Using SubscriptionFlow and Avalara to manage recurring billing

The subscription business model has long been in use, however, automation and high-tech tools have reinvigorated the power of this model. At present, the competition is fierce among the companies following the recurring billing business model. Also, the pandemic outbreak has speeded up the shift of different businesses to subscriptions.

Just like any other business model, the recurring billing model has its own challenges. One cannot overlook the fact that the customer comes to the retailer again and again, and some challenges arise just because of this recurrent sales and purchase process. Discrepancies in tax compliance are one of such challenges that subscriptions-based businesses have to deal with.

Additionally, it is more difficult to calculate the tax for digital products i.e. SaaS (Software as a Service) and find out where the tax liabilities lie. By the end of this article, you will know how SubscriptionFlow integrated with Avalara offers the best solution for recurring billing & payment processing and accurate tax compliance.

Also Read: How Do Tax Decisions Impact Business Strategy?

Taxing Digital Goods

Covid-19 has increased online sales and purchase, now, people are more into online buying than they were ever before. Within this short period of time digital supply chains also strengthened to balance increasing demands from the customer side. So, there was an evident need for an authenticated platform that businesses could use to calculate sales tax on recurring sales of their digital products. Even in the US, though there is no federal sales tax, different states tax digital goods and services differently. Some of them do not tax digital goods at all.

One of the major hurdles to tax the digital product is that it is intangible. SubscriptionFlow is a subscription billing automated software that integrates with Avalara to help recurring billing business communities to tax their customers accurately. With this integrated solution, you can manage subscriptions and offer accurate tax compliance.

Obedience of Tax Jurisdictions

Why tax calculation for SaaS products and services that customers buy recurrently is considered a taxing task? It is because of the complexities that arise because of the borderless nature of technology and changing tax jurisdictions in different states and countries. Technology has enabled businesses to reach out to diverse customer bases in different regions of the world, but it cannot make you an expert on tax jurisdictions for all these states.

However, subscription software integrated with Avalara can help you easily follow the tax jurisdictions in different states because it is a robust platform specially designed to offer maximum tax compliance even beyond borders.

Also Read: Best Of The Business Solutions Available At SubscriptionFlow Marketplace

Managing Tax Exemptions

Some customers are given tax exemptions, and Avalara empowers the subscription management software by integrating with it to manage these tax exemptions. Transactions that are exempted from tax depend on the rules defined in the jurisdictions and taxability of your SaaS product. The customer has to provide his tax exemption certificate to the retailer. The certificate expires with time. It is the responsibility of the retailer to maintain and manage the record of the certificate so that he may not miss taxing the customer after the certificate expires. Such discrepancies can cause a problem at the time of audit and companies are held liable to compensate for such inconsistencies. But when exemption certificates are automatically managed, the chances of odds are minimum.

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Avalara integrated with SubscriptionFlow helps to follow up the tax exemptions so that you can avoid any tax irregularities.

Also Read: An Incredible Variety of Integrations that SubscriptionFlow offers to SaaS Businesses

Updating Tax Rates

The amount of tax that your recurring customer is liable to pay depends on the following factors:

Customer’s location
The tax rate at that location
State laws

When it comes to tax rates, they change. It is not possible for a human being to keep the track of the rapidly changing tax rates in different states. However, Avalara integrated with SubscriptionFlow can easily do that for it is designed for this purpose. Within the past two years, in different states of the US, temporary sales tax exemptions were provided. You see, sales tax rates, rules, and regulations are not easy to predict.

Nonetheless, if you onboard an effective subscription handling software like SubscriptionFlow, you can easily handle unpredictable sales tax rates.

SaaS Sales Tax Checklist

Now that you know SubscriptionFlow integrated with Avalara can manage not only subscribers but also all your tax-related woes, you need to have a checklist so that the complex sales tax management process for recurring customers would be more understandable for you. There you go with your checklist:

Determine your location and see if SaaS products in your state are liable to pay sales tax for digital products or not.
Though automated software assists in keeping abreast of tax regulations, you need to understand all tax-related rules in your state.
Look out for those states where you have economic nexus (your connection with the state that will need you to register and collect the sales tax when you are doing business inside that specific state).
Calculate the sales tax (use SubscriptionFlow integration with Avalara for this purpose).
File and deposit your sales tax liabilities.
Always maintain a record of the deadlines when you need to file for tax returns.

Use this checklist to streamline the tax management process for your subscription business.

Also Read: Subscription Flow Announces Partnership with Avalara to Automate Sales Tax Management

In Conclusion

Businesses avoid using different software and automated platforms for miscellaneous business processes. It is not only because using many software is costly, but they would also need to be proficient to use all these applications. To avoid, all this hassle, businesses go for integrated business solutions. SubscriptionFlow integrated with Avalara is one such business solution that has a panacea to many subscription business problems.

If you are also willing to say goodbye to tax-related worries, then you need to call the SubscriptionFlow team to try the integration of Avalara with their recurring billing software. We assure you with this integration, you will no longer have to worry about subscription management, tax returns, sales tax jurisdictions that vary from state to state, continuously changing sales tax rates, and maintenance of transaction history.