TaxJar is best for smaller business owners that want a simple interface. Avalara is best for larger businesses, especially ones in e-commerce, that have more complicated sales tax situations.
Sales tax rules differ from state-to-state, making it hard for small business owners to know exactly how much they need to collect and when to send it to different states.
Many small business owners prefer using TaxJar because it’s simple and easier to use than Avalara. But Avalara can accommodate larger businesses with more complicated sales tax situations, especially e-commerce stores. The best choice for you depends on the size and needs of your business.
Not sure which one is right for you? Learn about the pros and cons of both TaxJar and Avalara below to find the best fit.
|When is sales tax software right for me?|
|TaxJar vs Avalara: at a glance|
|TaxJar pros and cons|
|Avalara pros and cons|
|When TaxJar and Avalara are right for you|
When is sales tax software right for me?
You should consider using a sales tax software if you have to file sales tax in multiple municipalities. Sales tax rules vary by state, counties, cities and even zip codes. It’s unrealistic to keep track of every single municipality’s rules and regulations — so sometimes sales tax software is necessary.
Sales tax software is especially useful for e-commerce businesses that sell across the country. Software can notify you if you reach nexus in another place — and can help register for sales tax in that area for you.
|💡 Nexus is a measure for how economically tied you are to a state, county or city. If you reach nexus requirements in certain states, you may be liable to collect and remit sales tax in those states.|
If you’re a brick-and-mortar shop with only one location or some other business that’s not selling outside of your area, then a sales tax software probably isn’t necessary. Most accounting software like Xero or QuickBooks Online can calculate sales tax for you based on your state and your taxable transactions if your settings are correct.
Your accounting software likely won’t file your sales tax returns or remit payments for you, but it will help you account for the numbers you need to do it accurately on your own.
TaxJar vs Avalara: at a glance
Before going into the details of each platform, here’s an overview of some of the main similarities and differences between TaxJar and Avalara.
Does it offer...
Automatic sales tax filing?
Sales tax nexus notifications?
Consolidated reconciliation reports?
Registration for sales tax licenses in all its plans?
|YES, VIA PARTNERS||YES|
Unlimited automatic filing included?
|YES, 30 DAYS||YES, 60 DAYS|
|NO, QUOTE IS REQUIRED||YES|
TaxJar pros and cons
TaxJar is designed for small businesses that have nexus in a handful of states. It’s generally considered easier to use for small business owners dealing with sales tax for the first time, according to online reviews.
Here are some specific pros and cons of using TaxJar:
- Generally easier to use. TaxJar has less advanced features than Avalara, which makes it easier to navigate and less overwhelming.
- Great for people using Square. TaxJar is a Square product, so it easily integrates with your POS system to identify taxable sales.
- Offers consolidated reconciliation reports: You can view all your sales tax reconciliation details in one report instead of having to pull from multiple reports, which saves you time.
- Pricing isn’t publicly available. You have to fill out a form and wait for their sales department to contact you.
- Less comprehensive. If you grow into a large business with more complex sales tax needs, TaxJar might not be able to scale with you.
- Doesn’t apply for sales tax licenses for you. TaxJar will notify you when you’re reaching nexus in another area, but it doesn’t offer to register there for you. Instead, it uses partners to do this — so it may cost you more.
TaxJar’s pricing starts at $19 per month for its most basic plan. Your business’ volume and locations may increase the price. For example, the Starter and Professional plans have a limited amount of AutoFiles, which are automatic sales tax filings. You’ll need to pay extra if you need to register in more states or if some states require more filings than others.
- Starter: Starts at $19/month
- Professional: Starts at $99/month
- Premium: Quote required
|📢 Editor’s note: We drew these prices from G2, a comparison site where brands can claim profiles and provide their own data. However, no prices are available on TaxJar’s pricing page.|
Avalara pros and cons
Avalara has many more features than TaxJar and is generally considered more advanced and comprehensive. Avalara offers many types of software — but its sales tax software is called AvaTax. (So when we say Avalara, we’re talking about AvaTax specifically.)
It can accommodate both small and large businesses. In some areas, Avalara is more automated than TaxJar.
Here are Avalara’s pros and cons:
- More advanced features. Avalara offers sales tax registration, business license services, international tax services and more. Not every small business needs these, but they may be good to have if you’re growing quickly.
- Transparent pricing. You don’t need to request a quote to find out Avalara’s starting prices for its basic and standard plans.
- Longer free trial than TaxJar. You can try out Avalara for free for 60 days while you can only try TaxJar out for 30 days.
- Might be more complicated or overwhelming for smaller businesses. Although Avalara does have more features, that can make it harder to navigate at times. Not every small business owner knows what types of international taxes there are — and most of the time, they don’t need to.
- Doesn’t include city, county and local filings in all of its plans. Those filings are included in its most expensive plan — but not its basic and standard plans.
- Doesn’t include consolidated reconciliation reports. You need to pull multiple reports to find out how your sales tax reconciliations break down exactly. That makes the process a little more time-consuming.
Avalara also has three available plans. Like TaxJar, Avalara also has factors that could increase the price. For example, you need to pay extra for each sales tax registration and optional e-filing.
- Basic (returns): Starts at $19/month
- Standard (returns and calculations): Starts at $83/month
- Custom (Avalara Compliance Cloud Suite): Quote required
When TaxJar and Avalara are right for you
TaxJar and Avalara can both be effective tools to help you stay compliant and avoid stress. But they’re both mainly designed for different types of business owners in mind.
Here’s what to keep in mind before you opt for either platform.
TaxJar is a better fit if:
- You’re a small business owner with simple sales tax needs
- You don’t expect to grow into any other states or municipalities any time soon
- You prefer a simpler interface
- You use Square POS systems
Avalara is a better fit:
- You’re a larger business with more complex sales tax needs
- Your business is growing rapidly
- Your industry is e-commerce
- You need more advanced features (like international taxes)
Since both services offer a free trial, you can see for yourself which one you prefer.
The bottom line
If your business sells across multiple states, you should let sales tax software handle filing returns and remitting payments for you.
TaxJar and Avalara are both great options that will help keep you stay sales tax compliant and avoid any trouble with sales tax. Generally, smaller businesses should go with TaxJar and larger businesses should go with Avalara. Why? TaxJar’s main strength is its simplicity and ease of use, while Avalara’s is its robust features.
Not sure how you should be handling sales tax in your state or if a software is right for you? Schedule a free call with a DiMercurio Advisors team member today to get in touch with experts who can guide you through sales tax and help you avoid a stressful and costly audit.