This blog was last updated on September 2, 2021
Almost two decades ago when Bruce Respler joined Marjam Building Supply, one of the largest distributors of building materials on the East Coast, he was in charge of calculating and filing sales taxes manually.
The company, which now owns 40 lumberyards, was only selling into a few states at the time. But even then, the process took Respler and his team two weeks to complete every year. After Marjam bought companies in Alabama and Florida, the writing was on the wall: They could no longer afford to process sales tax manually.
“There were problems with errors, filing problems, and payment problems,” remembers Respler, who is now Marjam’s controller.
In 2013, Marjam went searching for the best sales tax automation software available, eventually migrating to Sovos Managed Services to automate its sales and use tax system. The accuracy and timeliness of its sales tax processing shot up while the amount of time staff people were spending on the task shrank considerably.
“Everything improved dramatically,” says Respler. “We saved about two weeks of accounting personnel time. The errors went down. We’ve had very few problems with audits and with incorrect jurisdictions being charged sales tax.”
A more efficient tax prep process
Marjam’s process of sales tax filing is now streamlined and efficient, not to mention far more accurate. Sales tax filing takes a senior accountant two workdays to complete, as opposed to the two or more weeks they had previously been spending.
How does it work?
First, a senior accountant gathers all the sales and use tax information, runs macros, inspects the data, and transmits it to the Sovos website. Analyzing the data is necessary because Marjam has some unique tax situations, such as selling in Urban Enterprise Zones in New Jersey where they get some 50% sales tax reductions. The accountant passes the sales information every day to Sovos’ sales engine and generates additional files to conform at the end of the month.
Deeper insights in real time
The Sovos Managed Services tax preparer checks to make sure the data has no errors and does not contain sales to jurisdictions that are not on Marjam’s map. If they find one, they notify the senior accountant so Marjam can apply for a license in that state. Before moving to Sovos, Marjam probably wouldn’t have realized they were shipping to a new state for months, maybe years. Now they know right away and can take the right action to stay in compliance.
Sovos sends back a report on the sales tax amount they will file by jurisdiction, all of which is backed up by justifications. The report shows the liability on the sales tax returns for the actual sales tax paid, not the sales tax billed to customers. The senior accountant reconciles Sovos’ report with Marjam’s general ledger to make sure there are no significant differences.
More in the “Sales and Use Tax Solved” series:
ARTICLE: Growth is great – but is your approach to tax keeping up?
ARTICLE: Switching vs. suffering: Sales and use tax pain is avoidable
Filing with confidence
Once that final check is complete, Marjam’s accountant gives the preparer the okay to create the returns and impound the accounts. Marjam’s accountants can feel confident that the returns won’t result in error notices and assessments.
“We used to get large assessments because of mistakes in jurisdictions and sales tax rates, and it’s gone down dramatically,” says Respler. “It’s quite an improvement, and we really couldn’t live without it.”
Benefits beyond easier, more accurate filing
There are a number of ways using Sovos benefits Marjam aside from streamlined, error-free tax filings.
One is easy access to accurate tax data. Sovos’ up-to-date system gives Marjam sales employees crucial information they need to do their work, sparing the accounting team the pain of providing it.
“Salespeople all over the country used to call up a senior accountant and say, ‘What jurisdiction and what sales tax rate do I charge this customer? I can’t figure it out,’” remembers Respler. “We used to spend a couple hours a month on the phone with salespeople and researching sales tax rates and jurisdictions, which we don’t have to do anymore.”
Another benefit that Respler appreciates is the supportive, cooperative nature of Marjam’s relationship with Sovos.
“It’s been a very excellent experience for us and an excellent partnership,” says Respler. “I would recommend Sovos highly to anybody considering a provider for a sales tax solution.”
Download our guide to learn more about Sovos and get more insight into why Marjam has been a happy customer for almost a decade.
