Knowing may be half the battle, but when it comes to sales tax, your clients may simply know that it’s a complicated and necessary process. But there are key ways to help your clients improve their sales tax experience. Ever-evolving regulations, increasingly complex filing requirements and overall business growth can all lead to greater stress for your clients. That’s why we’ve highlighted the top ways to ensure your clients can achieve sales tax peace of mind.
Monitor nexus requirements
Both economic nexus and physical presence nexus should be carefully monitored. While every state that has sales tax has implemented economic nexus standards, the thresholds can vary from one state to the next.
Additionally, your clients’ nexus profiles are not static, a challenge that my colleague, Charles Maniace, recently discussed. Some states have made adjustments to their rules and others may have adopted economic nexus requirements that will go into effect over the next year.
Physical presence nexus can be established through people or property, meaning that your clients’ sales tax requirements may change as their business grows and/or expands. Did they add more contractors? Participate in a tradeshow? Their obligation to collect and remit tax typically starts once nexus is established.
Check out this upcoming session that will enable your clients to establish internal practices to help identify any changes in sales tax obligations as they arise.
Improve sales tax accuracy
Helping your clients improve their sales tax accuracy will ensure a more streamlined sales tax experience and will decrease the time you will need to spend reviewing their data for inaccuracies.
First, ensure that their transaction systems can support the tax granularity needed for products in each state where they operate. For example, is there a sales tax holiday (either a new one or an established one)? Can their system appropriately establish when sales tax needs to be applied to certain products?
Additionally, your clients must consider how their customer exemptions are stored, validated and applied to orders. Exempt sales must be correctly recognized to ensure that any tax-exempt customers aren’t unnecessarily charged.
Finally, make sure your clients define a process for compiling data from disparate channels. Implement a review strategy to ensure numbers match up when it’s time to file with departments of revenue. Filing requirements (deadlines, ways in which to file) can vary from one state to the next. Help your clients avoid the headache that can come with sales tax filing by staying organized. This will also streamline the process that you have to go through when it comes time for your clients to file.
Ensure sales tax efficiency
How can you best help your clients stay efficient in their sales tax process? Automation is key, but it’s also important to understand where any potential bottlenecks exist. Tax calculation, exemption management and sales tax filing could all have inefficient processes in place.
Manual processes are also not scalable, especially with increasing nexus requirements. Furthermore, federal, state and local regulatory authorities can digitally track and cross-reference transactions. They are also looking to maximize revenue and shrink the tax gap, which is made easier by the increase in digitization. Regardless of the size of your clients’ businesses, they need to know how to properly collect and remit all sales tax.
If you have not yet deployed an automated sales tax solution for your clients (or you aren't happy with the one you are currently using), this is the perfect time to take a look at an advanced solution to simplify the sales tax experience.
When you start vetting new software, you may prefer to see a demo first to better understand the product's functionalities before dealing with salespeople. Sovos understands that.
We invite you to the on-demand Sovos Filing demo, which will walk you through key areas of the filing process:
- The different options for passing your sales tax data to Sovos Filing
- How to review and adjust any data as needed, including what to do with negative returns
- Available reporting options for reconciliation
Sales tax is unavoidable but it doesn’t have to remain a constant headache for your clients. Working with a reliable partner, and opting for efficient, reliable and current solutions can ensure your clients stay up-to-date with all sales and use tax laws and associated filing requirements.