SaaS sales tax compliance

Growing your SaaS business across state lines means facing increasingly complex sales tax rules. Figuring out where you owe taxes, understanding confusing regulations, and keeping up with constant changes can be a huge headache.

TaxValet simplifies the process with expert guidance and tailored solutions. We'll analyze your business, determine your exact obligations, and create a plan to ensure you're always compliant, so you can focus on scaling your business, not navigating sales tax complexities.

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300+ fast-growing brands trust TaxValet to save an average of $301,496 in audit costs

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Protecting your SaaS business from audits, penalties, and lost profits starts with getting sales tax right

Clarifying the ambiguity of your SaaS product sales tax

Figuring out where your SaaS business needs to collect and pay sales tax can be a real headache. Many state laws were written before SaaS even existed, leaving businesses to navigate a gray area of outdated regulations and unclear definitions.

Here's why you need expert guidance:

  • Outdated laws, modern technology: States often struggle to keep pace with technological advancements. Applying laws designed for traditional software to cloud-based SaaS offerings creates ambiguity and uncertainty, leaving you vulnerable to misinterpretations and potential liabilities.
  • No "one-size-fits-all" answer: The taxability of your SaaS product depends on various factors, including its specific features, functionality, and how it's delivered to customers. A simple "yes" or "no" answer rarely applies.
  • Risk of inaccurate assumptions: Making assumptions about your product's taxability based on general information or outdated guidance can lead to costly mistakes. Under-collecting or over-collecting sales tax can result in penalties, back taxes, and even damage your customer relationships.
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Keep your SaaS sales tax billing data clean and compliant

Managing your SaaS billing data is critical for accurate sales tax compliance. But with subscription changes, usage-based pricing, and integrations with various platforms, ensuring everything is correct can be a headache.

Here's why you need expert guidance:

  • Subscription changes and prorated billing: Upgrades, downgrades, and cancellations can create complex sales tax calculations, especially when dealing with prorated billing periods. Mistakes here can lead to inaccurate reporting and potential penalties.
  • Tax collection errors: Getting your billing system right from the start is critical. If it's not collecting complete and accurate data, you risk major headaches down the road. Think inaccurate sales tax collection, time-consuming manual fixes, and even increased liabilities – not a good look for any SaaS business.
  • Integration challenges: Ensuring seamless data flow between your billing system (e.g., Stripe, Recurly) and your sales tax platform is essential for accurate compliance. Many solutions struggle to integrate seamlessly, leaving you with manual workarounds and potential data gaps.

The hidden nexus triggers of remote workers and data

In today's world, many SaaS companies operate with remote teams and cloud-based infrastructure. While this offers flexibility and efficiency, it also introduces unique sales tax considerations.

Here's why you need expert guidance:

  • Remote employees and contractors: Do you have developers, customer support agents, or other team members working from home in different states? Even if you don't have a physical office in those states, their presence can trigger physical nexus, creating a sales tax obligation.
  • Data storage locations: Where are your servers and data centers located? The physical location of your data can also trigger nexus, even if your primary business operations are elsewhere.
  • Software oversimplifies nexus: Most sales tax software focuses primarily on your main business address and sales volume, often overlooking these nuanced nexus triggers. This can leave you non-compliant and exposed to penalties.
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How your invoices are worded could trigger an audit

You might not think twice about the language on your invoices, but auditors do. The way you describe your SaaS services, the line items you include, and even seemingly minor wording choices can significantly impact your sales tax liability.

Here's why you need expert guidance:

  • Auditors look for clues: Auditors are trained to scrutinize every detail, looking for any indication that you might be under-reporting or misclassifying your services. Ambiguous language or inconsistent terminology can raise red flags and lead to deeper investigations.
  • State laws vary: Taxability rules for SaaS differ across states, and certain phrases or descriptions might be interpreted differently in various jurisdictions. What's considered non-taxable in one state could trigger an obligation in another.
  • Software can't offer guidance: Sales tax software focuses on automation and calculations, but it can't provide the nuanced guidance needed to ensure your invoices are compliant and audit-proof.

Raising capital or selling your SaaS? Don't let sales tax be a deal breaker

Investors and buyers scrutinize every detail, and sales tax compliance is no exception. Unresolved liabilities or inconsistencies in your compliance history can raise red flags, delaying deals, reducing valuations, and even causing deals to fall apart entirely.

Here's why you need expert guidance:

  • Due diligence deep dive: Potential investors and acquirers will thoroughly investigate your sales tax records, looking for any signs of risk or past mistakes.
  • Hidden liabilities can surface: Even seemingly minor compliance oversights from the past can become major deal breakers during due diligence, leading to costly negotiations or even the collapse of the deal.
  • Valuation impacts: Unresolved sales tax liabilities can significantly reduce your company's valuation, costing you thousands or even millions of dollars in potential investment or sale proceeds.
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How TaxValet helps SaaS businesses like yours

Our team of sales tax experts will partner with you to understand your unique offering, growth plans, and compliance concerns, then create a customized plan to ensure accurate, efficient, and stress-free sales tax compliance.

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SaaS product taxability

  • We analyze your specific SaaS offering, considering its features, functionality, and delivery method, to determine its taxability in each state.
  • We stay up-to-date on the latest rulings and interpretations of SaaS tax laws, ensuring accurate compliance, even as regulations evolve.
  • We provide clear and concise explanations of complex taxability rules, helping you understand your obligations and make informed decisions.

SaaS billing data management

  • We look into your billing and subscription platforms, ensuring accurate sales tax calculations for every transaction, including upgrades, downgrades, cancellations, and prorated billing.
  • We handle the complexities of usage-based pricing models, accurately calculating and reporting sales tax based on actual usage.
  • We streamline your data processes, minimizing manual intervention and maximizing accuracy, so you can focus on building your business, not managing spreadsheets.
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SaaS nexus determination

  • We go beyond basic software checks to identify all potential nexus triggers, including remote employee and contractor locations, data storage centers, and other SaaS-specific factors.
  • We analyze your business operations and contracts to ensure you have the necessary permits in every state where you have nexus, minimizing your risk of penalties.
  • We proactively monitor your business growth and expansion, keeping you informed of any changes to your nexus obligations and helping you stay compliant.

SaaS invoice review

  • We meticulously review your invoice structure and wording, ensuring they comply with relevant sales tax regulations and minimize your audit risk.
  • We help you clearly differentiate taxable and non-taxable services, use consistent terminology, and avoid language that could trigger unnecessary scrutiny from auditors.
  • We provide ongoing guidance and support to ensure your invoices remain compliant as your business and offerings evolve.
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Exit planning support for SaaS

  • We provide detailed documentation and a proven track record of sales tax compliance, giving potential buyers and investors the confidence they need during due diligence.
  • Our proactive compliance management identifies and resolves any historical liabilities, protecting your business valuation and maximizing your chances of a successful transaction.
  • We'll act as your point of contact for sales tax-related inquiries during due diligence, ensuring a smooth process and minimizing distractions for your team.

Your Fractional Sales Tax Department

Our comprehensive service ensures that every aspect of your SaaS sales tax compliance is accurate, efficient, and stress-free.

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SaaS nexus determination and review

Unsure where you need to collect sales tax for your SaaS product? We analyze your business activities, including remote workforce, data storage, and sales transactions, to determine your exact nexus obligations in every state.

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SaaS sales tax audit defense

Don't let a sales tax audit disrupt your SaaS operations. Our expert team will guide you through the entire process, minimizing your liability and protecting your business.

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SaaS sales tax strategy and planning

Develop a proactive sales tax strategy that aligns with your SaaS growth plans. We'll help you create a customized plan that minimizes risk, optimizes costs, and ensures compliance across all your operations.

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Dedicated SaaS sales tax expertise

Get personalized guidance and support from a dedicated team of sales tax experts who understand the unique challenges faced by SaaS businesses like yours.

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Expanding your SaaS to the U.S.? Get sales tax done right

As an international SaaS company selling into the U.S. market, you face unique challenges navigating the complex world of state sales tax regulations. From establishing a U.S. bank account for payments to obtaining necessary identification numbers and understanding varying state requirements, compliance can feel overwhelming. TaxValet specializes in helping international SaaS businesses like yours overcome these hurdles.

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Comprehensive compliance and unlimited growth without any of the risk

TaxValet's 360° approach to sales tax management ensures accurate compliance and audit readiness. Unlike software with limited guarantees, our “Sleep Easy” triple guarantee protects you in every scenario, with no extra charges as your business grows.

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30 day risk-free

If in the first month you don't think we’re the best solution for your sales tax hassles, you don’t pay.

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360° Audit-protection

If you ever go through an audit and we mess up, we cover all your costs.

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Unlimited transactions

Unlike software, we guarantee no extra charges for additional transactions as you grow.

 

Get your SaaS sales tax experts on your side

Schedule a call to see how TaxValet can create a custom plan to reduce your online sales tax risks, save you money, and give you peace of mind about compliance across all your channels.

"We were no longer stressed over keeping up with constantly changing regulations across states and jurisdictions. We had confidence that we were compliant, with filings completed accurately and on time, every time. Their solution gave us the freedom to scale without sales tax headaches slowing us down."

— Meryl J.

"There is no substitute for being able to talk to a competent tax professional in the ecommerce space… TaxValet has made compliance as easy and human as possible, which is significant given I have economic nexus in 29 states."

— Daniel Whitehouse

"Tax Valet has made the process easy for getting sales tax nexus set up in many different states. They take that burden off my hands and it frees me up to be able to run my business."

— Laura Woellner

Get your free, personalized sales tax roadmap

During your free consultation, we'll cover:

😵‍💫 Notices, back-taxes & other sales tax messes: to help you stop the bleeding, minimize liabilities, and regain control over your sales tax situation.

😱 The biggest sales tax risks for YOUR business: to identify your specific vulnerabilities, so you can prioritize compliance efforts and proactively protect your business from audits.

😡 How to eliminate sales tax software : to address the limitations of software and ensure accurate, reliable compliance moving forward.

 

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