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Accounting, Management & Legal
Hiring a Sales Tax Technology Provider
Features to consider
By: Jonathan Barsade
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- SINGLE SOLUTION. Sales tax compliance software must perform multiple operations. It must first determine the relevant jurisdiction and rules, and then calculate taxes in real time. It must then compile the data, complete and file the tax return and remit the proceeds. Make certain your provider can do all of these things in one single solution.
- EASY INTEGRATION. You do not need to hire an army of technicians or consultants to configure your sales tax compliance software. In fact, the solution should not require more than a couple of hours to set-up, install and integrate with your existing online shopping cart and accounting packages.
- ZERO MAINTENANCE. Sales tax laws change frequently. Older solutions required the manual installation of monthly updates and maintenance procedures, which was very time consuming (typically requiring a monthly maintenance fee ranging in hundreds or thousands of dollars per month). Newer, Internet-based solutions have automated, online updates so that your sales tax compliance software is always and painlessly up-to-date.
- TRANSACTION TRACKING. Online retail transactions can include not only the initial product sale, but also product returns, credits, refunds, exemptions and discounts. Make certain your provider tracks all of these before completing and filing the tax returns.
- AUDIT REPORTS. Who is not afraid of being audited? Be careful to leave audit trails that clearly show the compliance with all sales tax jurisdictions. Try to hire a company that tracks the entire transaction and can therefore leave a seamless audit trail.
- REAL TIME DATA. Make certain that various sales tax records and data are instantly available in real time and are easy to use and understand. You should never have to wait for reports or become confused because of their complexity.
- AUTOMATION OF MANUAL PROCESSES. If you have employees manually performing technical and repetitive tasks regarding sales tax compliance, you have an antiquated system. The modern technical solution should automate many of the manual tasks that you perform, freeing up your time to perform more business oriented tasks.
- ELECTRONIC FILING. No system should require you to perform a long list of tasks, such as printing tax forms, signing the form, printing a check, stapling them together and putting them in the mail with enough time in advance to accommodate postal delays. Income taxes are today filed electronically on the last day of filing, without having to stand in long lines at the postal office. Why not sales tax returns? Your provider should provide electronic filing, regardless of the state to which filing is taking place. The cost of this should be fully integrated into the cost of compliance service. If you are retaining only filing services (without tax calculation services), the cost should be under $5 per filing.
- FULLY REDUNDANT, HIGHLY SECURE, HIGHLY SCALABLE SOLUTION. Do not compromise on the security of the system. Reliability, security and the ability to handle any scope of transaction should be fundamental to any system you use. Make sure that the system has undergone extensive testing and certification.
- LOW COST. You do not need to pay high fees for sales tax automation. An effective solution is built around scalability, automation, and ease of use. This should not be expensive. For example, an automated end-toend solution should charge no more than $0.20 per transaction.
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Published on Tuesday, November 01, 2005
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