Critical Considerations When Shopping for Sales Tax Software

Shopping can be a fun experience, but key factors must be taken into account when it comes to new sales tax software. Technological advancements, including how government bodies (local, state, and federal levels) review data, are pushing organizations to keep pace. Additionally, ever-evolving requirements can quickly make manual processes obsolete.

Whether your clients’ current process isn’t keeping them up to date with the latest changes, or they are having difficulty evaluating and consolidating all obligations, they can’t afford to fall behind. Your clients need an enterprise-level system that connects to multiple channels. For businesses that have consumer-facing sales (ecommerce, POS, etc.), or for those with B2B sales that go through an accounting platform like QuickBooks, an automated solution is essential. Accountants and bookkeepers want to ensure that their clients have both of those sales channels consistent in calculations, with all obligations consolidated.

Here are the top considerations when your clients are shopping for their next – and hopefully last – sales tax software.

What are my sales tax requirements?

As my colleague has previously discussed, understanding both physical and economic nexus requirements are essential for sales tax compliance. Also, be aware of the types of tax applicable to your clients. Are alcohol or occupancy taxes something that needs to be considered? How about value-added tax (VAT) for businesses operating outside of North America?

The types of sales channels (POS, ecommerce, subscription services) should also be considered. Businesses with varying sales scenarios, such as drop shipments or consignments, will also have different requirements.

Are your clients operating numerous systems? This can include ERP, payment processing or ecommerce systems. Any customer intricacies cannot be overlooked. For example, government agencies, non-profit agencies or resale businesses will all have unique sales tax requirements.

Sales that also address purchasing or use tax, such as what is necessary with contractors, should also be top of mind.

What are my current and future sales tax needs?

Current and future sales tax challenges should be a key consideration. Your clients need a solution that helps them now and as they grow. For example, are your clients confident that they are filing taxes accurately and on time, every time? Real-time updates will be especially critical for keeping pace with a growing economic nexus footprint, as well as staying current as forms and filing processes change.

This is where a filing solution and/or filing managed services can be beneficial. Your clients will have the right forms for now and farther down the line. A seamless connection to the tax engine ensures accuracy, flagging likely errors before forms are submitted. Additionally, a skilled managed services team with dedicated preparers ensures a compliant process from start to finish.

Another top challenge could be obtaining exemption certificates from customers. Your clients must guarantee that the certificates are timely and complete. Additionally, they want to easily be able to access certificates during an audit. Once again, a growing nexus footprint could mean managing more certificates.

A certificate management solution with managed services can help prevent financial risk and dissatisfied customers. The right system scales with your clients’ business, reducing IT cost and minimizing the possibility of transaction errors and incomplete records.

Finally, keeping track of rate and rule changes is not easy. Your clients want to know that their products and services are properly taxed everywhere in which they are sold. This is where a cloud-based tax determination engine can be greatly beneficial, offering:

• Speed
• Accuracy
• Durability
• Flexible deployment options
• Ability to analyze and correct vendor tax

Finding the right balance

The right sales tax solution is properly configured, meaning end-users do not have to do extra work. But it is also not a rigid system, allowing businesses’ specific needs to be accounted for. Remember to review your clients’ functionality and support requirements, for the near- and long-term. Companies expand, through product offerings or in locations (physical and through ecommerce). Sales tax requirements are also going to continue to expand and evolve. Being able to keep pace with all obligations is critical for long-lasting success.