It’s no mystery why sales tax is one aspect of doing business that many owners and accounting professionals alike might prefer to avoid.
The tax compliance process — especially for ecommerce businesses that sell into multiple states — is about as straightforward and easy to manage as herding cats … in the dark … during a tornado. However, sales tax plays an important role and we don’t expect it will get easier to manage.
As we see with the 2018 tax reform, even tax experts need to study the implications of new rules before they can be fully understood and put in to practice. Not only are the new rules complex, the volume of new regulations is increasing. This is happening since states are only looking for ways to gain a greater share of sales tax proceeds to help fill their depleted coffers and have zeroed in on ecommerce sales as an area of interest.
But consider this: While ecommerce sellers inevitably face sales tax complexity, those business owners want that complexity, or at least what it represents. Why? Some of those compliance issues - triggering nexus, registering in new states, and collecting/remitting tax in new jurisdictions - ultimately signal business growth. And your clients look to their accountant it to be protector and steward of their growth and success.
Tax compliance matters to clients, as both a metric for success and a point of confusion, despite the complications. And for accounting professionals, providing your clients with services to offload that process can help your practice grow.
If you find yourself reticent to add sales and use tax compliance to your list of accounting services, you are not alone: 76 percent of accountants surveyed by Wakefield Research “agree that understanding sales and use tax is one of the most confusing aspects of an accounting team’s job.”
How Do You Take Steps to Add Compliance Services?
1. Add some basic services that help to manage your clients’ state and local tax compliance. Identify the states where your clients have nexus. Then help them get the business registered in those states, collect sales tax based on the correct rates and rules, and remit the appropriate funds. You can take these steps this even if you are not a sales tax expert and you provide your clients real, tangible assistance with sales tax.
2. Automation helps you stand apart from your competition and bring added efficiencies. For your clients who have multistate sales through various channels, tax rules get complicated quickly. Having a sales tax Software as a Service (SaaS) solution in place can ensure accuracy of tax rates and rules, while you file returns within minutes.
The ultimate goal of adding these services is client satisfaction, which can lead to recurring revenue from your valued client base.
Fortunately, the time is right to consider expanding your practice to include indirect tax compliance. There are a number of easy-to-use tools available to get you started with managing the tax compliance on behalf of your clients. Some of these tools are targeted to accountants and bookkeepers with limited tax compliance know-how.
- Sales Tax Calculator. A free sales tax calculator provides tax rates with rooftop specific accuracy. Just enter the address and leave the calculations to us.
- Sales Tax Assessment Tools. These allow you to assess which states you have the greatest tax risk by answering a few simple questions.
- Automate the filing process. Analyze the sales tax you've collected, break it down by state tax jurisdiction, and organize it by state, then provide your clients signature-ready forms.
Tools like these show you how you can take simple steps toward adding more tax compliance services to your practice.
About Ray Bigley
Ray Bigley is the VP Business & Corporate Development at Avalara, responsible for the company's strategic relationships with the accounting community.