Tax automation: Budgets at the global, federal, state, and municipal levels have been ripped apart by COVID-19. Most tax authorities are facing a major revenue shortage as a result of pandemic response costs and lost tax revenue from business and activity limitations. As the world continues to recover, indirect taxes––things like sales tax, VAT, fuel tax, and so on––have become a popular tool to assist recoup their losses and produce new money.
Even the largest businesses have found it difficult to calculate and collect these indirect taxes. The 2018 U.S. Supreme Court ruling against internet retailer Wayfair, which allowed states to require corporations to collect and pay sales taxes on transactions if they sell products in that state, regardless of where the shop is physically located, has made the process even more complicated.
SMB’s are often ill-equipped to respond to the additional reporting and compliance requirements that will come with these new indirect taxes, as manual calculations are arguably impossible. Covid and the changing dynamics of consumer behavior mean that SMBs are often ill-equipped to respond to the additional reporting and compliance requirements that will come with these new indirect taxes.
In-House Tax Automation
Fortunately, automation can help organizations bridge the knowledge gap and strengthen their in-house tax knowledge, resources, and infrastructure. Small firms may enhance accuracy and promptly project and report their indirect tax liabilities by automating tax processes, all while increasing productivity. The following are ten advantages of tax automation that can help you save time, money, and the stress of dealing with indirect taxes:
Improve Productivity by Working Smarter
Manage additional tax compliance obligations – Businesses must additionally keep track of a variety of tax compliance obligations. Tax software and technology can assist business executives in more simply and concisely overseeing income tax filing, information reporting, and property taxes.
Prepare compliance returns that are signature-ready – Compliance returns are time-consuming and prone to audit-inducing errors. Automation makes them simple, accessible, and correct in just a few clicks, which is especially crucial today, as government auditors are expected to look through 2020 taxes with a finer tooth comb in order to recuperate Covid-related lost revenues.
Keep up with changing pricing and regulations – Business tax rules are always changing, and keeping up with them can be difficult–if not impossible–for your employees, diminishing productivity and increasing worry. Small firms selling across the country are now responsible for keeping track of over 11,000 separate tax laws in the United States, which are constantly changing. Small firms can use automation to stay up with changing rules, allowing them to work smarter rather than harder.
Reduce Costly Errors and Improve Accuracy
Get access to up-to-date studies from across the world — The Fortune 500 no longer has exclusive access to the global economy. Small firms can now operate in any tax jurisdiction around the world thanks to the internet economy. Without assistance, staying on top of the continuously changing regulations for indirect taxes in the United States is practically impossible. It is obvious that the seller bears the responsibility for knowing, understanding, and complying with the tax collection and reporting laws in each country where they have consumers. Not only can technology provide real-time insights and data on changing tax legislation wherever your firm does business, but it’s also necessary for maintaining compliance.
Reduce errors to save time and money – Errors in the workplace can be costly. Tax compliance mistakes can be devastating. Using several data sources to manually format and move tax, finance, and sales data offers a breeding ground for errors and omissions. Tax compliance processing that is automated improves accuracy while saving you time, money, and heartburn.
Validate and fix shipping addresses – Incorrect shipment addresses are inconvenient and expensive. Bad addresses are more than simply a logistical issue because shipping addresses are utilized to calculate indirect taxes for each transaction. Cloud-based platforms can keep address databases up to date in real-time, allowing small businesses to rapidly confirm shipping addresses and make revisions as needed, ensuring that they are collecting and paying the correct amount of taxes for each deal.
Consistently apply your tax policy – One of the most prevalent grounds for SMB audits is inconsistent and erroneous sales tax filing (or underreporting). It’s odd that audits aren’t more common with so many different sets of regulations. One strategy to ensure that you collect and report sales tax accurately and consistently, regardless of the customer’s location, is to automate your tax processing. On the other hand, some small firms that are afraid of audits find up putting away more money than they need during tax season –– money that could have been better dedicated to business growth.
If you need finance for your business, click Apply ForA Loan button below, We are here to help you with financial needs