We’ve previously discussed how important it is for the right tools, processes and people to be in place to ensure that there is a strong foundation for your finance team. But the tax function within the financial team also needs its own special consideration. Otherwise, a business could overlook certain regulations and requirements, especially as sales tax continues to evolve quickly. Here are five key things for finance leadership to keep in mind when working toward tax success.
The Olympics are not the only place that can utilize “dream teams.” Sales tax also needs to have everything from IT, to legal, sales, marketing, billing and even accounts receivable working together for compliance. Ensure your company has the right employees in place and that they have the necessary training to help them stay compliant – and keep the business compliant.
Employees must understand the implications of changes and be adaptable. A technology-focused and data-driven mindset will also be key. Knowing the security risks, and how to properly meet those challenges, are also essential.
Sales tax compliance is not easy. But when businesses take the correct steps and prepare for filing obligations, it will be easier. Your employees need to understand the risk of non-compliance (e.g., reputational factor, financial dangers). Have regular sales tax nexus reviews, which should include knowing your current physical and economic nexus status, as well as if you’ve lost nexus anywhere. Nexus is not static, and regulations can evolve over time. Maintaining compliance is going to require employees at all levels – work with your teams to help them understand how to utilize the right resources.
Manually tracking regulatory change can be difficult, which is why your team shouldn’t have to depend on that. Subscribe to the Sovos regulatory feed, so your business can be advised when changes do occur. Leave researching tax laws to the professionals.
Additionally, evaluate your internal processes for implementing any changes. Integrating a tax engine into your ERP can help with the adaptability. For example, working with a cloud-based tax engine and a provider that regularly pushes updates into your system will remove your IT team as the middleman.
Your technology also should be able to grow with your business as it expands – whether through growing product lines or adding locations in new taxing jurisdictions. Technological investments are becoming an increasingly top focal point for organizations. A recent Sovos survey found that approximately three-quarters (76%) of U.S.-based software organizations said they were looking for a new sales tax solution within the next two years. Additionally, nearly half of respondents (47%) said the ability to maintain compliance as the company grows and expands was part of their enhancement roadmap.
Remember that depending on the stage of growth your organization is going through, a different level of automation may be appropriate. Reviewing the types of sales tax solutions out there can help ensure that the right option is integrated.
Increased efficiency is just one benefit to automating your sales tax process. Businesses will also gain greater insight into their data, utilize clearly defined audit trails, cut back on human error and ensure focus on overall business growth – no more stress over maintaining sales tax compliance.
Automation and even artificial intelligence (AI) are not meant to replace people. Instead, they are meant to help employees do their jobs better and faster. Reiterate to your teams that they are valued, it’s just increasingly critical to have them using the best tools.
Contact our team to explore how tax technology can enable your team to meet the demands of modern compliance with minimal stress.