Which is better for your business - a Tax Software or Managed Solution?
Automation is the right answer for companies to manage their multi-state sales tax compliance requirements. You’re selling on multiple channels; you sell all over the country; you have products and services that are taxed differently in each state; and you need to file the sales tax liability collected based on a schedule each state provides you. How could anyone do this manually or even want to attempt to?
You go ahead and purchase tax software for handling this challenge. You set up your tax profile, nexus states, mapping of tax codes, integrate it to the platforms you sell on for calculating sales tax and sign-up for the filing service. Easy and automated right? Well, not always.
Many people do not consider themselves sales tax experts and don’t ever want to achieve that distinction. As they dive into the Onboarding process for implementing their new software, they are not only dealing with both the complexities of tax but also the specific nuances of the software. They are typically given minimal time to work with people during set up where support hours can even be capped. What ends up happening is they need to figure many things out themselves which is where problems can occur. Other tax providers push a self-serve experience which can be like flying auto-pilot in a hurricane.
Once you’re live on the software, ongoing review and changes to your account are required. It’s estimated that a company can expect to spend 300-500 hours per year for the ongoing management of their account which includes getting transaction data into the account, reviewing reporting, approving filings, adding nexus states, adding new tax codes, handling tax notices and addressing any account issues. There’s a lot of work to do!
Due to the complexity and ever changing nature of sales tax, set-it-and-forget-it is not an option with just a tax software. Is there a path to a fully hands off, sales tax nirvana?
A Tax Managed Solution leverages all the benefits of technology while also leveraging the expertise of people and built in processes for providing the right solution for long-term success. Onboarding is transitioned from the customer taking all of the responsibility to a partnership approach where success is a mutual effort.
The partnership approach of a Managed Solution continues to be realized during the ongoing management of your account. The solution will help with the monthly transaction data imports, review of state reports, filing, tax notices, tracking changes to nexus, product taxability mapping and issue resolution. When a change is needed, you receive an email or SMS (text) notification to approve a change. Sales tax that can be managed from your cell phone with just a few clicks.
For some companies that have dedicated and knowledgeable tax resources for managing sales tax software, a managed solution is probably overkill. You’re happy with the software and you’ve got people that know how to manage it. For everyone else, the managed solution option provides the right path towards a true set-it-and-forget-it experience. And if you like the idea of being able to not have to deal with it at all, it’s the right solution for your business!