Sales taxes get little notice outside of the tax and compliance arena. If they are not handled properly, however, sales taxes can become a business' worst nightmare. Unfortunately, businesses that do not understand the intricacies of sales tax compliance and follow it to the letter could face crippling audit penalties. This brief guide will help you better understand the challenges and risks associated with managing sales tax compliance.
The sales tax environment in both the United States and Canada has become increasingly complex over the last several years. The current political and economic environment threatens to make it even more difficult for companies to keep up with ongoing changes, as government agencies seek out additional sources of revenue.
Avoid becoming a Compliance Castaway! Each time the rules change, businesses collecting sales tax must change the way they charge customers and remit receipts to the state as well.
End-to-end Compliance With Avalara
Avalara reduces your sales tax audit risk with cloud-based services that make it simple to calculate rates, manage exemption certificates, file forms and remit payments.
- Calculation -Real-time access to the most current rates and nexus rules within any ERP or billing system.
- Certificate Management -Timely, accurate and responsive transaction tax filing and remittance—with unprecedented ease.
- Returns & Filing - Limit your non-taxed transaction audit liability. Without all the hassle and in real-time.
The key to reducing risk is creating processes
When your company has established rules and processes in place to ensure sales taxes are collected and remitted properly, the business is probably protected from fees and penalties – even if mistakes are made. In the example of collecting exemption certificates, the company did not have an established method for collecting, verifying and ensuring that certificates had not expired. With a clear, detailed process in place the business can:
- Ensure the certificate is the proper form, not a business license or other document.
- Ensure the certificate is properly completed.
- Store certificates - The best method is electronic.
- Collect updated certificates when old ones expire.
- Ensure that customers are billed properly once their exemption certificates are on file with proper accounting procedures.
Navigating Compliance Risks
To effectively comply with sales tax regulations, you will need cooperation from several departments on your team:
- Accounting - Team members must track and apply sales tax law changes across every jurisdiction where your company does business.
- Sales - This group must help the company determine whether new locations or accounts will bring with them additional sales tax compliance issues.
- Audit - Team members must create and maintain detailed records of sales tax compliance activities.
- IT - They must make changes to accounting systems and e-commerce systems, plus allocate adequate electronic storage for compliance records.
SYSPRO has integrated Alavara, AvaTax as part of our enterprise suite of modular systems to manage your business' requirements. Enterprise software and systems when and as you need them, out-of-the-box, without legacy code-and-wait cycles.
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