An unexpected piece of the omni-channel puzzle: online sales tax compliance

November 17, 2014 Written by NetSphere Category: Omni-Channel
An unexpected piece of the omni-channel puzzle: online sales tax compliance

eCommerce sales have grown exponentially over the last decade, nearly reaching $300 billion in 2014. Retail consumers are now spending half their shopping time online, whether it’s via computer, tablet or smartphone, to research their purchases before they make them.

Because of the ramp-up in time spent shopping online, consumers are demanding a better experience. Part of those expectations include a more seamless, immersive experience across all retail channels. With the volume of online sales increasing rapidly, however, so has the complexity of handling all the transactions. Therefore, having a fully integrated eCommerce system in place is essential for online retail functionality and accuracy. A prevalent example of this is how to accurately apply sales taxes to online purchases.

While most eCommerce systems have basic tax automation for sales, these systems aren’t fully capable of applying the myriad of rules and rates associated with online transactions. This means many businesses are engaging in the almost impossibly difficult task of manual tax management. Having to upload and maintain tax rates for individual states, counties and cities is wastefully time consuming and inevitably leads to calculative inaccuracies. 

Furthermore, validating purchaser addresses by zip code, which isn’t 100 percent reliable, also leads to errors in delivery, costing businesses money and time. On top of that, the tax rates from the federal to local level are ever-changing to further complicate the manual process. Therefore, the practice of manual tax management is flawed since businesses are required to commit resources to a major task that doesn’t generate revenue while also exposing themselves to the risk of unintended non-compliance with tax regulations.

When looking for a solution to improve a business's online presence, typically, many will emerge, causing a business owner to spend time vetting the right solution for his or her needs. However, in the arena of online tax compliance, there is but one solution that exists to make retail tax management much simpler and fully automated. That solution is offered by Avalara, which has been in the business of producing end-to-end sales tax compliance software for 10 years.

Avalara’s AvaTax integrates with the majority of eCommerce systems, making it very likely to be a virtual plug-and-play installation for most businesses. With AvaTax, the tax decision engine instantly verifies addresses using geo-location mapping and implements the appropriate sales tax. By pinpointing the exact latitude and longitude of each transaction rather than relying on zip codes, the aforementioned errors are avoided.

Advanced logic processing within the software manages other potential snags, like tax holidays, exemptions and product-specific tax rules. Since Avalara’s product automatically updates in the cloud and offers comprehensive reports, all pertinent information will be centralized and readily available to ensure less interruptions in workflow. Using this technology results in the ability to appropriate company resources toward increasing the bottom line of any business, especially those heavily engaged in eCommerce. 

If a reliance on manual tax management is slowing down the growth of your company, you can turn to NetSphere Strategies. We have a strong relationship with the online sales tax compliance experts at Avalara and will help your business increase its profits. Download the white paper from Avalara where you can find more details on the topic today.

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Abbe Miller is the marketing manager at NetSphere Strategies, located just outside Chicago. NetSphere Strategies is a boutique eCommerce company positioned to help businesses transform their online presence by providing a full complement of services that starts with our strategic consulting and creative design teams, then continues with building innovative solutions and providing ongoing post-project support.