Sales Tax Automation and Outsourcing Investments
Published on by Cheryl Ganim in State Local Tax, Tax Services
When should your company consider investing in sales tax automation and outsourcing sales tax compliance? Businesses with sales into multiple states that have crossed the economic nexus thresholds may have multiple state sales tax filing requirements every month.
Yes. Every. Month.
Typically, businesses handle the sales tax compliance function in-house, but as the business grows, outsourcing and automation can benefit the business in various ways. Each company has different staffing availability and state tax experience, so evaluating the benefit of sales tax automation and outsourcing should be tailored to your specific business needs and future goals.
Partnering can provide protection
Partnering with a sales tax expert can provide a resource as needed to determine which products and services are taxable across states and provide advice on nexus and filing requirements. If back taxes are owed, a state voluntary disclosure agreement may help reduce penalties and shave off years of prior tax liabilities.
A sales tax advisor can assist with state registrations and monthly compliance, analysis and advisory, audit defense, notice responses, and minimizing taxes. Sales tax due diligence upon a sale or acquisition is a necessary exercise to avoid unforeseen pitfalls.
Every state is different
Sales tax rules in each state are different, and sales taxes can also be applied at the county and local levels. Tax rates periodically change, making it challenging to manually keep up to date with thousands of jurisdictions’ rates.
Software automation removes this problem by providing up-to-date real-time sales tax rates and forms. Accuracy and filing timeliness are improved, and consistent processes are implemented to keep it on track. When the business crosses the economic nexus threshold in new jurisdictions, getting registered and having data available to file is streamlined.
A side benefit of automation and a dedicated sales tax team is reduced exposure to audit assessments, implementation of best practices to have consistent processes, login and password management, and centralization of the sales tax compliance responsibilities. Additionally, the employee is freed up to perform other value-added work for the finance department.
We’re here to help
The Barnes Dennig team of Sales Tax Compliance professionals is here to help – connect with us today for a free consultation. And in the meantime, you might also be interested in our video on common sales tax compliance pitfalls and how to avoid them. Or on insights into the difference a CPA firm can make in your sales tax compliance journey.
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