There are now affordable technologies emerging to help with this problem. Until now, a business had three options when it came to calculating sales taxes for multiple jurisdictions.  Fortune 1000 companies spend thousands and thousands of dollars building complex IT solutions. Other businesses use a CD-ROM based subscription service to look up the tax for each invoice and then key the numbers in manually. Many businesses just guess and risk getting caught in a sales tax audit.

For example, one such technology we have found is AvaTax ST Sales and Use Tax solution from Avalara  www.avalara.com.  Using leading edge web services technology, AvaTax ST works behind the scenes to instantly validate the customer's address using AutoAddress+.  Then it accesses a database that contains the correct tax calculation for each of the more than 8,000 sales taxing jurisdictions in the U.S.  The correct tax amount is then automatically entered into the customer's invoice, ensuring tax compliance 100% of the time.  Plus, it creates the myriad of remittance reports that must be filed with the taxing authorities. The bottom line for AvaTax ST users is that they save hours of valuable time and can easily survive a sales tax audit. In fact Avalara guarantees that the calculations are 100% correct.  

Research shows that if a company is doing 425 invoices to existing companies and 75 invoices to new companies in a month they will spend 19 hours a month looking up the appropriate sale tax calculations.  That represents a direct cost of in excess of $500 a month.  With solutions such as AvaTax that 19 hours goes to 0 and the savings can be significant.

This is a great example of the evolution of Web-service technology.  Solutions such as AvaTax ST offer small and mid-sized businesses flexible, on-demand services at a fraction of the price of purchasing and maintaining software in-house. With AvaTax ST, in particular, you have only one schedule and two details, instead of hundreds, or thousands. Gone is the researching and assigning each customer to a specific tax schedule. One single schedule applies to all customers. Each calculation takes into account the complex dimensions of sales taxes, including customer exemptions, product taxabilities, amnesties, Nexus and sourcing rules.

The technology used by AvaTax ST is groundbreaking, simple to activate and use and extremely cost effective.  It is a transaction-based, web-enabled service that is powerful and accurate, yet simple to use.  Because this is a Web-based service, there is no hardware to buy, install, or maintain.  Unlike other tax calculation solutions which are expensive and require extensive IT resources within a company, Web-based services need no IT resources to manage taxation activities.  The service is totally transparent to the user.  All they notice is that the sales tax calculations are easy, automatic and accurate.

AvaTax works directly with Microsoft's Great Plains, MS eCommerce Server systems, Best Software's ACCPAC Advantage Series(TM), Best Software's MAS 90® and MAS 200®, and Scala. Coming soon is a solution for the millions of small businesses using QuickBooks. Installation takes minutes and there is no need for a sophisticated IT department to make it work. Once it's installed it calculates the tax on each invoice based on the customer's nine-digit zip code.  

Avalara has provided a free ROI calculator.  To check the savings that occur when you use a web-based solution go to www.avalara.com and click on the ROI button. You plug in the number of transactions you invoice each month, what you think the split is between new customer transactions and transactions from your existing customers, and then enter how long it takes your staff on average to look up and create a new customer record with the correct tax schedule supporting it. Back comes your projected savings and for most companies they are significant.

So is there a down side to moving to a solution such as AvaTax ST? I couldn't find one. In my testing I found it easy and fast to install, and invoicing was a breeze. Key in the address and AutoAddress+ checks the tax tables based on the zip code and instantly comes up with the correct taxes and moves them into the invoice. For example, when I used a Seattle zip code it calculated the correct state, city and area transit tax seamlessly. You can take advantage of the free Avalara tax calculator on their web site to prove to yourself that it calculates the correct taxes for your customers.

In summary, web-based sales tax solutions such as AvaTax ST will do away with the time consuming manual calculation of sales taxes; enter the correct taxes in the invoice; produce the jurisdictional reports and guarantee the accuracy of the calculations.  New technology to save the day.

Avalara Headquarters
900 Winslow Way East
Bainbridge Island, WA 98110
Phone: (206) 780-4848
Toll Free: (877) 780-4848
Fax: (206) 780-5011
info@avalara.com
www.avalara.com