As part of an overall sales tax compliance process, effective data management along with a current tax calendar are two of the more critical aspects. What exactly is data management? As I define it here, it should be a written plan that includes the following components:
- A list of all reports created each month
- A description of what system each report is generated from
- Specific instructions on how to pull the reports
- Who is responsible for creating the report(s) each month
- Where the reports are stored
- When the reports are available
- Who needs to receive the reports
- How each piece of data (each column for example) is used
This may seem like a lot of information, but if you’ve ever been in a business that has experienced turnover of the person responsible for pulling these reports and data, it can be a hair raising experience. Especially in the world of sales tax compliance, with tight due dates every month, there’s not a lot of time to recover. In fact, many companies use turnover as the catalyst to outsource their sales tax compliance.
Additionally, if you are planning to outsource your sales tax compliance, one of the key elements of setting up a sales tax outsourcing relationship is establishing a data management process. If you already have this information documented and you have a solid data management process in place, then the transition to an outsourcing provider, such as TaxConnex is quite simple and can occur quickly – allowing you time to get your returns submitted timely.
In-house or outsourced, a data management plan is key to sales tax compliance.