Managing sales tax doesn’t have to be a complicated, overwhelming and time-consuming process. Assuming of course that you properly evaluate your internal capabilities, existing technology and varying levels of expertise correctly. With thousands of tax regulations that can change at a moment’s notice, it can seem a nearly impossible task for businesses to remain compliant. Governments are cracking down to close the estimated $600 billion tax gap by embracing new technology and enforcement methods to ensure they collect what is legally required. Deciding on and implementing a sales tax process or solution for your business is an important step to meeting your compliance requirements and avoiding costly notices and audits.
The growth of e-commerce has further solidified the need for businesses to manage their sales tax challenges. E-commerce has accelerated at a rapid pace due to the digital transformation caused by the COVID-19 pandemic. According to a report published by IBM, 96% of leaders reported COVID-19 accelerated their digital transformation by an average of 5.3 years. Organizations that were reluctant to adopt digital solutions realized they could no longer postpone the inevitable.
This digital shift can also be seen in the tax world with cloud-based tax software gaining popularity. Implementing a cloud-based solution allows businesses to have peace of mind knowing any updates are done on time and in a secure system. Researchers from ASUG, the world’s largest SAP user group, conducted in collaboration with Sovos, found that cost reductions (hardware/software costs and/or support staff costs) and strategic initiatives or digital transformations were top reasons companies host sales tax solutions in the cloud. Additionally, 47% said the top benefit in hosting sales tax solutions in the cloud is reduced manual work for IT staff.
Sales tax compliance is only going to continue to become a more complicated process for businesses to manage.
In addition to tracking the ever-changing laws and regulations, organizations must stay on top of new legislation that is constantly being introduced. To put this in perspective, at the end of 2020, Sovos was tracking more than 684 bills that could change sales tax compliance requirements. For the same period in 2019, Sovos was tracking only 104 bills. Additionally, in early spring of 2021 Sovos was tracking as many as 2,148 proposed bills that had the potential to become law.
Having a reliable sales tax solution is something all businesses should strive to have in 2022. Implementing an automated cloud-based solution allows for you to focus on your core business initiatives while leaving tax compliance to the experts. If you are finding that managing sales tax is hampering your ability to successfully run your business, rest assured, there are options available to get you on the right track.
Ready to learn more about how Sovos’ products and services can streamline your sales tax management process? Talk to one of our experts.