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4 Amazon Seller Tax Software for Your Ecommerce Success

Michael Pignatelli
Last Updated on September 28, 2023

Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

Amazon is not just a regular online marketplace; it's a massive platform that facilitates countless transactions on a daily basis. And where there are transactions, there are taxes. Sellers must understand the tax obligations of selling on such a platform. The solution? Amazon seller tax software designed for e-commerce platforms. 

Taxes can pose business challenges due to the varying rates across jurisdictions. One wrong move can result in penalties, fines, and potential legal issues. By harnessing the power of tax software tools, you can automate sales tax filings while staying compliant with the ever-changing tax regulations of Amazon. 

Before we delve into the best tax software for Amazon sellers, let's ensure we're all on the same page about the fundamentals of sales tax in this online marketplace. 

Understanding Sales Tax Basics for Amazon Sellers

Sales tax is a transaction-based tax that varies by state and sometimes by local jurisdictions. As an Amazon seller, you must know whether you are responsible for collecting and remitting sales tax returns based on specific rules and regulations.

In many cases, Amazon takes care of the hassle of calculating, collecting, and remitting sales tax for orders shipped to certain states. Isn't that a relief? No more stressing about manually figuring out tax processes for every transaction in those states.

But what about the other states? Sadly, the landscape changes when it comes to other states where Amazon doesn't assume the role of a facilitator. In these jurisdictions, sellers are responsible for the entire sales tax process. They must fulfill their duty accordingly to avoid any legal issues.

You can refer to this table for more information to find out which countries are covered by Amazon's marketplace legislation.

What Makes FBA the Most Complex Aspect for Sales Tax?

Sales tax is a topic that affects every ecommerce retailer, regardless of their size. But when it comes to Amazon FBA, the realm of sales tax can become more intricate and demanding compared to other retailers.

Amazon FBA offers numerous advantages, such as storage, packaging, and shipping services, allowing you to focus on their products and customer experience. But the convenience of FBA also brings with it a complex web of sales tax obligations that businesses must unravel.

Let’s start with the concept of Nexus. It refers to an Amazon seller's connection or presence in a particular state. With FBA, sellers often store their inventory in Amazon’s fulfillment centers across various states. This physical presence in multiple states can trigger sales tax obligations in those jurisdictions, even if the seller is based in a different state.

Another one is the dynamic nature of inventory movement within Amazon’s FBA network. Inventory may be transferred between fulfillment centers to optimize storage and shipping efficiency. While this benefits sellers in terms of logistics, it adds intricacy to sales tax compliance since the movement can impact the specific jurisdictions where sales occur.

Regulatory changes can also indicate an ongoing challenge for FBA sellers. Sales tax laws and regulations are not static; they often undergo state, country, and local modifications. These changes encompass new tax rates, adjusted thresholds, or revised exemptions. Staying updated and ensuring compliance can be demanding.

Let's not forget about physical products or tangible personal property. Sales tax obligations typically apply to the sale of physical goods, which is true for many products sold through Amazon FBA. Determining the correct sales tax rates and taxability of each item can be a lot, mainly when exemptions or special rules apply to certain things.

Navigating these hurdles requires a proactive approach to streamline sales tax management. The question now is, how will you rise to the challenge and stay on top of your tax responsibilities?

4 Sales Tax Compliance Software for Amazon Sellers

Managing Amazon sales tax compliance can quickly become overwhelming and prone to errors. Fortunately, there are solutions available to simplify the process.

You can now leverage sales tax automation software that integrates with your Amazon account. These nifty solutions take the burden off your shoulders by automatically calculating the appropriate sales tax for each transaction based on the customer's location and applicable tax rules.

As promised, here are four tax software options for Amazon sellers like you:

1. TaxJar

Key Features
  • Automatic Sales Tax Calculations
  • Transaction Tracking
  • Process/Workflow Automation
  • Free VAT Audit
  • Nexus Insights
  • PricingSubscription-based pricing, with plans starting at $19/month
    Sales ChannelsIntegrates with major ecommerce platforms, including Amazon, Shopify, Etsy, and Paypal
    Tax Filing and ReportingUses TaxJar Autofile, a built-in technology that can electronically submit sales tax returns directly to the respective tax authorities.
    Customer SupportOffers customer support via email and phone

    One of the most challenging tasks in sales tax rate computation is the first step—knowing which jurisdiction's sales tax nexus you fall under. National and local tax regulations make sales tax more complicated. But you can skip these worries with Taxjar, as the software stores information from 11,000 states, provinces, and municipalities. 

    Amazon also has the Marketplace Tax Collection, so even the tax acquisition and remittance are made for you. Meanwhile, Taxjar lets you export sales data in a CSV file to complete your sales taxes and have it ready for your financial reports.

    2. Taxomate

    Key Features
  • Automatic Sales Tax Calculations
  • Accounting Software Integration
  • Data Capture and Transfer
  • Sales Management
  • Statement Reconciliation
  • PricingSubscription-based pricing, with plans starting at $12/month
    Sales ChannelsIntegrates with Amazon and other e-commerce platforms like eBay, Shopify, and Walmart
    Tax Filing and ReportingAccountants can import settlements as sales receipts into QuickBooks or Xero and match them against bank deposits from Amazon.
    Bookkeepers can generate quarterly and yearly tax reports and verify them against the form 1099-K sent by Amazon to the IRS.
    Customer SupportOffers customer support via email, chat, 1:1 onboarding

    Taxomate has you covered on your sales and income taxes. As your taxes are monitored, so is your inventory. You'll have data on best-selling products and when it is time for stock replenishment. 

    Once you purchase from Amazon and other ecommerce sites like Shopify and eBay, the details are automatically sent to Taxomate. Given that you have expanded your customers abroad and use a different currency, the multicurrency function of Taxomate will make tax computation and remittance easier.

    3. A2X

    Key Features
  • Automatic Sales Tax Calculations
  • Accounting Software Integration
  • Customizable Templates and Reports
  • Multi-Currency
  • Financial Analysis
  • Bank Reconciliation
  • PricingSubscription-based pricing, with plans starting at $19/month
    Sales ChannelsIntegrates with Amazon and other ecommerce platforms like eBay, Shopify, Walmart, BigCommerce, and Etsy
    Tax Filing and ReportingA2X tells you exactly how much sales tax was collected per bank deposit. 
    Customer SupportFAQs/Forum, Phone Support, Knowledge Base, Email/Help Desk, Chat, 24/7 (Live rep)

    Another reliable software that can track your ecommerce business operations is A2X. Unlike other software that focuses on taxes, A2X's coverage is broader. It serves as automated bookkeeping for your business, which removes the need for manual input and the risk of data inaccuracy. 

    Amazon FBA and sales tax assistance are made possible because the software monitors FBA inventory locations and the destination of orders. These two details are the basis of sales tax rates. Because of the historical data available on the software, you can also check trends on sales tax and your business as a whole. 

    4. HelloTax

    Key Features
  • Automatic Sales Tax Calculations
  • Turnover Tracking
  • Threshold Limit Monitoring
  • Live Data Validation
  • Deadline Notifications
  • Quality Control
  • Tax Letter Inbox
  • PricingSubscription-based pricing, with plans starting at 39€/month
    Sales ChannelsIntegrates with Amazon and other ecommerce platforms like eBay, Shopify, WooCommerce, CDiscount, and Magento
    Tax Filing and ReportingOnce your accounts are connected, and sales data are uploaded, HelloTax will organize your transactions and prepare reports. 
    They will handle the filing of your VAT returns in the countries of your choice and take over communication with the tax authorities. 
    All the necessary information and deadlines will be accessible to you on your dashboard.
    Customer SupportFAQs/Forum, Phone Support, Knowledge Base, Email/Help Desk, Chat, 24/7 (Live rep)

    Your customers might be from countries that pay VAT, so it pays to know about it and how it is implemented. HelloTax helps you comply with requirements by offering features tailored to VAT calculations, reporting, and compliance. 

    Various EU countries and some provinces in Canada can benefit from this tax information reporting software. Most have distinct VAT systems and regulations requiring careful attention.

    Unloop: Your Trusted Partner in Sales Tax and Accounting

    Navigating taxes, whether for local or international sales, can be a complex undertaking. You must understand how much tax is owed in each country or the recent changes in guidelines. But fear not; we're here to help!

    At Unloop, we understand your challenges as an Amazon seller, so we've curated a list of exceptional software solutions to make your tax troubles a breeze. These innovative applications enable you to accurately calculate tax rates based on specific regions where your products are sold, simplifying the compliance process like never before.

    But our support doesn’t stop here. We’re here to handle all your financial management needs through our reliable and efficient sales tax preparer services. You can focus on the bigger picture of your business while we handle the nitty-gritty of Amazon tax management.

    Let us be your reliable partner in conquering the complexities of Amazon sales tax. Book a call now!

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    About unloop

    Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.