Complexity: It’s Why Your eCommerce Tax Solution Matters
August 13, 2020
In the eCommerce universe taxes are, well, taxing. Regulations vary from location to location around the world. Sales and use tax classifications, calculations, and compliance are more complex than ever and continue to evolve at a rapid pace.
This complexity is why tax automation is critical to customer experience. Once buyers have made their purchase decisions, they expect a seamless online experience throughout checkout. This includes multiple payment options, automatically populated payment information, accurate tax and shipping cost calculations, and, of course, ample security.
As more brands go global, it’s also important that retailers create digital experiences that serve global audiences – yet another layer of complexity when you factor in VAT and customs duty or import taxes.
These are all compelling reasons why eCommerce service and solution providers such as LiveArea partner with specialists like Avalara, an automated tax provider. Cloud-based solutions like AvaTax, a scalable, end-to-end solution, can be integrated with all the primary eCommerce platforms we work with, including Salesforce Commerce Cloud, BigCommerce, Magento and Shopify.
What’s the big deal?
There’s a lot of functionality we really like in AvaTax. The solution assesses rates based on geolocation, not ZIP code, so rate accuracy is improved. Addresses are validated for improved invoice accuracy. Some jurisdictions have special rates for items based on materials, price point, function, or other factors that aren’t immediately obvious. AvaTax takes into consideration product taxability, sales tax holidays, tax on shipping and handling, and more.
AvaTax actively monitors business activities and alerts sellers when they’re about to establish tax obligations in new places, based on their state’s nexus laws. Sales tax nexus is the connection between a seller and a state that requires the seller to register then collect and remit sales tax. Certain business activities, including having a physical presence or reaching a certain sales threshold, may establish nexus with the state. A map view visualizes where to file and when new thresholds are being approached.
Certain about certs
I like CertCapture, too, which syncs with your transaction tax software to automatically apply tax exemptions to purchases, including drop-shipments and purchase orders. It also serves as an audit management platform by storing all your exemption certificates in one place. Bulk export your documents, or grant auditors read-only access to your files — a special portal allows your auditor to see only the exemption certificates they request, so you can close audits faster.
CertCapture tracks expiration dates and automatically sends renewal requests before exemption certificates expire. Existing customers can update missing information online, via fax, or by mail. Returned documents can be uploaded directly to the database.
Cross border powered by machine learning
Online shopping has become one of the most popular activities in the world. Experts predict cross-border eCommerce sales will soon reach $1 trillion. But there are challenges with selling internationally. Digital sellers need to craft a strategy to ensure international customers have a frictionless and transparent experience. Getting the tax right on cross-border sales is vital for both retailers and their customers.
For businesses, especially online retailers that sell internationally, Avalara makes it easier to sell anywhere in the world by automating the process of identifying and mapping tariff codes (also known as Harmonized System/HS codes) to your products and by calculating customs duties and import taxes. Avalara’s automated solution helps manage the challenges of international customs duties and import taxes – reducing your risk of compliance errors, unexpected fees, and issues with products being delayed in customs.
The journey you create
Sales taxes may not be a topic you consider when you think about the customer experience you are creating in your digital storefront, but it influences the journey you create – and it can make or break that experience. In fact, syndicated research firm PSFK identified five critical customer experience stages so don’t discount the importance of tax automation.
Director of Solutions