One-Click Compliance: How to Quickly Set Up Sales Tax Automation on Shopify For Merchants To Save Time and Money

Shopify merchants' sales tax compliance is made easier with sales tax automation. In fact, more and more merchants have already turned to automation because it saves them time and money and gives them peace of mind and confidence to go about the other part of their business -- like marketing.

Integration is an essential factor when getting a sales tax automation tool because it will allow you to connect your Shopify store to the platform. With integration, the setup will be a breeze and your sales tax compliance is guaranteed.

Integration is the third most important factor for buyers when purchasing software. It comes behind trust and sales flexibility, according to Gartner 2023 Global Software Buying Trends [2].

Additionally, the 2024 State of Saas Integrations report revealed that customers who use integration are 92% less likely to churn. Also, integration drives 35% expansion and upsells.

That's why Kintsugi designed the Shopify integration to be fast and easy. With just a single click, your sales tax compliance is guaranteed and you can focus on growing your business instead of wasting hours getting yourself up to date with the complex and changing tax laws and rates.

In the next section, you'll see the challenges of sales tax compliance, the benefits of sales tax automation in navigating sales tax, and how Kintsugi simplifies the process. I'll also share a step-by-step guide in integrating Kintsugi with your Shopify Store in the latter part of this article.

Challenges of Sales Tax Management

Sales tax compliance is challenging, and many Shopify merchants admit that the filing process is a nightmare due to the complex and ever-changing tax rules and rates that vary in every state. Several even shared their horror stories online, with many admitting they were confused about sales taxes, and some just received an email about their liabilities in multiple states.

Here are the reasons why sales tax management is challenging: 

Complex and ever-changing sales tax laws

The majority of the entrepreneurs who participated in Avalara's survey in March 2024 [5] shared the same struggle when it comes to handling sales tax. Fifty-three percent (53%) said their most significant challenge was the complex and changing tax rules and rates.

If you sell in multiple states, tax rules and rates vary, and they change from time to time, so you have to keep yourself up-to-date to know when you establish economic nexus. Otherwise, you will have wrong tax calculations and risk yourself of non-compliance from tax authorities.

Manual processes are time-consuming and error-prone

There are numerous sales tax agencies that you can turn to for assistance in managing your sales tax, such as tax consulting firms, accounting firms, legal and tax law firms, tax professionals, sales tax automation providers, and more.

However, despite the available agencies, some choose to handle their sales tax compliance on their own, only to find out that it takes so much of their time that they could have focused on growing their business. It also costs them money because they eventually have to train some staff or hire an expert to do the job.

Overall, 32% said they broke even after dedicating substantial resources to sales tax holiday events, while 27% said they lost money during the holidays instead of making profits.

While you can do sales tax on your own, you should consider the risk associated with wrong calculations and its impact on your business operations and resources.

Financial implications of non-compliance

Managing your own sales tax with little to no knowledge about what you are doing is a big no-no. According to a famous adage, "A little knowledge is dangerous." 

You should take your sales tax compliance seriously because it has severe implications for your business. Aside from penalties and interests, wrong information and calculations on your filing could trigger an audit.

Benefits of Automating Sales Tax on Shopify

Automating sales tax offers many benefits, from saving time and money to enjoying peace of mind due to guaranteed tax compliance. Here are some things Shopify merchants who have automated their sales tax compliance love about automation.

Time Savings

Automating sales tax compliance reduces the time spent on tax calculations and filings. Some said they saved over 20 hours per month. The number of hours saved depends on the size and scope of your business operations.

Staff were also able to focus on their core business activities. Instead of working on tax forms and the complex and ever-changing tax laws and rates they were not familiar with, they were able to focus their energy and time on growing their business.

Cost-efficient

Aside from saving time, sales tax automation tools also help entrepreneurs save money because it minimizes the need to hire external tax accountants who offer higher charges for their services.

Sales tax automation can cut your compliance costs by 40%. OTC Shop said that by automating their sales tax, they cut down on administrative costs by at least 40%.

PickSmart, a leading manufacturer specializing in intelligent hardware products and system solutions, also saved thousands of dollars after using Kintsugi's sales tax automation tool with automated filing of tax returns.

Accuracy and Compliance

One of the benefits of sales tax automation is that these tools are updated in real-time. So, the software calculates accurate taxes because it reflects the recent sales tax laws and rates, guaranteeing tax compliance.

Additionally, with automated reporting and filing,  merchants are safe from late penalties and charges. The comprehensive records of invoices and other relevant data are also ready for audit and financial analysis.

How Kintsugi Simplifies Sale Tax Automation

Kintsugi created a better tax solution that not only streamlines the filing process but also ensures that our customers are supported all the way, from onboarding and Integration to when they need support. To ensure that you will have a smooth sales tax compliance experience, Kintsugi focuses on the following:

Seamless Integration with Shopify

Kintsugi offers seamless, no-code Integration. With just a click, you can easily link our sales tax automation to your Shopify Store and our platform will track your economic nexus and physical nexus, apply the correct tax rates, and automatically file your returns to keep you compliant.

JnS Bros, a New Zealand-based streetwear brand selling high-quality apparel designed to capture the laid-back Kiwi lifestyle, can attest to Kintsugi's seamless Integration.

User-friendly interface

Kintsugi aims to help Shopify merchants like you save time, so the tool is designed to be intuitive. Even non-savvy users can confidently navigate the software within minutes.

Stephanie, Gwella's finance lead, spoke about their experience with Kintsugi and they found the tool seamless and easy to use.

White-glove customer service

One of the elements that makes Kintsugi a standout in the market is its quality customer service. Most of its competitors offer additional charges for premium customer service, but they fail to deliver, with the users complaining about delayed responses. 

Kintsugi is different, as customers feel supported every step of the way. Some of Kintsugi's customers were from other providers, and they switched providers due to the competitor's poor customer service.

However, they experienced a different type of service with Kintsugi. The customer support was responsive, knowledgeable and professional.

The next section is the comprehensive guideline to set up sales tax automation on Shopify, when using Kintsugi.

Step-by-Step Guide to Setting Up Kintsugi on Shopify

For Shopify merchants who have already switched to Kintsugi’s automation sales tax tool, the setup process is a breeze thanks to Kintsugi’s seamless no-code integration.

Here’s what to do.

1. Login to your Kintsugi account.

2. Navigate to Data Sources, then Integrations.

3. Click on 'Connect' and select 'Shopify'.

4. Click on 'Install Shopify App.'

5. Search Kintsugi on Shopify’s app store page and click ‘Install.’

6. Click 'Install' from your Shopify store to complete the installation process.

Once the integration is successful, you will be redirected to Kintsugi and your Shopify account will be listed under the 'Manage Integrations' section on the 'Data Sources' page.

To know about the status of your integration, you can check the 'Data Sources' page, then the 'Manage Integration' section, and look for the 'Status' column. If the integration status is 'Active,' transactions are synced in real-time. You can check the 'Last Synced Date' column of the 'Manage Integrations' section to see the last sync.

Here's an overview of how Kintsugi works when integration with your Shopify store is completed:

For those who are planning to get Kintsugi, book a demo now or sign up for free.

Sources

[1] G2 2024 Buyer Behavior Report. https://research.g2.com/2024-buyer-behavior-report

[2] Gartner 2023 Global Software Buying Trends. https://emtemp.gcom.cloud/ngw/globalassets/en/digital-markets/documents/2023-global-software-buying-trends-report.pdf

[3] Insight.  https://www.inboxinsight.com/b2b-tech-buyer-behavior-stats/

[4] 2024 State of Saas Integrations. https://go.partnerfleet.io/2024-state-of-saas-integrations

[5] Avalara Survey March 2024. https://newsroom.avalara.com/2024-03-26-Avalara-Survey-Finds-Businesses-Are-Turning-to-Automation-to-Manage-Tax-on-Purchases

[6] Avalara Survey September 2024. https://www.prnewswire.com/news-releases/new-avalara-report-reveals-60-of-small-and-midsize-us-retailers-struggle-to-profit-from-sales-tax-holidays-302239193.html