Top 10 Sales Tax Software for Small Businesses

Small businesses often face challenges in managing sales tax compliance due to varying policies across regions and product types.

Tax compliance is a common Achilles’ heel for digital creators, SaaS companies, e-commerce sites—any small business, as you’re forced to know and abide by a complex web of regulations, laws, state-specific rules, and much more.

Failing to comply can lead to penalties, but with the right software, you can automate calculations, filings, and reporting, making sales tax management much easier. Join us as we take a look at the top 10 sales tax software solutions designed to simplify tax compliance for small businesses.

1. Quaderno

We’ll go ahead and get this one out of the way! Quaderno stands out for its simplicity and efficiency in managing global sales tax, VAT and GST. Designed to automate sales tax calculations for every transaction, it ensures you’ll always remain compliant with the ever-changing tax laws.

Likewise, Quaderno’s API is unique in the fact that it’s developer-first, allowing businesses to customize their tax compliance workflows and embed these functions directly in their own apps or platforms.

Key features

• Multi-jurisdiction compliance: Automatically adapts to tax laws in different countries, ensuring e-commerce sites are compliant with local regulations in real-time.
• Customizable and automatic invoicing: Generate invoices tailored to your business, with taxes automatically applied based on each jurisdiction.
• Automatic tax reports: Designed specifically for businesses selling digital products, making it easier to comply with VAT laws.
• Cross-border tax management: Ensures compliance with different tax laws across borders, such as EU VAT and US sales tax, without additional software.
• Automated EU VAT MOSS filings: Streamlines the complicated process of filing VAT returns under the EU’s Mini One Stop Shop (MOSS) system.

Integrations

Quaderno integrates seamlessly with popular e-commerce platforms like Shopify and WooCommerce, as well as payment processors such as Stripe and PayPal. It also connects with accounting software like Xero, enabling smooth data flow and easier tax reporting.

What really sets Quaderno apart, other than its seamless Shopify integration, is the sheer number of integrations with third-party learning platforms, such as SendOwl, Teachable, Kajabi and many more. Compared to Taxjar and Avalara, this is a much more inclusive set of integration capabilities.

Pricing

Quaderno’s pricing starts at $49 per month for the Startup plan, scaling based on your number of tax registrations and transaction volume. The Business and Growth plans are $99 and $149 respectively, while the Enterprise plan is available by contacting sales to discuss your specific needs.

2. Avalara

Avalara is renowned in the tax software industry, but it may not be the ideal choice for small businesses. While its comprehensive tax solutions are tailored for larger enterprises, there are some considerations for smaller operations.

Key Features

• Real-time rate validation: Avalara provides real-time checks to ensure accurate tax rates, though this feature is more beneficial to companies with extensive transaction volumes.
• Exemption certificate management: Tracks and validates exemption certificates, a widely automated feature in ecommerce, but perhaps more than what a small business requires.
• Flexible tax code mapping: Allows for intricate tax code applications, which might be overkill for simpler business models.
• Automated returns filing: Offers automatic filing of tax returns, essential for large-scale operations.
• Audit readiness: Prepares necessary documents and logs for audits, providing peace of mind, but it aligns more with large corporate needs.

Integrations

Avalara offers extensive integrations with platforms like QuickBooks and Shopify, ensuring tax calculations across channels. However, its integrations might be more suitable for businesses with complex setups and there is no automating invoicing.

Not to mention, there are use cases where you need multiple pricy products, some of which aren’t even available in most countries.

Pricing

Avalara's pricing is customized based on transactions and specific tax needs, typically requiring direct discussions with their sales team. The lack of transparent pricing on their website can pose challenges for smaller businesses seeking straightforward solutions.

While Avalara's offerings are robust, its focus on larger corporations means it may not align perfectly with the needs of small businesses searching for simplicity in paying WooCommerce sales tax.

3. TaxJar

TaxJar provides a streamlined approach to sales tax compliance, which is helpful for businesses using multiple online platforms. However, there are certain gaps in service that smaller businesses should consider.

Key features

• AutoSync for e-commerce: Automatically syncs your sales data from multiple online platforms like Amazon, Shopify, and eBay, consolidating all your tax data in one place.
• Smart transaction tracking: Uses AI-driven insights to identify errors or discrepancies in transactions, alerting you before they impact your filings.
• Multi-channel compliance: Handles taxes from various sales channels and ensures you remain compliant.
• Sales tax economic nexus tracking: Alerts you when your business crosses state thresholds for economic nexus, but doesn’t track thresholds outside the US.
• Simplified filing dashboard: Provides a user-friendly dashboard where you can manage, review, and file tax returns quickly without dealing with complex forms.

No automatic tax invoices with TaxJar

Tax-compliant invoices still fall on your shoulders. Every time you make a sale, it’s your responsibility to create an appropriate tax invoice with all of the correct customer data, send it to the customer after the sale, and store the document according to local tax law (sometimes for as long as ten years).

Pricing

TaxJar's pricing starts at $19 per month, with additional charges for auto-filing services. Each state tax filing incurs an extra fee of $25 per filing, applicable whether you're filing monthly, quarterly, or annually.

4. Vertex

Vertex is known for providing comprehensive tax solutions to a variety of industries, making it ideal for businesses with more complex tax needs. Hence, it’s not the right choice for digital creators at the start of their careers. It’s because Vertex is designed to handle not just sales tax, but also VAT and other global taxes, with an elaborate set of features and nuances.

Key features

• Product-specific tax settings: Allows for nuanced tax rules based on product categories, which is especially useful for industries with complex tax structures like telecommunications or manufacturing.
• Taxability matrices: Creates detailed matrices that outline tax obligations based on product type, location, and buyer, reducing ambiguity in tax application.
• Return preparation and validation: Prepares returns while checking for errors and discrepancies, ensuring that tax filings are accurate and compliant with all regulations.
• Industry-specific compliance: Vertex tailors solutions for industries like retail, healthcare, and finance, each of which has its own specific tax requirements.
• Multi-country VAT handling: Offers a sophisticated solution for managing VAT in multiple countries, with automatic reconciliation and compliance checks.

Integrations

The platform integrates with major ERP systems such as SAP and Oracle, as well as e-commerce platforms like Shopify and Magento. This makes Vertex suitable for larger small businesses and those with growing global operations.

Pricing

Vertex’s pricing is typically custom-quoted based on the specific needs and size of your business. Contact their sales team for a detailed pricing breakdown tailored to your company’s requirements.

5. Sovos

Sovos provides tax compliance solutions that are scalable for small businesses looking to grow. It’s particularly useful for automating the more complex aspects of sales tax management.

Key features

• Advanced reporting tools: Provides in-depth reports with custom filters, allowing businesses to analyze tax obligations across multiple regions.
• Exemption certificate automation: Automatically applies, tracks, and renews tax exemptions, ensuring your business stays compliant with exempt customers.
• Real-time tax liability management: Monitors your tax liabilities as they accumulate across different jurisdictions, giving you clear visibility into your total obligations.
• API-based tax integration: Sovos offers API connectivity that integrates with your existing systems to ensure seamless tax compliance without disrupting your workflow.
• Automated sales tax dispute resolution: Assists in managing disputes by automatically tracking and storing all tax-related documents, making it easier to resolve issues with tax authorities.

Integrations

Sovos integrates with various ERP systems, payment platforms, and accounting software like QuickBooks. This ensures that your tax data is synchronized across your entire financial ecosystem.

Pricing

Sovos offers flexible pricing plans based on the size and complexity of your business. You’ll need to contact their sales team for a custom quote, which will reflect the services and integrations you require.

6. QuickBooks Sales Tax

QuickBooks Sales Tax is designed to provide seamless tax management for businesses already using QuickBooks. Its intuitive interface and integration with QuickBooks make it easy for small businesses to automate their sales tax calculations and reporting.

Key features

• Seamless accounting integration: Automatically syncs tax data with your QuickBooks transactions, ensuring that your financial records are always up to date.
• Tax tracking on invoices: Automatically tracks and applies sales tax on both invoices and bills, ensuring all transactions are accurately recorded.
• Automated tax adjustments: Detects errors in tax calculations and automatically adjusts them during reconciliation, minimizing manual intervention.
• Custom tax rates: Allows businesses to set custom tax rates for specific products or locations, giving you flexibility when dealing with unique tax jurisdictions.
• Detailed sales tax liability reports: Provides in-depth reports that show your outstanding tax liabilities and help you prepare for tax deadlines.

Integrations

QuickBooks Sales Tax integrates natively with QuickBooks Online and Desktop, ensuring a smooth workflow for businesses already using QuickBooks for their accounting. It also supports integrations with various e-commerce platforms through third-party apps.

Pricing

Pricing for QuickBooks Sales Tax is included with most QuickBooks Online subscriptions, which start at $25 per month. Additional fees may apply for higher tiers or more advanced tax management features.

7. Xero Tax

Xero Tax provides small businesses with automated tax calculations and compliance tools, making it easy to manage taxes directly within Xero’s accounting platform. It’s particularly popular among businesses looking for simple, streamlined tax management.

Key features

• Direct accounting sync: Integrates natively with Xero, automatically reflecting tax obligations in your financial statements.
• Live tax compliance tracking: Monitors tax laws and updates in real-time, ensuring you remain compliant with the latest changes across different regions.
• Sales and purchase tax reconciliation: Easily reconciles sales and purchase taxes to ensure that your VAT/GST returns are always accurate.
• Custom VAT settings: Xero allows for custom VAT settings to adapt to complex business scenarios, including multi-rate VAT.
• Tax filing reminders: Provides automated reminders for upcoming tax filings, reducing the risk of missed deadlines and penalties.

Integrations

Xero Tax integrates directly with the Xero accounting software, along with various e-commerce platforms and payment gateways. It supports connections with Stripe and WooCommerce, along with the standard feature of handling Shopify sales tax.

Pricing

Xero’s tax features are included in the Xero subscription, with plans starting at $13 per month. Pricing scales are based on the number of users and transactions your business needs to manage.

8. Stripe Tax

Stripe Tax is designed for online businesses using Stripe for payment processing, assisting them in maintaining tax compliance for their sales transactions. However, certain aspects make it less ideal for small businesses.

Key Features

• Geolocation-based tax determination: Automatically calculates taxes such as sales tax, VAT, or GST based on the buyer’s location. This might require manual setup.
• Digital goods compliance: Focuses on compliance for digital products, particularly following EU regulations. This is limited to digital goods, which might not suit businesses with diverse product offerings.
• High-volume transaction handling: Optimized for businesses with a high volume of small transactions, but the transaction-based pricing model may escalate costs for small businesses as they grow.
• Real-time tax breakdowns: Offers instantaneous tax breakdowns at checkout, but these insights are confined to transactions processed through Stripe.
• Detailed tax reporting for filings: Automatically creates reports, yet this covers Stripe transactions only, which might not provide a full picture if other sales channels are used.

Integrations

Stripe Tax integrates directly with Stripe, supporting e-commerce platforms like WooCommerce and Shopify. However, its reliance on Stripe limits integration flexibility for businesses utilizing multiple payment methods.

Pricing

Stripe Tax's pricing begins at 0.5% per transaction, adopting a pay-as-you-go strategy. The percentage-based fees might be too expensive for small businesses as your revenue grows. Even worse, the customer support staff doesn’t contain too many experts, presenting an issue when more elaborate problems arise.

9. TaxCloud

TaxCloud is a popular choice for small businesses due to its affordability and simplicity. It offers free sales tax calculations, making it a great option for businesses looking to minimize costs while staying compliant.

Key features

• Free tax calculation services: Offers completely free sales tax calculations, allowing small businesses to save on operational costs while remaining compliant.
• State-by-state compliance: Monitors and adjusts for tax laws in each U.S. state, ensuring that your business complies with even the most complex state regulations.
• Economic nexus alerts: Notifies you when your business crosses a state’s economic nexus threshold, so you can register to collect and remit sales tax as required.
• Automated exemption certificate management: Helps you store and manage tax exemption certificates to simplify sales tax compliance for exempt transactions.
• Low-cost filing: Offers affordable filing options, charging a small fee for automating sales tax filings, reducing the administrative burden.

Integrations

TaxCloud integrates with major e-commerce platforms like Shopify, WooCommerce, and Magento, as well as accounting software such as QuickBooks. It also supports integrations with ERP systems for more complex businesses.

Pricing

TaxCloud offers free sales tax calculations and charges a small fee for tax filings. Filing fees start at $10 per month, making it one of the most affordable options for small businesses.

10. Sales Tax DataLINK

Sales Tax DataLINK offers powerful tools for accurate tax calculations and return filing, designed for businesses that need detailed, error-free reporting. It’s ideal for businesses that deal with complex tax regulations.

Key features

• Error-free filing validation: Automatically validates tax returns for accuracy before submission, significantly reducing the chance of costly mistakes.
• Custom jurisdictional settings: Allows businesses to create highly detailed tax rules based on specific jurisdictions, which is ideal for companies with complex tax obligations.
• Manual control with automation: While it offers automated tax solutions, businesses can manually adjust tax settings to retain control over their unique tax needs.
• Real-time discrepancy alerts: Alerts you to any discrepancies in tax calculations as they happen, giving you time to make adjustments before filing.
• Integrated filing across states: Files sales tax returns in multiple states from a single platform, simplifying multi-state compliance efforts.

Integrations

Sales Tax DataLINK integrates with various ERP systems, accounting software, and e-commerce platforms, including QuickBooks, Sage, and Microsoft Dynamics. This makes it highly adaptable for businesses using different systems.

Pricing

Pricing for Sales Tax DataLINK is based on the complexity of your business and the volume of transactions. Contact their sales team for a detailed pricing breakdown that fits your business needs.

Conclusion

Whether you're a small e-commerce store or a growing company with complex tax regulations, the right software can make compliance easier and more efficient. Sales tax software can save small businesses time and reduce the risk of errors by automating the complex and tedious aspects of tax compliance. Each software solution offers unique features, integrations, and pricing to fit different business needs.

If you’re curious how Quaderno can save you time and give you peace of mind, start your free trial today.