We’ve been trained all our lives to think about sales tax as an afterthought. Think about the basic question: What does an item cost? We usually answer that question without even including sales tax. But when you look at your company’s sales, there it is: sales tax, in black and white. Overlooking processes related to the management and application of sales tax is an easy thing to do. But, this can be an expensive mistake. The good news is it’s easy to find software that can increase the efficiency and accuracy of your sales tax processing. The right sales tax software will help you automate the application of local sales taxes, the preparation of sales tax returns, and the management of tax exemption certificates.
How many times in a month are you looking up a sales tax rate and applying it to an invoice? How many times in a year? If you’re selling products to customers in different locations, you’ve probably spent a fair amount of time looking up taxes. Then after you find the correct tax rate, you must apply it to the sale. This process, although relatively simple, can become time drain. A solution that will automatically apply appropriate sales tax rates to invoices can save valuable time that can be more profitably applied to other tasks.
The solution is sales tax software. A sales tax system consists of a database of all applicable sales tax rates. These tax rates are constantly updated to ensure their accuracy. Whether you are selling to a customer two towns away or across international boundaries, there is a solution to you. The software will then use the customer’s address to apply the appropriate sales tax rate to an invoice. Instead of paying a staff member to look-up tax rates, you will instantly see correct sales tax rates on invoices. This will also ensure that you are accurately charging for sales taxes and not subject to fines or penalties.
Charging customers for sales taxes is half the battle. Once sales taxes are charged to a customer, you are required to also file sales tax returns. Preparation of these returns can turn into a nightmare, especially if you’re selling products across state or provincial borders. The good news is that sales tax software will automate the preparation and filing of these returns. No longer will you spend hours compiling sales tax returns for each state you sell within. The entire process can be accurately completed in a matter of minutes.
An often overlooked aspect of sales tax compliance is the management of sales tax exemption certificates. In your list of priorities this can easily sink to the bottom. However, if you’re facing an audit, improper management of your customers’ exemption certificates can cost you large sums of money.
Many sales tax packages have methods for electronically tracking these tax exemption certificates. You will be able to set triggers to alert you when tax exemption certificates expire. This will ensure that you are not making tax free sales to customers without valid exemption certificates. When an audit does come you will not be forced to spend the time finding and organizing your customers tax exemption certificates.
Sales tax software is fairly flexible in terms of deployment options. Many ERP packages have sales tax modules available as an integrated piece of the software. If your accounting/ERP system doesn’t have a sales tax module, there are a number of standalone sales tax systems. These systems can communicate with other software to ensure that the management of sales taxes is as efficient as possible. Whatever your current software setup, there’s a sales tax system that can automate an otherwise labor-intensive process. In fact, if you’re looking to find options sooner than later, consider using our free software search service.