Avalara Returns for Small Business
Affordable, automated tax remittance and returns filing for ecommerce and marketplace sellers
Online selling has become a lifeline for many businesses, providing additional revenue streams to offset their decline in in-store sales. Forbes reported that online retail orders are up 146% from April 2019 to April 2020 according to research from Emarsys and GoodData. Even before COVID-19, ecommerce sites and online marketplaces were gaining in popularity with sellers as a way to attract new customers.
With an eye on the prize (more sales), it’s also critical to keep an eye on changing tax rules. When you add or expand sales channels, you also likely create new obligations to collect and pay sales tax to more states.
New tax laws mean more filing work for sellers
Filing sales tax returns in the United States is complicated and time-consuming. Every state that collects sales tax has its own rules, regulations, and schedules for how returns should be filed, and how often. Keeping this straight was never easy but it was manageable when you only had to worry about filing returns in states where you had physical stores. Now, with remote seller laws, you’re likely having to do a lot more work.
In June 2018, the Supreme Court ruling in South Dakota v. Wayfair, Inc. allowed states to collect sales tax from out-of-state sellers. In the two years following the decision, 43 states and the District of Columbia enacted economic nexus laws requiring remote sellers to collect and remit tax if they meet certain revenue or sales volume thresholds. Many states also have marketplace facilitator laws, which obligate the marketplace (e.g., Amazon, Etsy, Walmart) to collect and remit sales tax on behalf of its sellers.
Once you start selling online, either directly to customers or through marketplaces, you open yourself up to taxable connections to more states. Some states’ laws include a small seller exception; but rules vary by state and minimum thresholds can be low. It’s best to play it safe and have a plan for handling new filing obligations.
File sales tax returns in less time with less hassle
Most sellers have to deal with sales tax compliance to some extent. Large companies tend to absorb the burden easier with entire teams dedicated to sales tax. But at smaller companies, this job often falls to the business owner or a staffer to painstakingly manage the process with spreadsheets, manually looking up rates, and tracking down return forms and filing schedules — all while juggling a million other priorities. It’s barely manageable when you only have to do it for one or two states. Start selling to customers nationally (or internationally) and it becomes nearly impossible to keep up.
Resources are constrained more than ever, so anywhere you can add efficiency is a good thing. Cloud-based technologies are well within reach for small businesses. If you aren’t already automating tedious business processes that eat up valuable resources — especially tax compliance — now’s the time to start.
For most sellers, tax rate calculation is step one in the automation process. Having sales tax automatically added to sales not only frees up staff from having to look up rates or download tax tables, it also greatly improves customer satisfaction. Unexpected costs (e.g., taxes and shipping) at checkout continue to be the number one reason buyers abandon a sale.
However, tax rate calculation is only part of the equation. There’s still the issue of remitting tax owed and filing sales tax returns for each state where you have an obligation to do so. For many sellers, this is the more complicated and labor-intensive task and largely done manually. Yet for smaller businesses, options for automated returns filing are limited. Most products are geared to larger businesses and therefore cost-prohibitive, or more elaborate than you really need. Budget-friendly solutions meant for smaller businesses tend not be automated and often don’t have the ability to easily aggregate transaction data from across business systems.
Realizing that small-to-midsize omnichannel businesses that sell via online marketplaces in addition to their own ecommerce channels were missing an automated returns solution that fit their unique business needs, Avalara created Returns for Small Business.
“The unprecedented growth in ecommerce has significantly increased the level of tax compliance complexity for small businesses,” said Sanjay Parthasarathy, chief product officer at Avalara. “Avalara’s new returns offering provides small businesses with an easy-to-use solution that reduces the amount of time spent on sales tax return preparation, and at a price point designed specifically for them.”
A turnkey returns solution built with your business in mind
Avalara Returns for Small Business automates the sales tax return preparation process, so sellers don’t have to go through the hassle of remitting tax and filing returns manually for every state. For businesses that either already sell online or through marketplaces or are now starting to do so, the timing couldn’t be better.
To properly prepare sales tax returns, sellers need to be able to pull together transaction data from disparate systems, which isn’t always a seamless process. The manual work required is time-consuming and can lead to costly errors and late filings if not done right.
Avalara Returns for Small Business allows you to easily aggregate sales transaction data from your accounting, ecommerce, and marketplaces applications. This helps to simplify and streamline preparing and filing returns. Having a single repository for all your transaction data also makes it easier to add new business systems or sales channels as your business changes or grows.
“Avalara Returns for Small Business is extremely easy to use and significantly reduces the time our business spends preparing and filing sales tax returns. The best part of the product is that it is intuitive and requires little to no training to begin using it,” said Annette Manias, president and owner of Oasis Solutions. “Before we were spending three to four hours per month manually preparing tax returns, but now only have to spend mere minutes checking the data in the Avalara Returns system."
Avalara Returns for Small Business allows you to:
- Reduce time spent preparing sales tax returns
- Eliminate the hassle of filing with each state website
- Remit payments directly to state tax authorities
- Track and manage returns from a single dashboard
- Gather and report sales tax data from marketplaces
Best of all, there’s no lengthy sales engagement or complicated setup. Returns for Small Business easily connects to most finance and ecommerce systems, works as a standalone solution, or works in tandem with Avalara AvaTax, our tax calculation product. An easy online buy process lets you choose the plan that’s right for your business. Subscriptions start with an annual fee of $249 and $25 per return. Learn more at avalara.com/rsb.