Sovos vs. Avalara: What’s the Difference?

Trying to decide between Sovos and Avalara? Or maybe you’re using one of the two and you’re considering switching? Choosing the right sales tax compliance solution is critical for businesses – especially those who have to navigate complex tax regulations.

With over 13,000 tax jurisdictions in the U.S. alone, businesses that sell online often have tax liabilities across multiple jurisdictions – and those expenses and forms can add up. The Tax Foundation’s recent study found that tax complexity and compliance costs are rising. The companies they surveyed saw a 32% increase in compliance costs from 2017 to 2023.

We’ll take a look at Sovos vs. Avalara and examine their features, pricing, support, and reviews to help you understand the differences and choose the right tax automation software for your business.

Overview: Sovos vs. Avalara

What is Sovos?

Vertex provides comprehensive business compliance solutions that include sales tax compliance software and managed services to help businesses of all sizes navigate global sales taxes. Sovos is focused on providing hands-on services from a dedicated tax team that supports international taxes, including VAT. On top of sales tax, Sovos also has solutions to help with shipping compliance and regulatory reporting.

Overview:

• Manages global sales tax compliance through a mix of hands-on managed services and software.
• Targets large global businesses.
• Helps with tasks like real-time calculation of global sales taxes, filing sales tax, certificate management, and more.
• Primarily works with retail, manufacturing, financial services, digital services, and insurance companies.

What is Avalara?

Avalara is a publicly traded sales tax software company that’s been listed on the New York Stock Exchange since 2018. The company specializes in providing cloud-based sales tax compliance solutions for enterprises worldwide and does everything from help companies automatically calculate sales taxes on their products to help them file and remit sales taxes.

According to one market research site, Avalara is most often used by companies with $10 million to $50 million in annual revenue.

Overview:

• Handles global sales tax compliance.
• Customers are primarily large businesses that operate globally.
• Has solutions for tax rate calculation, sales tax returns, and sales tax compliance management.
• Integrates with all major e-commerce platforms.
• Primarily works with retail, manufacturing, software, hospitality, accounting, communications, and logistics companies.

Sovos vs. Avalara: What’s the Difference?

Sovos and Avalara both target large global enterprises and have many of the same features. They also sell their services a la carte instead of through an integrated package. Despite these similarities, they have some key differences.

Avalara and Sovos might also have pricing differences but neither lists their pricing online.

Sovos vs. Avalara: Features

Let’s compare Sovos vs Avalara on their features. As you see below, they basically offer the same services for global businesses.

However, the way they offer them and their price are likely their key differentiator. Sovos offers more hands-on dedicated service with the same team, whereas Avalara doesn’t guarantee that consistency from month to month.

Integration and Ease of Use

Avalara offers over 1,200 partner integrations with popular e-commerce platforms and tools including ecommerce platforms like Shopify and BigCommerce, payment processors like PayPal and Stripe, ERPs like Quickbooks and Oracle Netsuite, and subscription management integrations like Recurly. Sovos has less public info on their integrations but offers integrations with ecommerce and purchasing systems and ERPs like SAP and Oracle. They also offer a flexible and secure REST API and a Simple Connect API for creating your own integration.

On this point, Avalara seems to have the advantage because they have premium integrations as well as an entire library of other integrations that are easy to find and access for users without much effort.

Compliance Coverage

Both Sovos and Avalara offer regional, national, and international sales tax coverage that includes U.S. sales and use taxes, VAT, and international sales tax. No matter where your business sells its products, both companies will be able to ensure accuracy in your state and local sales tax returns and ensure you’re compliant and always know the date you need to file in each jurisdiction.

Automation and Customization

While both Sovos and Avalara offer businesses automated tax filing services, Sovos focuses more on sales tax filing as a managed service with a consistent tax professional that prepares your return every month. However, some Sovos products require you to manually import your sales tax data or purchase another one of their products rather than having that process automated for you. In contrast, Avalara offers a fully automated sales tax compliance workflow.

The major downside, however, is that neither company provides audit support to their customers on taxes they filed – meaning you’re on your own in the event of a costly and complicated audit.

Reporting and Analytics

Both solutions have the extensive and detailed reporting capabilities required to ensure you can stay on top of sales tax compliance and track and review your sales tax data to identify areas of cost savings or greater efficiency and determine your next steps across different states. However, Avalara advertises more comprehensive reports and greater security.

Sovos vs. Avalara Pricing

Between Sovos and Avalara, which sales tax management software is the most cost-efficient and provides the most value?

It’s difficult to tell since neither Avalara or Sovos list their pricing online. In order to get a quote, you’ll have to book a sales meeting with their team.

Both companies have feature and transaction-based pricing where you pay an additional fee for each add-on service you purchase. Depending on how many services you need, those fees can add up.

However, Avalara also charges a setup fee for many of their services – adding significantly more expense to the process, which can add considerable expense to the process of adopting their service. Avalara also requires that you commit to a certain period of service in exchange for lower prices, making it harder to review the software’s performance and make sure it works well for your business.

Choosing the Right Sales Tax Software

Both Sovos and Avalara have sales tax compliance solutions customized to the needs of large global enterprises. While both companies have a similar suite of services, how they deliver their services can differ with Sovos offering more hands-on managed services with a dedicated tax expert who works on your business’ sales taxes every month.

That kind of continuity would be particularly useful for companies with complex sales tax returns. Meanwhile, Avalara is a better fit for companies in industries where it has expertise over Sovos like logistics, accounting, communications, and hospitality.

Despite these differences, the cons for both companies include that they sell their sales tax functionalities a la carte – something that’s likely to add additional costs to your sales tax compliance process. For that reason, small businesses, medium-size businesses, or those who only operate in the United States would likely be better off using an automated sales tax compliance service with less global reach but all the features you need included in a monthly subscription price.

Before you make a decision between Sovos and Avalara, make sure you consider other solutions. TaxCloud, for example, offers support with your full sales tax compliance process – including audits. We also offer an all-in subscription prices for our core services that ranges from $19 to $79 per month and cost-efficient add-ons for things like sales tax filing and audit support. In contrast,  Sovos and Avalara, sell their services a la carte and have expensive add-ons.

TaxCloud can help with the following:

• Monitor your sales tax nexus status: Always know when you’re getting close to sales tax nexus in different states – without having to stay on top of every state’s tax nexus rules.
• Notify you of when you pass tax thresholds: Get notified whenever you achieve economic nexus in a state so you can start collecting and filing sales taxes there.
• Register you for sales tax: Don’t worry about registering for sales tax in each state. TaxCloud will do that for you!
• Calculate your sales taxes: We calculate the right sales tax on each transaction in all 13,000+ U.S. tax jurisdictions.
• Complete your tax filings: Save time and always file on time by letting TaxCloud automate your sales tax returns.
• Remit your taxes for you: TaxCloud can remit your sales taxes for you directly from your bank account to ensure tax payments are always on time.
• Help you respond to audits: If you’re audited,TaxCloud can help you navigate how to respond.