If you’re an accountant and have previously avoided even thinking about state and local tax (SALT) work, it’s time to come on board.
The growth of e-commerce and multi-state business, as well as the complexity of state and local taxation laws, continues to fuel the desire for accountants to add a SALT practice to their service delivery.
This comes as no surprise; nearly all U.S. states have state-level sales tax requirements and there are more than 7,000 tax rates on the books. Add to this the reality that back taxes, fines and penalties pose a great risk to most businesses and it’s easy to see why a SALT niche is in demand.
Determining Your Client Fit
Understanding the type of client that will benefit from your SALT niche is crucial to the successful expansion of your services. Determining that there is sufficient demand of SALT niche services will ensure return-on-investment for your training or hiring to provide this niche.
Which of your current clients could benefit from SALT services? While local businesses may have questions about their home state’s tax laws, it is unlikely they will have much demand for assistance.
The better prospect is the business that has multiple state locations, sells to other states via e-commerce, or deals frequently cross state lines with vendors and a supply chain. If you do not have many clients who fall into these categories, consider developing an approach to capturing more businesses with SALT needs, including online sellers, marketplace sellers or businesses with dealings in multiple states.
Online selling is experiencing dramatic increases, so there are ample prospects out there for your firm.
Compliance or Consulting Services?
Another key consideration for providing SALT services is determining which type of services to specialize in. There are two main categories of SALT services: compliance and consulting. These categories differ in the type of work required and in revenue generation.
Compliance relates to adhering to tax laws, and since most sales tax returns must be prepared on a monthly or quarterly basis, revenue from these services will be fairly steady and predictable. Most compliance services are billed on a “per-return” basis and not rate-per-hour. Compliance information will often come in all at once, ahead of the state’s monthly filing deadline – likely the 20th of the month.