NOTE: This information isn't intended to establish a relationship or advise you on taxes. It's always a good idea to consult a tax professional to learn more.
If you were to poll small business owners on their biggest pain points, you’d find that taxes consistently resurface as a major stressor. And for good reason, too. With the ever-changing laws around state sales tax rates and regulations, even the most organized entrepreneurs can feel behind the curve and overwhelmed.
Enter Avalara AvaTax.
Avalara AvaTax was built with small business owners’ tax concerns in mind. AvaTax helps businesses present an accurate sales tax total to their customers, calculated from accurate and up-to-date tax rates for assigned product-specific tax codes and more than 13,000 jurisdictions. Additionally, AvaTax helps you create accurate reports of your business’s taxes, which eases the stress of tax reporting and remittance.
And, to make things even more streamlined, GoDaddy and Avalara have partnered up to offer free AvaTax services for Websites + Marketing Commerce Plus customers.
Let’s take a look at some of the common tax headaches that small business owners face and how our new Avalara AvaTax integration can help to solve those pain points.
Headache No. 1: Constantly shifting tax rules and regulations
With all of the individual local rules on taxes, it’s inevitable that updates to tax codes will happen. Keeping up with those changes can be nearly impossible, given the number of tax jurisdictions across the United States.
In 2019 alone, there were more than 34,000 rate and taxability updates in the United States and Canada.
And, on top of simply being aware of those updates, ecommerce business owners would need to be making nearly-constant corrections to their checkout system in order to keep tax rates accurate for every tax jurisdiction across the United States.
With Avalara AvaTax and GoDaddy’s Websites + Marketing, those changes are made automatically.
When you set up AvaTax, you’ll enter your nexus details like your business locations, employee locations, shipping locations, customer locations and product categories. Avalara uses that information along with its database of thousands of tax codes to calculate the appropriate tax amount needed to comply with state-specific tax compliance rules.
Headache No. 2: Managing varying tax rates by product or service
Depending on the state or local jurisdiction, individual products or services and even shipping can carry different tax rates.
In Pennsylvania, for example, clothing purchases are largely tax-exempt. However, formal clothing and costumes are an exception and are subject to tax. And in Texas, deodorant is taxable, while antiperspirant is exempt.
The odd rules and quirks to tax laws aren’t limited to just products, however. Services and how they’re taxed also vary widely.
As one example, in Kansas, there is an amusement service tax on tethered hot air balloon rides. However, untethered hot air balloon rides are considered transportation and aren’t taxed. And in Arkansas, a service tax is charged for tattoos and body piercing services.
In order to avoid the headache of what products should be taxed where, AvaTax provides product-specific tax codes for many product categories.
Simply assign specific product tax codes to your products within Websites + Marketing Commerce Plus and AvaTax will accurately calculate the correct tax during checkout for your location, the customer’s location and the product type.
Headache No. 3: Keeping accurate tax data in case of audits or lawsuits
Audits aren’t limited to only small businesses, but the current tax laws make sales tax audits an onerous and expensive process for small business owners.
An audit can last more than a month and can cost an average of $300,000.
When businesses are audited, they're most-often cited for failing to adequately track, report and pay tax on all of their sales.
Don’t get caught unprepared.
Keeping detailed records is key. However, attempting to manage sales tax records on your own is tedious, inefficient and prone to error. Automating your taxes is the most-efficient way to keep your records accurate and up to date.
To help business owners stay in compliance, Avalara provides reports around transactions, tax returns and tax exemptions, all compiled automatically. These are accessible free of charge and can be used for tax filing and remittance.
Avoid unnecessary headaches with automation
The business world has changed drastically in the last several years, both with major updates to sales tax collection laws and a global pandemic changing the way businesses are run. Missing even a small detail in tax collection can cause a cascade of issues, from back taxes to expensive audits.
As a small business, it’s now extremely important to stay on top of ever-updating sales tax laws in every location you operate for every product. And that is a daunting task.
With sales tax automation, however, you can relax knowing that your tax rates are being calculated accurately without the need to make constant updates to your website.
Running a small business can be difficult, with new hurdles seemingly coming from all sides. With Avalara AvaTax, sales tax doesn’t need to be one of those.
Check out this help article to learn more about how to use Avalara AvaTax with Websites + Marketing.