I automate transaction taxes for a living. My livelihood has found purpose in that little sliver where tax and software collide. A niche within a niche and a double-dose of nerd on the side.
The premise of sales tax automation is to embed the tax calculation within the systems that process your sales and purchases (for example, your ERP or web portal systems). Specialized tax software can be connected to your ERP or web systems to make real-time, automated tax decisions. Implementing these tax systems can take anywhere from 2 months to 2 years, with LOTS of “depends” thrown in and I don’t mean the elderly kind.
Luckily, there are specialists out there who can help you piece it all together. Being one of them, I have learnt a few things over the years about how to implement tax software and what pitfalls to avoid. Through this blog, I am happy to share some of those insights with you.
But first things first - how do you know whether your company should automate its sales taxes? Here is a checklist to help you decide. Answer yes or no to the following:
- We are a registered, legitimate business
- Our company likes to be legally compliant
- We buy a wide range of goods/services and we get exemptions for special uses like entertainment, government contracts, manufacturing and R&D
- We sell goods/services to customers in many locations
- We are (or should be) registered for sales tax in more than 2 states
- We have been audited and material deficiencies were found (ouch – penalties…)
- We have conducted reverse audits and material overpayments were found (we paid too much!)
- We have to train our Sales, Billing, Purchasing or A/P users on what is taxable or exempt for sales taxes (and it’s painful)
- Our current sales tax process feels “broken” and we are not using our time wisely
- I talk to tax managers at other companies and envy their sales tax systems
- Other tax managers pity me
- We spend more than 1 day preparing our sales tax returns
If you have manual sales tax processes and you answered “yes” to 8 or more of these, then tax automation is for you. If you already have tax software in place and you still answered “yes” to most of these questions, then you just might need a tune-up (or an overhaul) of your current systems.
Either way my friend, stay tuned to this channel...
Other recent “Sales Tax Automation & Software” posts by Suzy Soo:
- Tax Automation Can Reveal Your Transaction Data Secrets
- Are Tax Automation Consultants Necessary? Well, It Depends...
- Saying “I Do” to Tax Software
- Sales Tax Automation. Are you an Innie or an Outie?
- Is Tax Automation For Me? The Twelve Questions to Consider...