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When we talk with businesses about sales tax compliance, we eventually get to a discussion about preparing and filing returns. Many times, this starts with “how hard can it be”. “It’s just putting numbers on a form”. However, I encourage businesses to consider the myriad aspects that need to be managed including updating your tax filing calendar, managing sales tax notices, monitoring their nexus thresholds, etc. Other key aspects include understanding your data sources, storing the data in a shared location, and naming them in a consistent format. This will help streamline your audits when they occur.

What’s in the name

We encourage clients to introduce consistent naming conventions for their data files so they and others can find the data they need and can understand what each file contains. This may seem obvious, maybe even trivial – but come audit time or if you have turnover in your organization, this trick will be useful. You don’t want to accidentally give an auditor a wrong file or utilize old data in your returns.

Clarity is the first step toward consistency. A new employee is more likely to stick with a data naming convention if it makes sense to them.

You should include sufficient information in file names to identify the data quickly. Any shorthand should be understood by all employees as quickly as possible.

Sometimes the organizers of data outsmart themselves – and just about everybody else – with abbreviations. As an example, how many times have you seen something that looked like this? 

“SLS_MAI” 

The file that this designates is anyone’s guess – until you add just four additional letters: “SALES­_MAINE”

Sure, abbreviations are clear if they’re consistent. But with turnover and other disruptions in today’s work world, long-term consistency is important.

Consider using type of data (sales tax or use tax) and its source, version numbers and other descriptive detail in the file name. The same holds for naming the folders that contain the files.

If you use a date in the file name, make sure users know if it’s the date the data file was created or the date it was updated. (“Date modified” is already often a standard information column in desktop folder panels.)

Input

Your best start (as with many initiatives in business) is to seek input from staff on what data names make the most sense, are clearest and are most practical. 

From that input, write a cheat sheet of file-naming formats and make sure new employees get one. Make and distribute an electronic version of this cheat sheet (and give it a name that’s clearer than just “README”).

Also:

  • Long file names don’t work with all software. 
  • Avoid spaces and special characters in the file name (save these for online passwords!).  
  • When numbering files, use leading zeros for clarity and to make sure files sort sequentially: “001, 002, ...010, 011” instead of “1, 2, ...10, 11 ...” 
  • If you’re unsure of a file name you’re assigning, try it on someone unfamiliar with the data to see if they understand it. 

(Stanford University offers a good tip sheet on file naming.)

Consistency in naming your data files won’t address the entire sales tax compliance quagmire but it will eliminate some confusion, especially in the case of an audit where nerves are often already high. 

If you’re looking to reduce costs, increase efficiencies and minimize risk, outsourcing your sales tax needs may be your best option. Contact TaxConnex to learn how we can help! 

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2011 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.