For SaaS companies who have customers everywhere, managing sales tax is no easy task. Internet sellers must determine whether they are liable to collect sales tax and if so, calculate the appropriate taxability and local rate.
A number of factors make tax on software more complex than traditional retail or e-commerce transactions.
Can I connect my tax engine to the billing and payment tools in my financial stack?
Can I calculate sales tax without a full address and use only the credit card zip code?
Can I update the tax amount whenever my customer adds seats or requires a revised invoice?
Getting any of these pieces wrong may result in an inaccurate sales tax assessment and loss of revenue.
The good news is that with the right tools managing tax on software can be straightforward. At Anrok, we have built a sales tax solution specifically for subscription business models. Download the guide to see how you can set your SaaS company up for sales tax success. Couple this guide with the 8 most common SaaS sales tax mistakes.
If the credit card zip code is all you have, one needs a tax engine with a sophisticated enough address validation system to account for such situations. This is crucial to ensure that tax is calculated instead of dropped or rejected.