If you're an accountant, calculating sales tax for your clients is one of your core responsibilities. You might also consider it to be one of the most challenging aspects of your job. With the regular changes in rules and regulations across different jurisdictions, keeping up with the complexities of sales tax can be time-consuming.
For this reason, many accountants choose to onboard a sales tax software to help them get it right every time. Sales tax software can add an essential layer of automation to a business that saves accountants both time and money.
Key Takeaways from this Post
With the rise in global eCommerce, consistently accurate tax calculations are becoming increasingly difficult. Sales tax software is a game-changer for accountants. It ensures your eCommerce clients remain compliant with tax laws and regulations, regardless of where they sell.
Sales tax software will save you time, reduce errors within your clients' accounts, and keep your books nice and organised. Most have a level of automation so you can take a step back from your repetitive and menial tasks and let the software take over.
Link My Books will help you create an efficient accounting system for your firm and your clients. By integrating it with your accounting software and your clients' sales channels, you can turn on autopilot so your clients' sales data automatically transfers over to your accounting software.
Today, I'm going through six of the best sales tax software for eCommerce accounting professionals. These will help you move your business forward, along with your clients' companies.
Understanding Sales Tax Automation Software
Sales tax automation software helps with the tax compliance process by maintaining organised accounting records. It enables swift payout reconciliation, and accurately calculates your taxes according to where you sell. Many such software have in-built features that allow for various levels of automation. For example, automatically categorising transactions or applying the correct taxes to your records.
Key Benefits of Using Sales Tax Software
Let's go through a few key benefits of sales tax software for accountants:
Offer Worldwide Accounting Services
eCommerce sellers might start off selling nationally or within their own state. But very often they'll come a time when they want to expand their business by branching out into new countries and states. As an accounting firm using sales tax software, you can accommodate all of your eCommerce clients, even those who sell on an international level.
Without such software, it's not always going to be practical (or even possible) to prepare returns for those selling in different countries or states. This is due to the complexities of different tax rules. If you adopt a sales tax software, your clients won't need to find another accountant when they scale their eCommerce store.
Keep Up With Changing Regulations
Regularly checking tax rules and regulations of different countries and states takes a lot of time. Sales tax automation software automatically keeps up with changing tax compliance regulations so you don't have to. Both you and your clients will have the confidence of knowing that your software is automatically updated so they'll be no nasty surprises when you're working out and filing taxes.
Minimise Errors
Sales tax software helps keep errors within your clients' accounts and their tax returns to a minimum. Not only do you avoid discrepancies associated with changing tax regulations, but also those caused by human error.
Data entry can be a menial task. Although it's simple, the repetitiveness can make it easy for mistakes to creep into your records unknowingly. Sales tax software can often automate data entry so mistakes like these are avoided.
Keep Organised
Sales tax software enables you to keep on top of more than just taxes; you can keep on top of your books and records as a whole. Maintaining an organised system, you can refer back to transactions and dates when needed. And, know that the data you're working with is accurate.
With sales tax software, you can keep all your clients records in one place too. And when it's time to submit tax returns, you'll be able to access the information you need quickly and easily. Furthermore, many sales tax software offers additional accounting features, like payroll and inventory management. This means you can manage multiple aspects of each business through the one software.
Save Time
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Automating areas of your business will save you time and enhance efficiency. The specific automation features will vary from software to software. But in general, software automates repetitive and menial tasks.
It can also automate complex tasks that work with a lot of data points. For example, automatically calculating taxes for a business based on data that comes in from multiple eCommerce platforms.
Accurate Reporting
Sales tax software can produce accurate reports based on a wealth of data that might otherwise be difficult (or time consuming) for a human. The software pulls data from different sources, depending on what it's connected to, and uses that data to generate reports like profit and loss statements, cash flow projections, and balance sheets.
These reports can help accountants give their clients sound advice that'll stimulate business growth. They can offer suggestions based on real-time data that'll maximise their budgets and improve the accounting process throughout their business.
6 Best Sales Tax Software That Accountants Should Consider
1. Link My Books
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Link My Books allows you to put your bookkeeping on autopilot. Perfect for accountants with eCommerce clients, it connects with your eCommerce accounting software and each client's sales platforms. Once connected, Link My Books automatically transfers sales data from one to the other.
The software consolidates the incoming financial data, and breaks down income and expenses to produce clean summaries.
Key Features
Clean Summaries
Turn on autopilot in your Link My Books dashboard and it'll automatically send clean summaries of financial data over to your accounting software. Link My Books breaks down this data to clearly display details like sales, refunds, advertising fees, COGS, and sales channel fees.
The data is categorised accurately in your accounting software, saving you hours of manual work every month on every single one of your eCommerce clients.
Guided Tax Wizard
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The Link My Books team created the Guided Tax Wizard as a straightforward way of ensuring tax compliance. The Wizard consists of just a few short questions, such as where your clients sell and product grouping, and it automatically applies the correct tax rates to every item they sell.
The tax compliance software remains up to date with each country's rules and regulations. With it, you can ensure your clients always meet their tax obligations.
Payout Reconciliation
Link My Books makes payout reconciliation quick and easy. In fact, automation makes it completely effortless. Your data in your accounting software will always accurately reflect the actual payouts from each sales channel, whether that be Amazon, eBay, Etsy, or Shopify. Additionally, you can complete bank account reconciliations in just a few clicks.
Analytics and Reporting
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Link My Books has two standout reporting tools; Benchmarking and Profit & Loss by Channel. Link My Books Benchmarking is a revolutionary, first-of-its kind tool that gives businesses a percentile ranking against industry averages. It looks at metrics like sales growth, advertising fee ratio, and refund ratio. It also gives you actionable advice on how to improve each metric.
P & L by Channel allows you to compare the performance of each client's sales channels. So if one client operates across Amazon, TikTok Shop, Square, and eBay, for example, you can get a clear overview of sales, refunds, fees, COGS, and Taxes for each channel side by side.
Integrations
Link My Books integrates with QuickBooks and Xero accounting software. Additionally, it integrates with all payment processors, like PayPal and Klarna, so you can track data from wherever it's coming from. With regards to sales channels, Link My Books connects seamlessly to whichever channels your clients sell through. These are:
- Amazon
- eBay
- Etsy
- Shopify
- Square
- WooCommerce
- TikTok Shop
- Walmart
2. QuickBooks Online
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QuickBooks is an ever-popular accounting software to help accountants and businesses organise their books and their sales tax. It's packed with business-boosting features, as well as learning resources for accountants. You can also use QuickBooks Online to grow your accounting practice and offer services like Payroll with minimum additional effort on your part.
Features
- Practice Manager: QuickBooks Online's practice management software allows you to automate tasks, manage your team, and record client data. Use the reporting tools to understand how your practice is performing and keep tabs on your team's progress.
- Corporation tax: Manage your clients' corporation tax efficiently with QuickBooks Online. You can map accounts with categories for speedy tax return prep, and file accounts directly through the software.
- Ledger clients: Ideal for accountants working with small businesses, QuickBooks Ledger allows you to automate workflows so you have the time and resources to expand your services. Get end-to-end client file management, and offer financial reports based on real time data.
- Bank account connections: You can connect your clients' bank accounts to QuickBooks Online for easy reconciliation. The bank feeds and credit card feeds are automatically synced with the QuickBooks records so you can be confident the data is accurate.
3. Xero
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Xero is an accounting and sales tax software with a user-friendly interface and smooth, modern design. Although it's packed with powerful features, businesses and accountants alike appreciate the simplicity of the platform. It allows you to manage your clients, staff, and your firm with just a short learning curve. The range of tax compliance features is also a big plus point for the software.
Features
- Xero Cashbook and Ledger: With Xero Cashbook and Ledger, you can manage your clients and their data. Connect with client bank accounts for automatic reconciliation and transaction matching. Through this feature, you can manage budgets, and prepare financial statements and reports.
- Xero Workpapers: This is a feature that enables accountants to manage compliance workflows. You can send and request work papers, assign workpapers to team members, and check on the status of each workpaper project. You can also reconcile trial balances through Workpapers.
- Xero Tax: Manage personal and corporation taxes through Xero Tax, including preparing and filing tax returns and accounts. For those in the UK, Xero is MTD-compliant. Because Xero Tax syncs seamlessly with the core software, populating company accounts within Xero Tax can be done quickly and easily.
- Xero Practice Manager: This feature lets accounting firms streamline their workflows, and enhance efficiency and productivity throughout their business. You can track time and convert it into invoices, create reports, and assign tasks to your staff.
4. HelloTax
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HelloTax is a VAT management solution that automates the process of organising and filing VAT returns. The software is designed specifically for European businesses. It features real-time data validation so you can always be sure you're VAT data is accurate. More still, you can set notifications to alert you if any reports or filings are missing.
Features
- Integrations: HelloTax integrates directly with some major sales platforms, including Amazon, eBay, and Shopify. This integration makes for a seamless transfer of data between your tech stack. It's suitable for eCommerce businesses selling both physical products and digital services through these sales channels.
- Tax Letter Box: Working within different EU countries, you'll likely come across different languages. HelloTax's Tax Letter Box feature is so handy for this as it automatically translates letters from different authorities into English, extracts key data, and displays this in your dashboard.
- VAT Software: HelloTax's VAT Software is designed to save time with automation features. It verifies and sorts data and transactions, and shows you all you need to know on your dashboard. You can register and file your returns through HelloTax to anywhere in the EU.
5. Zoho Books
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Zoho Books is a VAT compliance solution that has a plan for every budget; even a free one. If you partner with Zoho as a consultant, you'll enjoy a range of features that'll help you broaden your client base, and connect and collaborate. All while maintaining tax compliance. The cloud based solution has plenty of smart automation features, and facilitates accounting across multiple devices.
Features
- VAT preparation and filing: Take control of your returns preparation and filing tasks with Zoho Books. Access your clients' accounts and collaborate with them through the software. The intuitive solution can also generate returns automatically while maintaining MTD-compliance.
- Invoicing: Zoho Books has some impressive invoicing features. You can personalise your invoices with your firm's branding elements. Plus, it allows your clients to pay in their own currency through a variety of payment methods including cash, cheque, and directly through the invoice.
- Inventory: Zoho Books allows its users to monitor their inventory through the software. Organise client inventories, and track stock levels and COGS. With this solution, you'll always know the precise stock levels of each product so clients will never run out.
6. Avalara
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This tax compliance software is ideal for US-based accountancy firms and businesses eligible for both sales and use tax. It enables you to manage a multitude of tax compliance documents to reduce the risk of underpayments or overpayments. Avalara has plenty of resources to enhance accuracy across sales tax operations, offering cloud-based solutions for businesses of all sizes.
Features
- Tax risk assessment: Get familiar with your clients' U.S tax and compliance obligations. This solution will help you identify when you've triggered tax obligations in different states (nexus), while keeping up with the ever-changing compliance regulations of each state and jurisdiction.
- International compliance: Avalara is a powerful software that helps customers streamline their tax processes, even when they operate on an international level. It facilitates compliance specifically for Shopify and eBay international shipping too.
- AvaTax: Avalara's AvaTax is an automated tax calculator. Use it to calculate tax payments and rates for sales and use tax, customs and duties, GST, and VAT, to name a few. You can calculate rates on sales and use tax, VAT, etc. across different industries and jurisdictions.
Things to Keep in Mind When Choosing Sales Tax Solutions
- Budget: Some solutions will allow accountancy firms to onboard their software for free through partner programs while others you'll need to pay for. Calculate your budget and check it aligns with your chosen solution.
- Features: Make a list of important features for you, your clients, and their customers. Now you can cross-reference your list with the best solutions available.
- Integrations: It's really handy to be able to integrate sales tax software with other platforms, like sales channels. This streamlines accounting systems for efficiency and reduces the need for manual data entry.
- Geographical location: We've looked at some of the best sales tax and accounting software for UK accountants and for those operating in other locations. Keep geographical suitability in mind when you're choosing which to go for.
- Scalability: This is a critical aspect if you're going to encourage business growth, for you and your clients' companies. Pick a software that'll grow along side you.
Use Link My Books to Help Comply With Tax Obligations
Sales tax is a complex matter, even for seasoned accountants and companies. The rise in international eCommerce has only increased this complexity. Link My Books can help organise your books across your clients' entire operations with its Guided Tax Wizard, data syncing, and reporting tools. Support your clients by putting their bookkeeping (and tax calculations) on autopilot.
You can sign up for your free Link My Books trial today and start automating your books in just 15 minutes.
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