Sales Tax Integration For Auction eCommerce Platforms

The early days of retail and auction eCommerce on the internet had a more “wild west” feel, with very few businesses properly charging sales tax. Shopping online could be a considerably cheaper experience than brick-and-mortar options if the online retailer wasn’t collecting taxes for the items...and most of them weren’t.

The last few years have seen a considerable uptick in the collection of taxes for online shopping. Government agencies—both national and local—are much more likely to exercise the power they have when policing the collection of taxes.

That reach will continue to expand as the word gets out: “Collect proper taxes during eCommerce transactions, or be held accountable.” Businesses that once thought they could slip under the radar are coming to realize that it’s just not an option anymore. So if you need to collect sales tax and create related reports, why not make it easy on yourself and your staff?

Why Sales Tax Changes

Wouldn’t it be easy if you could simply charge 5% sales tax for every transaction and be done with it? It’s never going to be that easy, which is why it’s so important to incorporate software that can calculate sales tax at every level.

• By State – Fifty states in the United States means that you’re dealing with (at least) 50 different eCommerce tax rates.
• By Country – If you’re selling internationally, you’ll want to automate your sales taxes so that it’s up to date according to that country’s laws. This includes additional taxes such as value-added taxes (VAT), customs, duties, and tariffs.
• By Buyer – Some buyers may be tax-exempt, which means you’ll need some way to verify their tax-exempt status.
• Drop Shipping – You might not have the item in hand, so what part does your state, country, or district play in how much tax is collected? And how are taxes handled in the area where the item is being drop shipped from?
• Buyer Address vs Shipping Address – If the home office orders items for a subsidiary or franchisee, is tax charged according to the home office’s state or the state the item is being shipped to?

Accurate, Real-Time Sales Tax

Taxes are constantly changing at every level, and unless you are only selling locally—which is unlikely for auction eCommerce businesses—it takes some serious software to ensure tax information is kept up to date.

When looking for an auction platform developer, it’s vital that you look for a company that has previous experience properly incorporating tax APIs into your auction software. You don’t want to drop the ball when it comes to legal subjects like taxes.

What’s Best for Your Users?

When creating the tax page of user dashboards, you want to make it easy to navigate. No one wants to spend any more time on a tax page than they absolutely have to, so be sure to find a design solution that makes the process as intuitive as possible.

If you don’t already have a tax reference page on your platform, one of the easiest ways to find out what works best is to consult similar pages on your competitors’ pages, especially the biggest players in eAuctions. Of course, if you work with an experienced auction software developer, you can employ their design experience with tax pages to make it simple for users.

What Sales Tax Pages Should Deliver

Exactly what your customers are looking for in a tax page will partly depend on your industry. But no matter what industry you’re a part of, it’s important for sales tax pages to quickly deliver information that your users are looking for. This should be a combination of self-service and automated delivery so that members of your staff only have to deal with edge cases, not day-to-day tax information.

• Real-Time Numbers – A user of your platform should be able to access the sales tax they’ve been charged at a moment’s notice, up to and including an auction they paid for just minutes before.
• In-House Accounting – Users of your site, whether buyers or sellers, will appreciate a sales tax page that makes life easier for their in-house accountants
• CPAs – When your customers are paying a professional certified public accountant by the hour, it’s best to give them the most straightforward tax reports possible.
• Downloadable Reports – Just seeing the numbers on screen won’t always help. Instead, reports should be downloadable in multiple formats, including PDF, Excel, QuickBooks, Sage, etc.
• Emailed Reports – Even if you’re not legally required to send out sales tax reports, you can let users decide how often they can have them emailed. These reports are often sent via email with a link back to your site, letting them know, for example, “You Fall 2022 report is ready.”
• Automated Mailing – If you are required to send physical sales tax reports, you’ll save a lot of effort if your online auction software can aggregate the information into a file that can then be sent to a printer and mailer.

We’ve mentioned it before, but it’s worth repeating: Your eAuction platform should be as automated and self-service as possible. The more users can do for themselves—and the more useful information your platform sends them unprompted—the less your staff will have to address these repetitive tasks.

Self-Service and Automation

Implementing a robust sales tax reporting system for your auction platform might be a legal requirement, but it’s also a way to treat your buyers and sellers right. Once they see how easy it is to use your platform, and the cutting-edge advantages it offers, you’ll bring them back again and again. Being the best is the fastest way to become an industry leader.

Clarity Ventures is a leader in creating auction platforms, and we want to share what we’ve learned from our experience. Our website is filled with dozens of articles about eAuction topics, and our auction YouTube channel has more than 30 videos on every nuance of auction eCommerce.

We also offer a complimentary discovery process, where we’ll bring experts to the table to help you make a plan. It doesn’t matter whether you’re creating your eCommerce auction platform from scratch or are updating an old one, we’ll help you figure out the next best steps. Get in touch for some free expert advice.