Mar 14, 2023 • 3 minute read
Sales Tax Software Gets Your E-Commerce Business Filing-Ready
Sales tax software does the hard work of figuring out your tax obligations and how much to collect from customers.

If your online vintage store sells a trinket to a customer in New York and another in Oklahoma, do you know how much sales tax to charge for each purchase? No need to lose sleep worrying that you’re not collecting the right amount –  sales tax software can do that for you. 

Forty-five states, plus DC, collect sales tax, at varying rates. On top of that, 38 states allow for the collection of local sales tax. That’s a lot of sales tax.

From calculating tax amounts to collecting them, sales tax software keeps you compliant without having to think about it.

 

What Is Sales Tax Software?

Sales tax software calculates, collects, and remits state and local sales tax for your business. 

In the past, businesses only had to collect state or local taxes if they had a physical presence in the state. That changed in 2018 when the U.S. Supreme Court ruled that a physical presence wasn’t needed for a business to collect sales tax in a state.

Now, e-commerce businesses that meet an economic threshold in certain states must remit sales tax to those states. Sales tax software takes on the role of figuring out where your business needs to collect tax and how much you need to collect from each sale.

 

Calculate the Right Sales Tax

Sale tax rates vary by state or locality. On top of that, the items that are subject to sales tax vary by state. Buyers in Pennsylvania don’t have to pay sales tax on clothes. Shoppers in the neighboring state of Maryland do. 

Sales tax thresholds also vary from state to state. Your business must start collecting sales tax in Pennsylvania once you hit $100,000 in sales. In California, the threshold is $500,000. Some states have a threshold of a specific dollar amount or number of sales.

It can be maddening to figure out how much tax to collect and whether you need to bother. But a sales tax software platform can do the math for you, even letting you know when your business has exceeded the threshold in a certain state and needs to start collecting.

 

Collect Sales Tax Online

You have to collect the right sales tax amount on each purchase. Sales tax software handles that for you, ensuring you collect the right percentage on the correct products. When tax filing time comes around, you won’t be left facing a steep bill you can’t pay.

 

Manage Exemption Certificates

Remember that not every buyer has to pay sales tax. Some states exempt non-profits from paying tax, and those with a multi-jurisdictional resale certificate can also get out of paying tax on certain purchases. You can configure your sales tax software to collect and apply exemption certificates, reducing everyone’s hassle and headache.

 

Create Sales Tax Reports

As tax filing season rolls around, you can use sales tax software to generate reports for each state where you had a liability. Those reports make it easy to file your returns with each state. Depending on your service plan, the software may even file your state sales tax returns for you.

You don’t want to think about sales taxes. So get a software program that does all the heavy lifting for you. 

If you’re ready to take the first step, get in contact with our team at service@taxcloud.net.