Article
Sales tax assessment and automation: Streamline your organization’s reports
Oct. 5, 2023 · Authored by Mo Huda
Sales tax assessment and automation can help organizations save time, money, and resources while working toward more accurate tax compliance. Any company that sells goods or services in a state with sales tax could benefit. Below are some considerations for when a sales tax assessment would be necessary, the methods of assessment, and how to choose the best automated software for your business.
When a sales tax assessment is needed
Sales tax laws are complex and product taxability is diverse in each jurisdiction.
Consider a sales tax assessment if any of the following scenarios apply to your business in the following circumstances:
- Early stages of sales tax compliance journey
- Transitioning from manual filing to automation
- Changing enterprise resource planning (ERP) or point-of-sale (POS) systems
Sales tax assessment is often well-timed to when an organization first starts to explore its nexus footprint. Most processes developed in the early stage of a business' growth can quickly go awry if the fundamental requirements aren’t accurately addressed.
As with most processes, bad data placed into the system results in bad data being pushed out by the system. This can lead to substantial tax exposure and a larger investment down the line to clean up a broken system. Combining a process that incorporates knowledge of the legal tax requirements coupled with knowledge of the system functionality is therefore vital.
Sales tax assessment process
A sales tax process evaluation can provide an organization with a comprehensive view of the business' options for sales tax compliance.
The evaluation includes an assessment of the following:
- Any existing sales tax compliance processes and systems
- Business' products and services, as well as the jurisdictions in which products are sold and services performed
- Current business operations and any future expansion or exit plans
- Sales tax software selection
- Review of alternative options in the event an automated solution is not feasible or the desired approach
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.