As you are likely aware, managing your sales and use tax obligations is not a small task. Ensuring you have the right people and processes in place is key to maintaining compliance and not putting yourself or your business at risk.
Despite the risk, difficulties in hiring experienced accounting employees, lack of full knowledge of the rules and complexities and time constraints surrounding managing sales and use tax in-house, businesses continue to manage these obligations in-house. Our annual sales tax trends survey reported for the third year in a row that businesses are still managing the majority of tasks related to sales tax in-house with 57% preparing and filing returns in-house, 66% remiting payments with in-house resources, 74% managing jurisdictional notices in-house, and 56% managing calculating the correct sales tax rate internally.
The reason sales tax remains in house could be a multitude of factors, a distrust of an outside partner with financials, a lack of understanding of current obligations or the complexities to accurately comply, or just a hurdle in not wanting to outsource something that is supposed to be a pass-through tax. It makes sense to a degree, but the right provider can alleviate the burden, become a trusted partner and take away the risk and liability.
For many companies, investing in the legal, tax, and accounting expertise of outside consulting experts with a proven track record is a good option for sales and use tax compliance. These consultants, often working closely with internal staff, will recommend and implement best practice solutions that will enable the business to have immediate access to subject matter and industry expertise.
5 reasons you should outsource your sales tax obligations are:
- Eliminate incremental headcount or reallocate employee time to more valuable areas of your business
- Reduce workload of internal staff that have roles outside of sales & use tax
- Ensure your sales tax exposure is properly monitored and a process is in place to accurately, efficiently and effectively manage your sales tax obligations
- Gain a trusted partner and expert that acts as a member of your team without needing the office space, cost of benefits or costs and time of hiring someone internally
- Leverage knowledge gained from other clients that can be applied to your business
There are many options when it comes to outsourcing. You can outsource to a variety of software companies, CPA firms and other specialty firms. Each has a varying degree of support, management of your process and liability.
When deciding which service provider is right for you, a thorough review of the sales tax compliance process, paired with a detailed understanding of which steps of the process each provider supports is critical. If there are gaps that are not supported by the service provider, then you will either need an internal process to fill in the gap or be willing to carry the associated risk.
If you think outsourcing may be the next right step for you or your business. Get to know TaxConnex. We provide a dedicated practitioner to each of our clients to give 1:1 support, expertise and manage the process for you fully. Reach out to learn more!