AvaTax also offers automated filing of returns, with the system preparing and offering review of forms for all taxing entities, then handling the e-filing or mailing of hard copies, as well as the remittance of funds, all by the deadlines required for each jurisdiction. The system also includes tools for managing exemption certificates, helping reduce audit risk.
The backbone of the system is an extensive online database of rates and taxability rules, which is continually updated by Avalara’s staff at their offices in Seattle and nearby Bainbridge Island, Washington. The rates and rules are based on much more than just ZIP Code, but also using technologies such as their Geolocation Engine, which is similar to GPS, and can identify specifically where a sale occurs. This is important for mobile sales, such as window replacement services, locksmiths and caterers, and also valuable for those selling products to contractors, where a physical street address may not yet have been assigned.
Avalara even offers free sales tax rate lookups on their website (www.avataxrates.com), but the true value in AvaTax isn’t just the rates, but also having the system automatically perform rate and taxability lookups, and then freeing the business from all of the compliance functions. This can save hundreds of hours or more, allowing businesses to concentrate more on their specialty, instead of managing sales tax.
Integration: The Key to Avalara’s Growth
Since it was started by the trio of Rory Rawlings, Scott McFarlane and Jared Vogt in 2004, Avalara’s core focus was on making sales tax easier through integration. In its first year, the system provided integration with QuickBooks. Since then, company’s flagship product AvaTax has grown to integrate with virtually every accounting, point-of-sale and ERP system on the market, as well as with nine of the top ten ecommerce shopping carts. And it now has more than 350 staff, all located in the U.S. As a result, AvaTax is used by about 850,000 of the world’s top million ecommerce websites, either directly, or through OEM partnerships with services like Buck (www.singleclickcheckout.com; formerly Billing Revolution).
Avalara’s executive vice president Pascal Van Dooren noted that to serve the needs of this broad client base, which includes businesses in 45 countries, Avalara added support for VAT, and expects to grow their international presence to 61 countries by the end of the year.
“Our key focus is on continuing to serve the U.S. market, while also pursuing growth in Europe, perhaps with the addition of a European office by next year,” Van Dooren said. As of 2012, AvaTax performs more than 1.7 million tax calculations per day for over 10,000 businesses, and will file more than 500,000 returns this year.
Innovation: The Key to Avalara’s Future
In addition to pursuing new markets, entering into partnership agreements, and the 2008 acquisition of TrustFile, a sales tax compliance system that it continues to offer for businesses with less complex comprehensive needs, Avalara is developing new technologies for small businesses and accounting firms.
One of the most dynamic areas of sales and use tax is the rapid growth in mobile payment technologies, such as Intuit GoPayment, which allows retailers to easily accept and process credit and debit card transactions on their smart phones or tablet devices. Avalara worked with Intuit to integrate the Geolocation Engine into GoPayment, helping these on-the-go retailers keep in compliance with sales tax rules.
The company also recently partnered with MuleSoft to create the iApp4Tax app using the Mule iON platform, which connects with AvaTax and gives users automated processing of online orders and integration into ERP and ecommerce accounting systems, including QuickBooks Online, Oracle and SAP.
“Mule iON provides a great alternative to those customers who previously relied on custom integration code to access our sales tax solutions,” said Avalara CEO Scott McFarlane. “With iApp4Tax, many more customers can now quickly and easily access our advanced tax decision technology.”
Not Just Sales Tax – 1099 Automation, Too