Navigating the complex world of sales tax compliance is no easy feat for businesses. The ever-changing tax rates, varying tax jurisdictions, and intricate rules can quickly become overwhelming.
Fortunately, you don’t have to trek through the treacherous terrain on your own.
In the wake of the digital revolution, sales tax outsourcing to sales tax automation have both risen as valuable components of sales tax compliance. But which one is right for your business?
Let’s find out.
What is Sales Tax Outsourcing?
Let’s start by understanding the concept of sales tax outsourcing. Imagine a scenario where you could offload the burden of sales tax compliance to someone else and have your team invested in company growth and development. Well, that’s precisely what sales tax outsourcing entails.
By collaborating with reputable service providers and tax specialists, businesses can delegate tasks such as tax calculations, filings, and remittances to experts in the field who are well-versed in the complexities of the tax landscape.
So you might be wondering, “What sets sales tax outsourcing apart from other solutions?” The key lies in the expertise provided by these outsourcing partners. With years of experience in handling disparate data inputs and navigating the labyrinth of tax legislation, outsourcing sales tax to specialists ensures that your business stays compliant, no matter how convoluted the regulations become.
The Key Benefits of Sales Tax Outsourcing
The allure of sales tax outsourcing goes beyond just convenience. It allows businesses to focus on their core operations, knowing that their sales tax responsibilities are in capable hands.
But how does outsourcing help businesses achieve that shift in operation investment?
Enhance staff value by freeing up time
By outsourcing sales tax compliance tasks, businesses reduce the burden on internal staff, cutting the time employees spend on manual tasks and freeing them up to focus on high-value work that leads to active business growth. This shift also helps businesses identify more effective operation strategies and assign workloads according to freed-up capacity.
Reduce costs and optimize spending
In a similar vein, outsourcing sales tax compliance reduces the need for full-time staff who perform manual tasks that could be done more efficiently by a third-party sales tax service provider. By eliminating the need to hire additional staff and training existing staff on sales tax compliance, resources can be invested towards business growth.
Minimize audit risks
Outsourcing sales tax processes to tax specialists ensures that business activities and transactions are tracked and monitored by a dedicated team at all times. This minimizes the risk of exposure and makes sales tax audits a breeze when they do come around.
Streamline the compliance process (to a point)
By tailoring the compliance process to your business’s operations and activity, outsourced third-party sales tax specialists can help you create a more streamlined compliance process, where transactions and sales tax compliance are managed proactively.
The advantages of outsourcing are clear. There’s no doubt. But even when you’re working with the best tax specialists in the industry, you can still end up bound to human restraints and time-consuming manual operations.
And this is where automation comes in.
What is Sales Tax Automation?
Now, let’s delve into sales tax automation – the tech-savvy solution that streamlines sales tax compliance like no one’s business. At its core, sales tax automation is the leveraging of specialized software to handle tax calculations, track sales transactions, and automate reporting. It seamlessly integrates with your billing system, alleviating the need for manual tax calculations.
The best part is that sales tax automation software can be set up within minutes, making it a valuable tool in a market where the adage “time equals money” has never been truer. businesses. Businesses get to minimize human errors and save valuable time spent on repetitive tasks, allowing teams to focus on strategic initiatives and business growth immediately.
Key Benefits of Sales Tax Automation
Sales tax automation brings a host of benefits to the table. With the ability to accurately calculate taxes based on diverse tax rates, jurisdictions, and constantly changing sales tax laws, automation software puts your tax compliance in safe hands. As a digital tool, it also significantly reduces the likelihood of calculation errors.
But what is your business getting beyond a sales tax tool?
Risk-free sales tax management and reliable accuracy
By automating sales tax, businesses can reduce the risk associated with manual tax management. Sales tax automation software improves efficiency by automating tasks such as data entry, processing, validation, and extraction, which were previously done manually. But it goes beyond simply taking over the job, it does the job without the risk of error. With up-to-date rates and rules maintained by a cloud-based tax engine, automated tax software can increase the accuracy of your tax compliance.
Seamless integration into operational infrastructures
The key differentiating factor of sales tax automation software is its ability to integrate into existing tech stacks, effortlessly becoming part of an existing infrastructure from the moment of installation. From a company’s POS to HR tools to ERP software, automation software can pull together a diverse collection of data points to create a single source of truth for sales tax compliance.
Maintaining a clearly defined compliance trail
Sales tax software provides clearly defined audit trails, making it easier to track and monitor compliance in real-time. This thoroughly documented trail makes compliance a lot simpler, especially when returns need to be filed along with applicable exemption certificates.
Benefit from exemptions and deductions
Sales tax laws and regulations are different in each state, and once you start selling in a new state, you’re subject to a whole new set of rates and thresholds. But you’re also subject to a whole new set of exemptions and deductions that you may not be aware of (and that your outsourced partner may have missed). Automation software, on the other hand, never misses an opportunity to save your business and your customers a few dollars.
Access true streamlined simplicity
Along with all of these benefits, sales tax automation software offers the same set of benefits that outsourcing does. Businesses get the opportunity to reassign human resources in line with growth goals, cut the cost of redundant staffing and training, and ensure risk-free audit assurance.
But automation takes the streamlined compliance journey that outsourcing can only hint at and turns it to full blast. From sales tax calculations and remittance to exemption certificate management and nexus monitoring, it’s all taken care of. That’s why sales tax automation software truly gives new meaning to the term “streamlined”.
Outsourcing vs. Automation: Determining the Right Solution for Your Business
Now comes the crucial question: Which solution is the right fit for your business? The answer lies in carefully assessing your specific needs and requirements. Here are some essential factors to consider:
Step 1: Business Size and Complexity
Evaluate the scale and complexity of your business operations. If your sales span multiple jurisdictions or involve intricate taxability rules, sales tax automation is the ideal choice to navigate the intricacies effectively and simplify complex compliance processes.
Step 2: Analyze In-House Expertise and Resources
Consider the expertise and resources available within your organization. If you lack the necessary tax knowledge or dedicated personnel to manage sales tax compliance, outsourcing can provide the expertise you need.
Step 3: Consider Budget Considerations
Analyze your budget and cost considerations. While sales tax automation may be a viable cost-effective option for some businesses, others might find the personalized attention of sales tax outsourcing more valuable.
Step 4: Determine Industry-Specific Compliance Requirements
Different industries may have unique sales tax compliance needs. Evaluate whether your industry demands specialized expertise that outsourcing providers can cater to.
Step 5: Plan for Future Growth and Scalability
Taking the future into consideration will help you assess how well each solution can accommodate your business’s growth. Consider the scalability of both sales tax outsourcing and automation to ensure a sustainable solution.
Sales tax automation with the benefit of outsourced support
As you weigh the merits of sales tax outsourcing and sales tax automation, remember that there’s no one-size-fits-all solution. Each approach brings distinct advantages, catering to different business requirements.
Where outsourcing may be an effective option for smaller businesses, automation becomes essential as a business grows and its clientele becomes more widespread.
So be sure to carefully assess your needs, consider the intricacies of your operations, and perhaps seek guidance from tax professionals to make an informed decision.
But what if you could have the best of both worlds?
Complyt is a sales tax automation platform that simplifies your compliance to the extent that you’ll forget we’re even there if everything goes right. But things don’t always go right, do they?
Sometimes we need to understand our journey before we can simply hand over the reins to someone else. And we understand that. That’s what sets Complyt apart. We’re a company built on the experience and knowledge of veteran tax specialists who are always ready to assist you and bring the assurance you need to your compliance journey.
So even though your Complyt dashboard will keep you compliant without you even realizing it, you’ll always have the benefit of outsourced support just a call away.
Give us a call and find out why Complyt is the sales tax solution that’s right for your business.