As one of the more complicated administrative aspects of a retail business, sales and use tax filing processes are ripe for re-evaluation.
Begin by asking yourself questions such as: Does my current solution do enough to make my life simpler? Do I get more out of it than I am putting in?
Believe it or not, pain and suffering isn’t inevitable.
There are alternatives out there, but they may leave you wondering whether the next solution you choose will be any better than what you have now. How should you balance the potential risks and rewards of moving to a new sales and use tax solution?
Here are some considerations to help you assess your existing process for filing sales tax and think about what it would take to switch to something better.
How to evaluate a new sales tax solution
If your new tax solution works well, your life could be better. But a solution that doesn’t solve your problems could make it worse. Here are some of the issues to look out for when evaluating new solutions so that you don’t fall for a promise that fails to deliver.
Due diligence about your new tax provider will help, but it’s hard to predict exactly how the system will function on a daily basis. The tool you choose may end up being more complicated or confusing than it seemed on first glance.
Pro tip: Ask for a demo of any tool you’re considering adopting to see how it works. Make sure the demo addresses your real-world scenarios, not just the ones the vendor wants to show you.
With sales tax regulations changing regularly, it’s essential that whatever system you use be as up-to-date as possible. Some tax solutions aren’t as frequently or thoroughly updated as they need to be, hampering tax determinations with old information and setting customers up for submitting error-filled filings.
Pro tip: Ask to speak with current customers to get input on whether they have experienced such problems.
While it is true that you can check the returns your provider sends you, there’s no guarantee that your new system will make that process easy. The filings may not come to you with information to back up each line item, leading to a frustrating and time-consuming review effort.
Pro tip: Ask for details about the information you’ll receive to back up the determinations on your tax filing forms and how it will be delivered.
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Potential rewards of getting change right
When you pick the right solution, your stress is replaced by relief. It’s hard to overstate the value of getting your sales tax right quickly and accurately.
Here are some potential rewards you can look forward to with the right sales tax automation system.
If you’re switching from doing your sale taxes manually, using an automated solution will slash the time you need to spend on this task. The ROI for this kind of time-savings is easy to calculate and is likely to be substantial. Picture this: You send data to your provider, receive the return, review it quickly, find no mistakes, and authorize it to be filed. You’ve spent a day or two on the whole endeavor, rather than a couple weeks.
Improve your team’s morale
If your solution isn’t meeting your company’s needs, chances are good that your tax team has a cloud hanging overhead every month. Taking the bulk of this task off their desks will improve morale and free up their time for other priorities.
Grow without concern
Business growth makes sales and use taxes more complex, especially as the company expands into new states. This means that your team needs to be able to accommodate a number of new nexus obligations quickly without spending too much time researching the ins and outs of each state’s tax law. With real help in managing the ever-growing task of business sales tax, they’ll be able to easily support the full velocity of your business.
Put more of your capital to work
Many organizations view tax as a cost center, fearing they’ll get hit with fees due to underreporting. They set revenue aside to handle these fees just in case. But if you can count on your sales tax solution to provide accurate returns, you can stop reserving funds and use all available capital for other things during tax time.
Get peace of mind
Business decision-making doesn’t take place in a vacuum. If business leaders have peace of mind about the disposition of operational details — like, say, sales tax filing — they are likely to feel confident focusing on other concerns that can drive the business forward. They can make bold decisions without worry about the sales tax implications. Acquiring a company? No problem. Expanding into new locations? Don’t hesitate.
Using a reliable automated service, business leaders can make moves without including tax questions in their calculations. Download our guide to learn about ending sales and use tax pain, and what Sovos means when we say “we solve tax for good.”
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