Staying on top of sales tax — calculating and collecting correct sales tax amounts and then remitting those amounts to the relevant tax authorities — can be incredibly challenging, especially for businesses that are growing rapidly. And things are even more complicated for e-commerce brands and software-as-a-service businesses.
They have to accurately determine how much sales tax to charge and what products to charge sales tax on, and then they need to figure out how to register, file, and remit sales taxes in thousands of jurisdictions all over the country, or perhaps the world.
And noncompliance with tax laws can have serious consequences. That’s why using the right sales tax tools is important. The proper sales tax tool can turn something tedious and daunting into something that requires only minutes every month.
Two of the most popular sales tax compliance tools on the market right now are TaxJar and Anrok. TaxJar works with many different types of businesses, including e-commerce and SaaS, whereas Anrok focuses solely on SaaS.
Both tools aim to simplify the complexities of sales tax, and both are designed with business owners in mind. In this article, we’ll delve into everything you need to know about these two commonly used sales tax solutions, and we’ll introduce a third option that is worth considering.
What is TaxJar?
TaxJar is a very popular ecommerce sales tax compliance software. It’s designed to automate almost everything related to sales tax, including calculations, filings, and compliance processes. This has made it a go-to for many businesses.
Core features of TaxJar
TaxJar has a wide range of capabilities designed with business owners in mind, such as:
- Sales tax compliance: Automatically determines which jurisdictions require tax collection based on your sales activity and ensures compliance with local regulations.
- Sales tax calculation: Provides accurate, real-time tax rate calculations for every transaction based on location and product type.
- Nexus tracking: Helps businesses track where they have sales tax nexus, a critical factor in compliance as businesses expand their geographic reach.
- Filing and remittance: Automates the preparation and submission of tax returns, as well as the remittance of taxes to the appropriate authorities.
- Exemption certificate management: Stores and tracks exemption certificates, ensuring compliance during audits and reducing administrative burdens.
Another important feature of TaxJar is its ability to integrate with a wide range of billing platforms. This gives business owners a one-stop sales tax solution when selling across multiple platforms. Out of the box, TaxJar can integrate with popular platforms such as Shopify, WooCommerce, Amazon, Etsy, BigCommerce, and Magento. TaxJar can also integrate with popular accounting software such as QuickBooks and Xero, making bookkeeping a breeze, too.
TaxJar also has an API that allows for custom integrations. This means that no matter what software your company uses to sell products or keep its books, you can rest assured knowing that TaxJar can integrate with your systems.
Pricing and getting started
Like many products in the sales tax compliance space, TaxJar has a tiered pricing structure that’s designed to work with businesses of all shapes and sizes. Pricing is dependent upon the volume of transactions that customers see, and there are two plans. Their Starter plan starts at $19 per month, and their “Professional” plan starts at $99 per month. These plans cover 200 orders per month. For businesses that have more than 200 orders per month, there are additional fees.
Who is TaxJar best for?
TaxJar is a great choice for e-commerce businesses that sell on multiple platforms. The out-of-the-box integrations that TaxJar offers make adopting and deploying it a breeze. However, TaxJar is designed with small and midsize businesses in mind. If you run a larger enterprise, then you’re probably better off with an enterprise-grade sales tax compliance solution.
Reviews and insights
Overall, TaxJar has some mixed reviews. Their Shopify app has roughly 100 reviews and only has a three-star rating (out of five stars), with many users complaining about customer service. However, TaxJar has 4.4 stars (out of five) based on more than 75 reviews on Capterra, with users saying that the program was easy to implement. This indicates that using their Shopify app might be a little tricky, but there’s a good chance you’ll have a good overall experience with the company.
What is Anrok?
Anrok is a very popular sales tax solution designed with SaaS companies in mind. It is especially popular among startups looking to outsource compliance.
Unlike many competitors, like Avalara, that are more general-purpose solutions, Anrok is built to address the unique problems faced by SaaS companies. The SaaS space is constantly changing, especially in terms of sales tax, and Anrok is focused on growing and changing with this space.
Core features of Anrok
Anrok’s features were designed to provide SaaS businesses with the tools and techniques that are needed to navigate the complexities of SaaS sales tax, such as:
- Sales tax compliance: Ensures that businesses remain compliant with varying state laws that govern taxation of software and subscription services.
- Sales tax calculation: Provides accurate, real-time calculations that account for the unique rules applied to SaaS products, including tiered taxation and exemptions.
- Nexus tracking: Monitors where a business has established nexus, based on customer locations and revenue thresholds, which are especially critical for subscription-based models.
- Filing and remittance: Automates the preparation, filing, and remittance of sales tax returns, reducing administrative burdens and ensuring timely submissions.
- Exemption certificate management: Tracks and validates exemption certificates for B2B customers, ensuring compliance while streamlining the sales process.
Much like TaxJar, Anrok has the ability to integrate with the other software that your business relies on. Anrok comes with no-code integrations for billing platforms such as Quickbooks, Stripe, Xero, Chargebee, Recurly, and Chargify. It also has no-code integrations for payroll and HR systems such as Rippling, Gusto, and BambooHR (important when it comes to tracking physical nexus).
And like many players in the space, Anrok provides API support, so no matter what systems your company uses, you can integrate Anrok into your stack. This makes Anrok incredibly flexible and implementable at pretty much any SaaS company.
Pricing and getting started
Anrok offers only custom pricing tailored to a business’s size, transaction volume, and specific requirements. So you’ll need to book a demo with an Anrok representative to learn about pricing. However, there are three main plans; Starter, Core, and Growth. It’s important to mention that you will not receive API technical consultations if you go with the Starter plan!
While Anrok no longer publicly discloses pricing, using Wayback Machine, we are able historical pricing for the above-mentioned tiers:
Who is Anrok best for?
Since Anrok is designed specifically with SaaS businesses in mind, it’s the ideal choice for companies that sell subscription-based products. It’s particularly valuable for businesses that operate in multiple states or internationally, as this is often when sales taxes become the most confusing, regardless of the type of business you’re running.
Reviews and insights
Overall, Anrok has very good reviews online; its score on G2 is 4.5 stars (out of five), based on more than 150 reviews. Existing customers seem to be huge fans of how easy the product is to use, the level of customer service they receive, and the integrations that are offered.
Numeral: A third option to consider
Although TaxJar and Anrok are great options for sales tax compliance, Numeral is a more versatile alternative that bridges the gap between these two tools.
Numeral is designed to serve businesses of all shapes and sizes that sell both products and services. This makes it a great choice for companies that have hybrid business models (or may in the future).
How does Numeral compare with TaxJar and Anrok?
Numeral provides similar services and has many of the same features as TaxJar and Anrok, including:
- Sales tax compliance and calculation: Handles real-time tax rate calculations and ensures compliance across jurisdictions.
- Nexus tracking and filing: Tracks nexus and automates the preparation and submission of tax returns, providing end-to-end compliance.
- Cross-platform compatibility: Integrates with a wide range of platforms, including e-commerce systems like Shopify and subscription billing platforms like Stripe, making it versatile and useful for e-commerce businesses and SaaS businesses.
Additionally, the user-friendly interface, adaptable features, and top-notch customer service make Numeral incredibly easy to integrate into your stack. This makes it a great choice for small and midsize businesses that are looking for both ease of use and flexibility.
Pricing and getting started
Numeral’s pricing is straightforward and doesn’t have any hidden fees, so you don’t have to worry about calculating your monthly cost based on how many orders you receive.
Instead, Numeral charges a flat fee of $150 to register your business in a particular state. For context, TaxJar charges $299 per registration. Once your business is registered, Numeral charges a flat fee of $75 per filing, regardless of your company’s revenue or how many orders it receives.
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Which sales tax compliance tool is right for me?
Unfortunately, there isn’t really a clear choice when it comes to choosing the right sales tax compliance tool. The product that works best for you is going to depend on a lot of things, like your own personal preferences, your company’s structure, and how much business your company does.
Generally speaking, TaxJar is a great choice for e-commerce companies, and Anrok is great for SaaS companies.
However, if you’re looking for a solution that works with both types of business models, then Numeral is probably right for you. Numeral is a flexible alternative, allowing you to operate a hybrid business model with ease, or simply leave the door open for future expansion. If you are looking for additional options, you may want to compare Avalara and Anrok, too.
