Published February 5, 2025
The Power of Outsourcing Sales Tax Compliance
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Sales tax compliance has its unique challenges for growing businesses. While it is only one element of your accounting team’s responsibility, the wide range of tax laws and regulations across the country can quickly tie up your team’s time and focus.
If your business has reached the point where sales tax compliance is necessary in multiple states and jurisdictions, you are faced with three options:
Whichever option you choose, it’s essential to understand that the more your business grows, the more complex your sales tax process will become. If you want to clear the path for new growth and new acquisitions, you’ll find that outsourcing should always have been your first choice.
Even the strongest internal accounting and finance teams can quickly become overwhelmed by the intricacies of sales tax compliance. And it’s no surprise! As you expand into new states and jurisdictions, sales tax only gets more complex. Each jurisdiction can set its own rates, nexus, and tax deadlines. It’s a full-time job just keeping up with sales tax alone.
This wide variation of sales tax laws is what makes compliance notoriously difficult. You face different challenges not just in every state but also in each city and jurisdiction where your business operates and meets the nexus requirements.
There are three main areas to watch for differences in sales tax law.
Managing these constant changes can be difficult for small teams to master and may lead to missing sales tax payments or risking noncompliance.
Most small businesses are trying to conserve resources as much as possible to focus on customers and new growth. Sales tax compliance can require significant investment from team members to handle it effectively. Dedicating one or more team members to focus on sales tax compliance solely can be impractical and costly.
Even seeking out self-management solutions can be costly if you don’t understand what software and tools can best serve your business’s needs. You could end up creating an even larger headache for your team.
Continuously monitoring changes to sales tax regulations and legislation is a daunting task. Your team needs to stay informed and implement new internal processes as changes occur. This requires significant training and a strong understanding of sales tax to do quickly and efficiently. Failing to stay up-to-date can result in fines and damage to your reputation.
If the stress alone isn’t enough to convince you to outsource your sales tax compliance, look at the many benefits you’ll have from choosing a sales tax management partner.
Outsourcing sales tax compliance is particularly helpful for startups and businesses experiencing rapid growth or expansion. New growth brings its own challenges, and navigating all the latest sales tax regulations alongside expansion can be taxing (pun intended) on your team.
If you want to move quickly, instead of spending hours and days researching sales tax laws, turn this task over to your outsourcing partner. You can trust that qualified professionals who are well-versed in sales tax compliance will be able to find the answers you need more quickly and efficiently. Doing so can save your business valuable time and resources without hiring additional staff or panicking about missing sales tax returns.
For instance, if your business sells designer hats in-store in Kansas and online to customers nationwide, outsourcing your sales tax compliance will streamline how you calculate and file sales tax across various jurisdictions as you hit the nexus requirements. This enhances efficiency and allows you to allocate resources towards other critical aspects of your business growth.
There’s nothing quite as empowering as having experts on call to assist you with unexpected circumstances and critical questions. When you outsource with a sales tax management firm, you tap into decades of experience and the latest technology, strategies, and practices to keep your business compliant and running smoothly.
Sales tax professionals know the importance of timely compliance and the ever-changing landscape of tax law. They can ensure that your business doesn’t miss out on important deadlines, so you can rest assured that your sales tax returns are always accurate and timely.
States and other local jurisdictions require businesses to obtain a sales tax permit or certificate before collecting and remitting taxes. Obtaining these permits isn’t always easy, but you won’t have to worry because your sales tax experts can take care of it before you know it is an issue. That’s much less paperwork for you so you can focus on the parts of your business that need you the most.
Any type of tax or accounting requires a watchful eye and dedication to precision and accuracy. When you rely on experts who stay updated on complex regulations and filing requirements in every jurisdiction, you can ensure that your taxes are filed correctly every time. You eliminate room for errors that could cost you major fines and penalties.
Once your business operates in numerous states, tracking sales tax responsibilities becomes a matter of highly detailed precision. Estimations and best guesses won’t fly here. Use professionals who can leverage their expertise and ensure exact compliance.
More cash in your business is always a good thing. Alleviate the financial burden of hiring an in-house accounting team using an outsourced sales tax firm instead. At a fraction of the cost of a full-time staff, you’ll have quick and professional help that can transform how your business perceives and handles sales tax. Turn that savings around and facilitate more growth for your business.
Bonus! Outsourced sales tax management firms often have access to the latest in sales tax management software. It can help alleviate the need for tedious manual entry and enjoy improved accuracy with the help of professionals.
Sales tax includes sensitive information, including customer data. It is crucial that this information is secure and protected from unauthorized access. When you outsource your sales tax management, you can rest easy that everything is stored securely.
The experts use state-of-the-art software and encryption protocols to protect customer data from cybercriminals and malicious actors. They also have strict policies to prevent unauthorized access or misuse of customer information. By outsourcing your sales tax operations, you can ensure that customer data remains private and secure.
With the help of sales tax experts, you’ll be able to receive detailed reports with comprehensive analytics for easy tracking and monitoring. You’ll be able to see your sales taxes across various jurisdictions so you can make smarter business decisions. You are empowered to make confident business decisions when you have access to live, up-to-date data.
For example, if you deal in fast food sales, an outsourcing partner can help you track sales tax trends over time and compare them to those of other states. This allows you to identify potential areas of opportunity and make informed decisions about where to focus your efforts.
Outsourcing sales tax support clearly holds many benefits for your business, but how do you choose the right sales tax management firm? As with all things, it can be challenging to find a trusted partner who can alleviate problems, understands your business, and matches your core values.
As you evaluate potential partners, consider the following and how they might impact your decision.
In this case, the grass is greener on the other side. Outsourcing sales tax compliance can be transformative for business leaders and accounting teams. Having such a time-intensive, technical task off your plate opens up a world of possibilities.
Sales tax is stressful and ever-changing. Instead of restricting your team to a single task, enable them to use their precious time and valuable experience towards larger goals that keep your business running. Should any questions arise, they’ll have the added benefits of sales tax professionals.
No more staying up late worrying about missing oddball deadlines or updated legislation (as I’m sure we all do). You can be confident that your sales tax is managed well, in a timely manner, and ahead of the curve regarding new regulations.
At a certain level of business, audits are inevitable. However, sales tax professionals can empower you to fight back with sales tax exemptions and certifications. When you outsource your sales tax compliance, you’ll have someone fighting on your side, gathering all the data and reducing any potential liabilities.
Business growth can be scary, but with the right tools and systems in place, you can handle it. New markets and jurisdictions won’t bring more uncertainty, just more opportunities.
This one may not be for everyone, but we believe that you can come to understand and love your sales tax process. Removing the fear of the unknown and unburdening that responsibility is one of the most incredible things about supporting business leaders as they outsource their sales tax needs.
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