IDC MarketScape names Avalara a Leader in automated tax solutions

Dramatic changes for businesses in recent years come with greater opportunities, and greater risks, for companies of every size.

Tax compliance is one of those areas of change.

New US tax laws on remote sellers, new enforcement standards in global markets, and a wide range of changes brought on by the explosion of ecommerce have all created new tax compliance challenges for businesses.

“It’s a changing world,” says Greg Chapman, senior vice president of Business Development at Avalara, a worldwide provider of global tax automation software.

“The new norm is digital payments,” he recently told Technology Record magazine. “That’s where the digital approach to tax really comes into play.”

Fortunately, there are automated solutions that can ease some of the new compliance burdens companies face, which IDC MarketScape has identified in its most recent reports.

According to the IDC MarketScape for Worldwide SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Small and Midsize Businesses 2021 Vendor Assessment, consider Avalara when, “Your business is growing and encountering SUT tax management challenges, such as navigating regulatory change, beginning an omni-channel ecommerce strategy, facing new product expansion, or selling in new geographic areas.”

IDC MarketScape names Avalara a tax compliance Leader

IDC MarketScape reports include guidance tools for businesses seeking to digitize their tax processes. The reports highlight the increased needs businesses have for automated tax solutions to mitigate new risks resulting from three primary areas:

  • The growing global digital economy
  • Complex changes worldwide
  • Enhanced tax enforcement tactics

In its most recent reports, released near the end of 2021, IDC MarketScape identified Avalara as a Leader in three critical areas of sales tax compliance:

  • Sales and Use Tax Automation Software for Small and Midsize Businesses1
  • Sales and Use Tax Automation Software for Enterprise2
  • Value-Added Tax Software3

The Sales and Use Tax Automation Software for Enterprise 2021 Vendor Assessment reports that Avalara supports “an end-to-end compliance process, Avalara offers nexus assessment and studies, voluntary disclosure agreement and back-filing services, business licensing and sales tax registrations, world -class tax calculation, integrated returns preparation, filing and remittance, and exemption certificate management.”

Avalara software works through a network of partners — with more than 1,200 signed partners — to deliver tax automation solutions to users of ERP, CRM, billing, invoicing, point-of-sale, ecommerce, and marketplace platforms.

That means Avalara software can work seamlessly with business applications companies are already familiar with — like Microsoft Dynamics 365, explains Avalara Chief Product Officer Sanjay Parthasarathy.

“The key is to bring together the capabilities of the Microsoft Dynamics 365 platform and the Avalara platform through what we call connectorsParthasarathy continues. “Connectors take data from one side, transform it, pass it to the other side, and then do it all again when the data comes back.”

“The customer doesn’t need to see all those calculations that are happening behind the scenes,” he adds. “To them, it just feels like magic.”

According to the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Small and Midsize Businesses 2021 Vendor Assessmentgrowing companies should consider Avalara products to handle challenges raised by several scenarios.

Small and medium-sized businesses, for example, could use Avalara solutions if “your business is growing and encountering sales and use tax management challenges, such as navigating regulatory change, beginning an omnichannel ecommerce strategy, facing new product expansion, or selling in new geographic areas.1

Avalara also offers advantages to enterprise-scale users and multinational businesses with potential VAT obligations.

Cloud-based solutions are essential today

Anyone who has ever filled out a federal income tax form knows one thing is true: Accurate tax filing depends on having the right documents.

That’s doubly true for businesses trying to file their sales tax returns, Parthasarathy says. “In order to pay taxes, you need to have lots of documents relevant to the filing, with invoices being just one example.”

That became problematic when everyone was forced to work from home during the early months of the COVID pandemic, he explains: “If the documents required for compliance are in the office, they can very suddenly become unavailable.”

That’s why cloud-based solutions like Avalara AvaTax are so important, Parthasarathy says.

“The best thing you can do with any important tax document is to digitize it, put it in the cloud and make it accessible to all the systems that run your business,” he explains. “The cloud, therefore, becomes a very natural part of not just the calculating and returns, but every part of the compliance workflow.”

Tax compliance automation provides fundamental value

Parthasarathy identifies three “fundamental areas of value” for companies that automate their tax compliance work.

“One, you can grow your business around the world without having to be a tax expert. Two, you don’t need a large, expensive tax department, which is especially valuable if you’re a small or medium-sized business. And finally, you’re managing risk. If you fail to file adequately you can face serious consequences and having a specialist ensuring that you comply with regulations helps to reduce that risk.”

The growth in ecommerce and the explosive adoption of cloud-computing technologies are once-in-a-generation shifts that have “fundamentally changed how business must think about managing tax in today’s digital-first world,” says Avalara CEO and Co-founder Scott McFarlane.

“Avalara helps businesses of all sizes stay compliant as they grow and expand into new geography and tax types,” the CEO continues. “We’re committed to removing the burden of tax compliance for our current and future customers so they can focus on growing their businesses without compliance barriers.”

1 IDC MarketScape: Worldwide SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Small and Midsize Businesses 2021 Vendor Assessment, Doc # US47987521, October 2021
2 IDC MarketScape: Worldwide SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Enterprise 2021 Vendor Assessment, Doc # US47987421, October 2021
3 IDC MarketScape: Worldwide SaaS and Cloud Value-Added Tax Software 2021 Vendor Assessment, Doc # US47987321, October 2021

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