A huge number of growing businesses use online sales tax calculators. But not all sales tax calculators are created equal. The tax tool you use can either raise your risk and waste time or reduce risk and up your awesomeness and efficiency. In this post we’ll:
- debunk common sales tax calculator myths; and
- introduce you to a sexy sales tax tool that will save you resources and scale with your business.
Sales Tax Calculator Myths
Myth 1: Sales Tax Calculators Are All The Same
A calculator is a calculator is a calculator, right? Not when it comes to sales tax. Some “sales tax calculators” are just calculators that do multiplication, like the one shown above. It’s BYOR—Bring Your Own Rates. They require you to go out and research the actual sales tax rate you need before you can figure the tax.
These calculators don’t give you any advantage over the calculator app on your smartphone.
A true sales tax calculator provides the rate for you. You enter a price and a location and get back a sales tax amount.
Myth 2: All You Need Is Rates
You’ve discovered a sales tax calculator that provides the sales tax rates and only asks you for dollar amount and address. Bada bing bada boom. Another common misconception: this is enough to give you accurate calculations. Not true. Where do the rates come from? A rusty truck in a back alley? A van down by the river? ZIP codes (just as dangerous)?
One of the most pervasive and insidious sales tax myths is that you can get accurate sales tax rates based on ZIP codes. Long story short, ZIP code boundaries do not always correspond to sales tax boundaries, of which there are 11,000 in North America.
So, if you want the right rates—and you do, because the state auditor would love to penalize you if you use bogus rates—you need a calculator that uses geolocation.
Geolocation is the technology that tells you exactly where you are on Google Maps. And in a sales tax calculator it can pinpoint the exact tax jurisdiction you need to find the right rate.
The AvaRates calculator pictured above uses geolocation. Accept nothing less.
Myth 3: Calculators Are the Best/Only Option for Growing Businesses
If you need only the occasional sales tax calculation then a geolocation-based sales tax calculator is for you. BUT if you have a growing business that needs to calculate and file sales tax on a regular business, a calculator won’t cut it. It doesn’t scale and it still leaves plenty of room for human error.
For a growing business, especially one that does business in more than one state, you want to automate. After all, who wants to think about sales tax? (Well, besides us). Wouldn’t you rather be thinking about innovation, growth and profit? Sales tax automation gives you accuracy and it scales with you as you grow.
Sales Tax Automation
There are several sales tax automation services out there. But let’s look at our industry-leading solution, AvaTax. AvaTax integrates directly with whatever financial application, ERP or ecommerce platform you happen to use. That means you never have to leave your software to get tax calculations. It also uses geolocation technology to give you accurate sales tax calculations, so you don’t have to sweat when the auditor comes around.
Unlike a simple calculator, AvaTax automates your entire sales tax management process, delivering smart tax decisions, including rates and taxability, directly to your e-commerce or accounting software. That frees up your resources so you can focus more on growth. Follow the link if you want to learn more about automating with AvaTax.
- Not all sales tax calculators are created equal
- Don’t trust anything that doesn’t use geolocation
- You’re not stuck with a calculator! You can automate.