Running a finance team in a rapidly expanding SaaS company brings a unique set of challenges, sales tax compliance often being one of them. While it may appear as a low-return task and end up at the back of the to-do list, it is a reality that uncollected sales tax from your customers could have you paying those taxes yourself further down the line, along with fines, charges, and interest. Typically, businesses hire and spend upward of $50,000 to $200,000 on consultants to manage security and compliance.
Here's the silver lining: tackling sales tax compliance is not as arduous as it may seem. Galvix is a managed sales tax compliance service: our team takes the work off your plate, so SaaS businesses save time and protect future revenue.
Navigating sales tax in the SaaS sphere
Sales tax compliance is an essential task for any business, but recent developments have made it particularly complex for SaaS companies.
With the digital economy on an exponential rise, governments worldwide are reshaping their tax policies to match the pace. Every US state with a sales tax (45 states and Washington, D.C.) requires remote sellers to collect it once they pass an economic nexus threshold, and many countries do the same. These laws are diverse, ranging from the specifics of tax rates to defining the amount of economic activity that prompts sales tax obligations. Additionally, digital products, like SaaS, are subject to varying definitions.
Unsurprisingly, this creates a challenging labyrinth of tax rules for businesses to navigate. As a SaaS company, it's imperative to understand where your customers are based, how your product is classified and taxed in each state, and whether you've hit the sales thresholds set by local governments to identify where you have sales tax obligations. The processes of collecting sales tax from customers, forwarding the collected tax to appropriate jurisdictions, and handling the associated paperwork can be overwhelming.
However, there is a more straightforward option for modern finance teams: hand the work to Galvix.
The Galvix approach to sales tax compliance
It starts with your transactions. Galvix connects to your billing system and brings in every transaction, so our team can see where you have nexus and what you owe. If you also want tax calculated on each invoice, the optional tax determination module adds the right sales tax to each charge in real time.
Yet, Galvix doesn't stop there. Once you collect sales tax from your customers, you must also submit those taxes to the relevant jurisdictions. Our team prepares and files your returns on your behalf each month, and you approve them with one click. That way, you are free from dealing with confusing government forms and complicated payment systems.
Moreover, being a SaaS business, your revenue tech stack should be equipped to accommodate the needs of a rapidly growing software company. Here's where the synergy between Galvix and your billing system comes into play, making the checkout-to-billing process more straightforward and giving businesses a comprehensive view of their sales tax exposure while automatically adding the correct tax to invoices.
Galvix understands that the unique aspects of SaaS business models can be challenging for some sales tax tools to manage, especially when the aim is to implement sales tax without causing friction in your checkout and billing processes. Galvix works with the billing systems SaaS companies use, and every customer gets direct access to our compliance team.
Getting started with Galvix
Getting started takes no coding.
Here is how it works:
- Connect your billing system so we can import your transactions and show you where you have nexus.
- Optionally, turn on tax determination so the right sales tax is added to your invoices in real time.
- Our team registers you in new states, prepares and files your returns, and handles state notices. You follow it all and approve returns in your Galvix dashboard.
Most Galvix customers spend 5 to 20 minutes a month on sales tax. Book a demo to see how it works.
Sales tax compliance need not be a burden on your SaaS business, with more finance leaders saying tax and compliance is an increasing priority. With Galvix as your compliance team, your business can focus on growth and innovation, and your finance team can spend its time on higher-return work. After all, the success of your business should not be overshadowed by the complexities of sales tax.
Experience Galvix today and see how it can simplify sales tax for your SaaS business.
