Staying on top of the ever-evolving sales tax landscape takes constant time and attention. Many companies believe this is something they can manage in-house, though the current job market might make that difficult, if not impossible.
Teams are leaner than ever as existing employees quit, and new ones are harder to find. What should you know, what should you look for, and what are your options?
Hiring is on the minds of many executives as we end 2021. But how does that impact your sales tax compliance and is there a way to lighten the load on your finance teams who may already be feeling the pain of doing more with fewer and fewer resources?
According to TaxConnex’s recent market survey of 100 top finance professionals in a variety of industries, most respondents (79%) say their growth plan for the next 12 months involves hiring employees out of state as well as acquiring customers or otherwise increasing the number of states in which they’ll need to collect and file sales tax. This growth could potentially impact your sales tax obligations in a way that your team can no longer efficiently manage the already growing responsibilities of sales tax compliance.
Considering two out of five respondents (41%) use internal sources to prepare and file returns and even more (56%) utilize internal resources to manage jurisdictional notices and communications, it’s a split decision as to whether companies manage sales tax internally or not. Furthermore, only a little more than a third (36%) said they are “very satisfied” with their company’s current approach to managing sales tax.
What’s ‘Great’ about it?
The Great Resignation saw a record 4.4 million people – 3% of the American workforce – resign in September, according to the most recent data from the Bureau of Labor Statistics.
And it’s especially hard to find professionals who know taxes: Finding qualified staff is an enduring, front-burner concern that continues to challenge even CPA firms this year. Time-tested tools for hiring and retention still seem to work as well as anything right now: increased wages, market-rate raises, long-term incentives, wider benefit choices and retention bonuses.
Sales tax compliance involves everything from determining if your company is obligated to collect and remit sales tax in a jurisdiction (aka nexus) and monitoring ever-changing tax laws to maintaining filing calendars, collecting data and filing the correct forms on time (tax jurisdictions don’t like to wait). To handle sales tax in-house, you need someone on staff who understands evolving rules and regulations; can track a galaxy of filing deadlines and notices; and understands how your company growth changes tax obligations. It’s a big and important job, and not one you can do easily.
You or your remaining staff will have to pick up the slack –and chances of errors multiply as fewer people try to do the complex work of compliance with more on their plate or without the proper expertise. You must ask hard questions about what your staff can handle:
- How many staffers will it take to handle your current and future sales tax obligations?
- What resources will they need to handle this new responsibility?
- What will be their reaction to the new workload – and your potential cost of employees quitting down the road?
There’s another consideration for going in-house: The legal liability is all yours if you miss a compliance matter.
Outsourcing can free your business to concentrate on what it does best. You can outsource to a variety of software companies, CPA firms and other specialty firms, but again you must ask questions:
- What’s the vendor’s focus? Do they specialize in tax compliance at the state and local levels?
- What’s their customer service? Are they based domestically or offshore? How many professionals will they dedicate to you?
- Are they qualified (sales and use tax practitioners usually aren’t regulated)? Are they experienced with auditors?
When searching for a firm to outsource your compliance work to, get proposals from at least two firms, identify the services you need and give details about your business. Now might be the ideal time to outsource so you’re not left in a pickle if someone quits, retires or just has too much on their plate to handle sales tax as well.
Don’t let sales tax compliance overwhelm you. Rely on sales tax experts to maintain your compliance. Contact TaxConnex to learn what it means when sales tax is all on us.