Automated Tax Solutions Help Subscription Businesses Go ‘Back to School’

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Best Practices e-commerce Tax

Best-practices_2x_yellow.pngFor most of us (okay, everyone in the northern hemisphere), summer is here. We’re thinking about our vacation plans, longer days, warmer nights, and general fun in the sun. Retailers however are thinking about back-to-school. Most consumers do their back-to-school shopping in July and August, so now is crunch time for retailers to get ready. This is because the back-to-school season is the second-busiest time of year for retailers (yes, the holiday season is first), reaching $68 billion in sales in 2015, according to the National Retail Federation (NRF).  

Not surprisingly, 90% of respondents to an NRF survey said they planned to shop online for back-to-school supplies (which include clothing and accessories) — an increase of 12% over last year. This year’s internet sales in Q1 have already seen an increase of over 15% from 2015. The main reasons shoppers gave for going the e-commerce route were convenience, free shipping, and the option to buy online and pick up in-store.

In meeting customers’ expectations, such as those above, one thing online retailers need to be particularly mindful of is their customers’ mobile experience, making sure their site is easy to use on a mobile device, loads quickly, and always has the most up-to-date information, especially regarding price.

Sales tax can be another complicating factor, as offering a ‘sales tax holiday’ is becoming an increasingly popular promotional tactic. These holidays encourage consumption and boost sales during the summer month by temporarily exempting many popular items such as clothing and school supplies from state and local sales taxes. They also complicate sales and use tax compliance.

According to Recurly partner Avalara, seventeen states and the Territory of Puerto Rico provide for sales tax holidays in 2016—a tax-free period in late July or August (the Puerto Rico holiday is in January). Each state’s holiday differs from the next in the details—and, as the saying goes, the devil is in the details. A state may have a statewide tax holiday, but local jurisdictions may not be required to participate. Or qualifying goods may have a price limit to qualify for exemption. The dates the holiday is in effect will likely differ from state to state, along with which items are exempt.

Rather than taking on the complexity of trying to abide by every detail and every exemption, subscription businesses should use an automated tax solution. This will ensure compliance with tax laws and save considerable time and effort trying to keep up. Recurly has partnered with Avalara to provide this service to our customers, which includes precise tax rates, taxability rules, detailed tax reporting, tax remittance, and more.

To learn more, talk to a Recurly expert at (844) 732-8759 or sign up for a demo below.

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