TaxJar vs. Avalara: How to Pick Between the Two

The right tools can make this process easier. TaxJar and Avalara are two popular software solutions. Both streamline the process of calculating and collecting sales tax, as well as filing sales tax returns and remitting the taxes owed. However, there are important differences between the two products. 

This TaxJar vs. Avalara review can help you to decide which solution is best for you, given the size and scope of your operations, as well as the industry you operate within. 

What is TaxJar?

‍TaxJar is a cloud-based software solution that automates every aspect of sales tax compliance in a single streamlined platform. The program is ideal for multi-channel sellers and growth-minded businesses that want to incorporate AI to remove the administrative burden caused by sales tax collection and remittance. 

TaxJar offers specialized solutions for companies in specific industries, including retail, medical, food and beverage, ecommerce brands, and SaaS. Designed for small to midsize businesses, TaxJar's platform can be easier to use than Avalara's, but Avalara can accommodate larger company sizes and offers more pre-built integrations. 

Key Features

TaxJar automates every aspect of the sales tax lifecycle. Some of the key features the software offers include:

• Sales Tax Compliance: TaxJar enables companies to follow sales tax rules across 11,000 jurisdictions by calculating the correct tax rate for all products, auto-filing tax reports by local deadlines, and remitting the correct amount of funds due for each state.
• Sales Tax Calculation: You can connect your eCommerce or ERP platform to TaxJar in minutes to enable real-time calculation of local tax rates. Sales taxes are calculated instantly so customers can view them in their cart in real-time, with the correct amount determined based on the state, county, and district where your customer is making a purchase.
• Nexus Tracking: Each state has different thresholds and qualifications that determine when you establish an economic nexus and must begin remitting sales tax. TaxJar helps you track when you're close to meeting the threshold. You'll receive real-time alerts and can track your data in the Economic Nexus Dashboard. 
• Filing and Remittance: After you enroll in each state where you must submit a sales tax return, TaxJar takes care of filing that return for you. TaxJar's AutoFile uses data from your eCommerce or ERP system to prepare and submit an accurate return by the deadline, along with the required remittance or payment. 
• Exception Certificate Management: TaxJar allows Professional Sellers to upload and store exemption certificates, including resale certificates. These make it possible to attest that you're tax-exempt or are purchasing an item to use for a tax-exempt purpose. 

Available Integrations

TaxJar offers pre-built integrations with popular eCommerce platforms so you can integrate your platforms with the program in minutes. Integrations are configurable from the TaxJar dashboard. Some of the platforms you can integrate with include:

• eBay
• Etsy
• Quickbooks
• Shopify
• Square
• Walmart

TaxJar API also allows you to build your own integrations and offers detailed documentation and open-source clients to make that possible. 

Pricing

TaxJar offers multiple pricing plans to meet your needs:

• Starter: Beginning at $19 monthly, the Starter Plan includes 200 orders per month and up to three data-import integrations.  A single user has access, and you get four free AutoFiles annually, although you can pay for additional filings. You are limited to email support. 
• Professional: Professional begins at $99 monthly for the Professional 200 Plan, which also includes 200 monthly orders. The plan offers 10 total integrations, real-time sales tax calculations, and access for multiple users with their own defined roles. It also includes an Economic Nexus Insights tool with proactive notifications, as well as 12 free AutoFiles annually. You'll get priority email support and phone support with this option, although phone support is only available with the Professional 1K Plan or higher. 

Reviews

TaxJar received mixed reviews, earning a rating of three out of five stars among over 100 users on Shopify. Most of the negative reviews complained of poor or non-existent customer support, while the positive reviews praised the automation of compliance obligations, as well as the quick and easy setup. 

Who is TaxJar Best For

TaxJar is best for smaller businesses within the industries the software is targeted towards, including retail, medical, food and beverage, digital goods, and SaaS. The simple platform, limited learning curve, and affordable price ensure that small businesses will get good value from the cloud-based software solution. 

What is Avalara?

Alvara offers a suite of cloud-based tax compliance software solutions that can help your company manage sales and use tax; property taxes; occupancy taxes; and cross-border taxes. 

The company offers specialized solutions for a wider variety of industries than TaxJar, including manufacturing, retail SaaS, hospitality, short-term rentals, accounting firms, communications, government and public sector, and supply chain and logistics. Its sales and use tax solutions are designed for businesses of all sizes, and it offers more than 1,200 integrations, which is more than many competitors. However, it does come with a steeper learning curve.

Alvara's full-featured software tools automate all aspects of sales tax compliance, from calculating taxes due to collecting and accessing exemption documents to preparing and filing returns and remitting taxes due. However, while entry-level costs are low, prices rise quickly when using additional services. 

Key Features

Alvara offers automated sales and use tax compliance for online sellers across multiple industries. Some of the key features offered include the following. 

• Sales Tax Compliance:  Alvara offers an automated solution to sales tax compliance. You can select which services you want to pay for, with the option to manage every step from calculating to remitting taxes or to choose specific services you need assistance with.
• Sales Tax Calculation: Alvara calculates state and local tax rates based on address rather than just relying on zip code rates which can be less accurate. Using a system of advanced rules, Alvara ensures that the correct tax code can be applied to each product sold. 
• Nexus Tracking: Alvara offers a variety of tools for nexus tracking, including an in-depth evaluation of your economic and physical nexus obligations. You'll also get real-time alerts when you're approaching the economic nexus threshold, so you'll know when you need to register. 
• Filing and Remittance: Alvara prepares reports for you and also offers automated filing as an option. The software solution provides an automated filing calendar and will verify information across sales platforms to ensure the correct information is included. You can also consolidate all tax payments into a single deposit, and Alvara will remit payments to each jurisdiction by the deadline.
• Exception Certificate Management: Exemption certificates can be uploaded via scan, email, or photo or using the online portal. Alvara will collect and store the documents, automatically exempting taxes when a certificate is present. The software will manage renewals. 

Available Integrations

Alvara has more than 1,200 pre-built integrations, which is more than many competitors.  Platforms you can integrate with include:

• Amazon
• Oracle
• Stripe
• Intuit Quickbooks
• eBay
• Etsy 
• WordPress

You can also design your own integrations with Alvara's powerful API solutions.

Pricing

Alvara Sales Tax Registration costs $349 per location. The company is not as transparent with pricing as TaxJar, and it charges extra fees for additional services, such as filing returns. 

Reviews

Alvara received 4.7 out of a possible five stars on Capterra, which is a site focused on helping companies select software. Comments on customer service were mixed, with some praising the support they received and others reporting difficulty getting the help they needed with setting up the platform or accessing its features. Positive reviews praise the Nexus tracking features, as well as greater accuracy than TaxJar for calculating taxes on the street level. 

Numeral is a Third Option to Consider

Alvara and TaxJar aren't the only options out there. Numeral provides a simple alternative that allows your business to spend less than five minutes monthly managing your sales and use tax obligations.

Numeral is run by operators and CPAs and offers a white-glove solution without the steeper learning curve of both TaxJar and Avalara. Sales tax registration costs half what Alvara charges, and you'll also benefit from transparent fixed fees with no monthly subscription required. You'll also benefit from services competitors don't offer, including reports on both sales taxes collected and sales taxes paid so you can determine if you're under-collecting taxes. 

While both Alvara and TaxJar received mixed reviews when it comes to customer service, Numeral also offers 24/7 support, providing the peace-of-mind that comes with knowing help is there when you need it.

You can book a free demo today with Numeral and there's no long-term commitment required, so contact Numeral today to see how simple sales tax management can be.

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Final Thoughts

Software is essential to make complying with sales tax rules easier. The right option for you will depend on factors like your budget, the services you need to take advantage of, and the industry you operate within. Check out customer reviews, features, and prices to decide which sales tax compliance program makes sense for your business.

And for ecommerce brands specifically, know that there are many other options to consider too.