TaxJar Review: Is it the Best Sales Tax Service for Amazon FBA Sellers?

TaxJar Review: There’s a lot I love about selling my own private label products on Amazon. I can take advantage of Amazon’s enormous traffic to make sales and Amazon’s FBA program eliminates many of the hurdles I would normally face when selling physical products online.

All this has enabled me to create a 7-figure Amazon FBA business.

But with all the good that selling online provides, there are some annoying aspects as well.

One of these things is collecting sales tax. It’s a huge pain and inconvenience, especially if you try to do everything yourself.

That’s why, I decided to go with TaxJar, a service that keeps track of what sales tax I owe for each state, and will automatically file my sales tax returns for the states I choose.

While it ends up being a fairly expensive expense each month, it really does reduce my stress every filing period so I would definitely say it’s worth it.

In this TaxJar review, I’m going to give you an idea of how it works, and why I think it’s an essential service if you are trying to make a living selling online.

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Why Do I Need TaxJar?

Since Amazon keeps my inventory stored in different locations around the country, I’m affected by what’s known as a sales tax nexus.

So not only do I need to collect sales tax in my home state of California, but I’m also forced to collect sales tax in every state that I have a nexus in.

At the time of this review, this figure has grown to 18 different states.

It can be quite time-consuming to register for every sales tax license you need, and then file your sales tax returns at the required times periods. Currently, I have to file monthly for 9 states, quarterly for 4, and the rest yearly.

Plus, every state has a different process for filing.

Some states have a fairly simple process and you can finish a filing in less than 5 minutes. But some states are huge pains as you need to manually enter revenue for every city and/or county in the state.

Texas, for example, is the worse offender, and filing your taxes there can take hours if you have a lot of sales.

This is why I’m using TaxJar. It helps me keep track of all the data I need to do my sales tax filings in one place and I can use it to autofile these more difficult states.

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How Does TaxJar Work?

What I like about TaxJar is that it is fairly straightforward to use.

When you first sign up, you need to link to your seller account. For Amazon, TaxJar gives you clear step by step instructions on giving the proper permissions to TaxJar so it can work properly.

While I use it with Amazon, TaxJar supports a wide variety of other e-commerce platforms as well.

This includes Shopify, Paypal, WooCommerce, Stripe, and much more. If your chosen platform is not supported, you can also try importing your sales data in via CSV file.

Once TaxJar has collected the data from your account, you can see how much you owe from various states on your Dashboard.

TaxJar shows each state, categorized by:

• States where TaxJar is auto filing for you.
• States you are collecting sales tax and filing manually.
• States in which you might have a nexus but are not collecting.

The third category is one that you definitely need to keep an eye out on.

Amazon can store your inventory in new state warehouses randomly which will trigger a sales tax nexus at any time.

So once you notice a new state in this list, you know it’s time to go through the process of registering a new license.

I would love if TaxJar provided some help with registering for individual states since they all have different processes. But unfortunately, they don’t at this time.

Clicking in any state will give you a breakdown of what your gross sales are for the current filing period, how much sales tax you’ve collected, and how much sales tax TaxJar expects you to owe. You can also look back at past data as well.

How I Use TaxJar

While having all your sales tax data in one place is great, the main benefit of using TaxJar is the fact that it can autofile your sales tax for you. For some states, this can save you A LOT of time.

However, I don’t use it for every state, since TaxJar charges $19.95 for every return that it files for you. If you’re filing monthly for a state, this can really add up.

Some states have a straightforward filing process where you might enter in a couple values like your monthly sales revenue and then click a few buttons to file and pay. For these states, I feel it’s not worth it to use autofile.

However, some states really make the filing process difficult. South Carolina, Washington, and Texas come to mind.

Take Texas, which is the worst offender of them all. To complete their sales tax return they require you to enter sales for EVERY jurisdiction in the state. As you might know, Texas is a very large state and these jurisdictions include every city and county in Texas.

For my business, this means filling out data for over 600 jurisdictions! And when I first joined TaxJar they didn’t support autofile for Texas. It was such a nightmare to file and I dreaded it every time the filing deadline came up.

Fortunately, TaxJar now has added autofile for every state. This was a huge relief and has simplified my life completely.

To setup autofile with any state, just click the ‘Enroll in AutoFile’ button underneath the state name. Keep in mind that you can’t just enroll any time you want. There’s a specific enrollment window each month for each state.

The other thing I like about TaxJar is their Facebook Group. It’s quite an active group filled with helpful people who are in the same boat you and me. Taxes, in general, are always a complicated subject and it’s great to have a resource where you can ask specific questions.

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TaxJar Pricing

TaxJar has 4 different pricing tiers, each based on how many transactions you have per month. If you have under 1,000 transactions a month then you qualify for the Basic plan which is $19 a month. Up to 5,000 transaction is $49 a month while up to 10,000 transactions is $99 a month.

Then as I mentioned you have to pay $19.95 per filing per state you’ve enrolled in for autofile.

I have yet to see TaxJar offer any sale discounts or coupons for any of their plans. Howev, r they do offer a 30-day free trial.

For a large seller like me, I’ve already outgrown their largest plan. So I’m currently paying $199 a month for 50,000 transactions and $159.60 for autofile.

While it’s a very large expense, I have to say it’s well worth it.

When I first started with my Amazon FBA business, I considered finding some tax accountant that I could just pay to handle all this for me. But after I got some quotes, I was sticker shocked by how much it would cost me to have someone else handle this for me.

So when compared to that, the price I’m paying per month for TaxJar still feels like a steal.

Final Thoughts

Collecting and filing sales tax is not a fun process, but it’s a necessary evil of having an online business. States don’t really make it easy for you to register and file, but you need to do it anyway.

That’s where TaxJar comes in. It helps you keep track of how much sales tax you owe, and makes it easier to file your sales tax automatically or monthly.

The biggest thing is that it gives me peace of mind that I’m doing things correctly and for that reason, it’s become an essential part of my Amazon FBA business.

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