Expanding into new states can be great for your business’ growth, but it comes with added intricacy. Because each state has the authority to regulate the production, sale, and distribution of alcohol within its borders, state reporting can get complicated for alcohol producers and retailers.
Just how complicated can it get?
When states determine what information and forms are required for filing, there is no template or standard. Some states are straightforward and only require you to submit filings annually, while others can require multiple filings as frequently as monthly.
These filings can include a sales and use tax return, excise tax return, and shipper return. Keeping track of these filings for one state every month can be overwhelming—let alone for several. Within some state’s returns, they may require DOB of customers to be reported, the carrier that “fulfilled” the order, or even the tracking numbers associated with orders to be reported. Then when you add the step of reviewing which orders money has been collected for, or which orders ship on a monthly basis—things can get complicated quickly with each state shipped to.
So, how do you manage multiple state reporting?
When trying to manage state filing—whether it’s to 5 states or 45—there are varying approaches you can take:
- File manually on your own. This is the “old school” method—it works for some but not all. If you’re not properly prepared and organized, this approach can quickly spiral into a stressful and time-consuming task trying to track each state’s requirements and timelines. But, if your business only needs to submit reporting in a few states that have simple reporting requirements, this approach can work well and be manageable.
- Use a solution or software to help you file. Having a software that automates and pre-populates information for state reporting can significantly reduce the risk of human error and minimize your time spent on state reporting. With this hybrid approach you still have access to your data in the event of an audit, but the time-consuming tasks of manually filling out forms and keeping track of deadlines are eliminated. This can save your business significant time while maintaining visibility. For example, Carriage House Imports reduced their time spent on reporting from 160 hours a month to about one hour a month by using a solution to help automate their reporting process.
- Hire a consultant to handle everything. This approach means you’re completely hands off when it comes to your state reporting. This is the most expensive option and can often leave you with the least visibility into your compliance process. There are consultants that specialize in the beverage alcohol industry that you can go to, and they will do everything from data entry to the final submission to the state.
No matter what approach you choose to manage state reporting, make sure you maintain transparency and control over your compliance process. State reporting doesn’t have to be overly complicated and stressful, but if mismanaged it can lead to some serious consequences—like audits, penalties and fines.
See how Sovos ShipCompliant can help you manage sales and use tax, excise tax, gallonage and shipment reporting with AutoFile.