Don't Make Sales Tax an Afterthought / How to win the sales tax game

Avalara writes: There comes a point in every company’s growth when manually calculating sales tax using tax tables and department of revenue sites is not enough to get the job done. In short, sales tax becomes an afterthought at just the moment when it is the most risky, potentially expensive approach to a statutory obligation.

So why is sales tax an afterthought? Likely because a. it is dull and cumbersome, b. it can be overwhelmingly complicated or c. because other things are more pressing (like linoleum in the break room). Even accounting professionals, the very people charged with tracking and checking the accuracy of transactions, have difficulty understanding sales tax fully.

Even accountants struggle with sales tax According to a recent survey by Wakefield Research, 50% of accounting professionals surveyed said a sales tax audit would likely result in a negative finding. And even more of the same professionals noted that running a marathon was easier than understanding sales tax.

Sales tax is obviously a mess for many companies, what with the statutory requirements, the low priority, and the difficulty. No one likes it, it is overwhelming, and increasingly in the news. Besides, who wants to enter the fray with the likes of Amazon as they fight with states over whether or not they need to charge sales tax on sales over the Internet. Whether big or small, your company likely has sales tax responsibilities about which you are (perhaps blissfully) unaware.

Are you one of these characters in the Sales Tax Afterthought Club?

The Confused One-Overwhelmed by sales tax complexity. Unsure how to solve the pain of sales tax

The Shrugger—Assumes sales tax is a no-brainer with no real cause for concern.

The Delayer–Understands sales tax is an important aspect of business operations, but doesn’t want to think about it today.

The Excel Wizard—Believes they can track sales tax changes by calling departments of revenue, signing up for email alerts, and relying on building tax tables.

Are you one of these characters? Time to get to work and find a solution that tackles the status quo. Why not get ahead of the game and develop a sales tax strategy that streamlines, reduces risk, and works. Get your feet out of the clay and get to work. Here are the biggest aspects of the sales tax challenge. Are you ready to tackle them and get ahead of the competition? Get right with sales tax. Here’s how:

Tax Content: It’s the data

When it comes to sales tax content, the data from which sales tax rates, rules, and boundaries are derived, better depth and more experience and expertise means greater accuracy, lower audit risk, and greater efficiency. Some companies contract that out. Avalara generates original content. Do you want a provider that is going to stand by their data or “pass the buck”? Not only does Avalara generate content around the 46 states with sales tax and 100+ countries around the globe, Avalara is the official provider of sales tax data for a number of states including Georgia, Vermont, and Nebraska.

Avalara provides content-related services to thousands of companies in numerous industries and across countless verticals. Whether U.S. or globally, Avalara has the right content for the job. Avalara content gives users access to instantaneous tax decisions, using a family of products that provide end-to-end compliance, tackling returns, reporting, rate calculation, product taxability and the problems with your teenager. Avalara content powers sales tax management functionality automatically and in the cloud, bringing accuracy and enlightenment to all who choose the path of compliance. The compliance tasks involved in an accurate tax management system rely on robust tax content at each point in the management process.

Which character in the Afterthought Club this helps:

The Excel Wizard—Believes they can track sales tax changes by calling departments of revenue, signing up for email alerts, and relying on building tax tables.

Accuracy: Get it right. Do it quickly.

ZIP codes don’t mean zip – they’re too inaccurate to calculate sales tax in many states. Geolocation is the only way to be sure you’ve got it right. Get on the side of the Proactive Sales Tax Club and look for accuracy down to the rooftop level.

Address validation Avalara AvaTax encompasses the most accurate and up-to-date address data available. Input addresses are automatically checked and corrected for spelling errors and inaccurate street names. Five-digit zip codes are appended to nine-digit accuracy.

Precise rate determination Avalara AvaTax uses geo-positioning as the basis for the precise identification of tax jurisdictions and a roll-up to a total tax rate.

Product taxabilityAvalara has robust well-researched product taxability data as well as researched and validated system tax codes for millions of products across the U.S. Even better, these rules are constantly updated in the cloud so your tax calculations are always accurate.

Sourcing rules 
Avalara AvaTax is programmed with the latest information for handling sourcing rules (whether destination- or origin-based) ensuring the most accurate assignment of tax rates at the transaction level.

Calculation speed 
Sales tax management solutions often don’t support sub-second calculation speeds. This can adversely affect your user-conversions rates, because customers don’t like to wait.

Which character in the Afterthought Club this helps:

The Delayer–Understands sales tax is an important aspect of business operations, but doesn’t want to think about it today.

The Shrugger— Assumes sales tax is a no-brainer with no cause for concern.

Reporting & Filing: Report and file right on time.

Most sales tax solutions don’t offer any out-of-the-box sales tax reports. Whether you’re preparing for the monthly or quarterly filing crunch or for a sales tax audit, detailed and reliable reporting is a must. Sales tax management solutions often don’t offer an integrated filing service. No matter what kind of business you run, it makes sense to consolidate your sales tax efforts with a platform that does it all: calculating the tax, handling the returns, and navigating the remittance process with states.

Automated filing and remittance 
Avalara Returns ensures the right amount is remitted to the right taxing authority at the right time, dramatically shrinking the time your company spends on sales tax return processing.

Which characters in the Afterthought Club this helps:

The Delayer–Understands sales tax is an important aspect of business operations, but doesn’t want to think about it today.

The Confused One-Overwhelmed by sales tax complexity. Unsure how to solve the pain of sales tax.

Support: Can you count on your provider to have your back?

When you receive an audit notice or have a compliance question, does your sales tax provider have your back? When it comes to sales tax compliance there’s a lot at stake. You need knowledgeable and timely support to make sure you get the right answer the first time. Choosing the right tax solution is a big deal. It can mean the difference between a difficult relationship with sales tax (inefficient manual work, ongoing customer service issues, and costly audits) and an easy one (working with a partner that specializes in sales tax automation).

If you are currently in the Afterthought Club, it might be time to rethink how you’re managing sales tax compliance – so you can relax knowing that it’s being done correctly.

Which character in the Afterthought Club this helps:

All of them.

Now what?

Even smallest companies get audited every 1.5 every 5 years  (Aberdeen group), so getting audited is no longer under the “not likely to ever happen” category. Don’t make sales tax an after thought. Join the Proactive Sales Tax Club today.

Which character in the Afterthought Club this helps:

All of them.