TaxCloud vs TaxJar: What are the differences?

Introduction

TaxCloud and TaxJar are two popular online sales tax software solutions that help businesses automate and manage their sales tax calculations, filing, and reporting processes. While both platforms offer similar features, there are key differences between TaxCloud and TaxJar that make each platform unique and cater to different business needs.

1. Pricing Model:

TaxCloud operates under a transaction-based pricing model, which means that businesses only pay for the sales tax calculations and filings they actually use. On the other hand, TaxJar offers various pricing plans based on the number of transactions, revenue, or API requests, providing flexibility for businesses with different levels of sales volume.

2. Supported States:

TaxCloud is fully certified in all U.S. states that have a sales tax, making it a comprehensive solution for businesses operating nationwide. TaxJar, while also supporting a wide range of states, may have limitations or requirements for businesses operating in certain states, such as obtaining separate accounts or licenses.

3. Nexus Requirements:

TaxCloud requires businesses to have a physical presence (nexus) in states where they want to calculate and remit sales tax. This means that businesses without physical presence may not be able to use TaxCloud for all jurisdictions. TaxJar, on the other hand, offers a feature called "SmartCalcs API" that allows businesses to calculate sales tax in any U.S. state, regardless of physical presence.

4. Integration Options:

TaxCloud offers integrations with various e-commerce platforms, shopping carts, and other third-party software, making it easier for businesses to integrate their sales tax calculations seamlessly into their existing workflow. TaxJar also offers integrations, but it may have more limited options compared to TaxCloud.

5. Real-time Sales Tax Calculation:

TaxCloud provides real-time sales tax calculation, allowing businesses to accurately calculate the appropriate sales tax amount for each transaction based on the latest tax rates, rules, and exemptions. TaxJar also offers real-time calculations, ensuring accurate tax determination for businesses and their customers.

6. Filing and Reporting Support:

TaxCloud supports businesses in filing and remitting their sales tax to the relevant tax authorities. They handle the required paperwork and generate reports to simplify the reporting process. TaxJar also provides filing and reporting support, but businesses may need to choose a higher-tier plan or use additional services to access advanced reporting features.

In summary, TaxCloud and TaxJar offer similar features for sales tax management, but differ in pricing models, supported states, nexus requirements, integration options, real-time sales tax calculation, and filing/reporting support. Businesses should evaluate their specific needs and consider these differences when choosing the right sales tax solution for their operations.