When Sales Tax Management Inhibits Growth

Maybe you or someone else at your company manages your sales tax. You might make sure everything is in order, send in payments like clockwork, review all invoices to make sure everything is perfect, and keep great records of all your exemptions. Everything works fine right now but it takes quite a bit of effort. So what if you want to expand your business for online sales? Or to open a second location in another state? Your old model for managing sales tax probably isn’t going to work anymore. What can you do? You could hire more people to help manage sales tax, to check every invoice, keep track of filing dates, and manage exemptions. But if that takes two or three more people, it might mean a big hit in profitability. Even if it’s not a full-time job, it’s a specialized one, so your staffing needs for this one job could hold you back from expanding and growing your business in the way you have in mind.

If your plans in 2014 include growing your business, take a look at your sales tax management procedures for scalability. If you were to change your business in a way that impacts the amount of sales tax you need to process, could your sales tax management keep up? If you’re still using paper to complete sales tax and manually checking sales tax and invoices, it’s unlikely that you’ll be able to keep up without neglecting other duties or having to hire more costly workers. Automation is one solution to scalability that helps your business grow without holding back — but automation can be just as tricky if you don’t choose the right solution for your business. How can you be sure to choose the right solution for your business, now and in the future? Business Goals and Sales Tax.

Ask yourself these questions to help get an idea of what type of automation program you need and if you actually need one:  How many states or sales tax jurisdictions will you do business in? How many products do you sell? How complex is taxability for these products? Do you plan on expanding rapidly, in a year or less, or over the course of a few years? How will your company be structured before, during, and after growth occurs? Where do your business’s strengths lie? Where do you spend the most time in the management of accounting and finances? Where do you spend the least?  If your business is going to grow in 2014 and your sales tax management isn’t up to par, you could quickly create problems in your business you don’t need to. Be sure you’re getting a solution that makes it better to manage sales tax, not just another kind of difficulty.

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