Recently, Costco magazine featured an article on “How to grow your business by working smarter, not harder.”
According to Paul Meades, managing director of business advisory and accountancy firm Meades & Company, one of the key practices of successful businesses is that at some point, business owners need to work at a strategic level rather than juggle all the manual tasks required to keep a business growing. He emphasized that getting “…some distance and a more strategic perspective
Becoming Strategic, Viable and Sustainable
Costco magazine notes that business owners should spend time each week and strive to “[i]dentfiy one time-consuming task you could outsource or delegate.” Doing so is the first step to increase business strategic capabilities and build a business that is viable and sustainable.
In order to find those time-consuming tasks, Paul Meades says to “Look at your organizational structure in a chart. If you don’t have one, imagine one. Think of each business function or process having a box on that chart—e.g., sales, customer service, fulfillment, production. How many of the boxes on the chart are you regularly involved in? Think about how you can get out of those boxes you don’t want or need to be in—by outsourcing, delegating or recruiting.”
How Sales Tax Impedes Growth
One of the ways you can begin working at a strategic level in your business is to consider the overhead costs of sales tax management. Consider the time it takes to manage, monitor and ensure sales tax is applied correctly.
- How much research is done (or should be done) on a regular basis to ensure that your business is applying the correct sales tax rates and associating with the correct jurisdictions?
- Does each month involve dedicated time to balance the books on sales tax revenues collected and your receipts?
- Are you filing in a timely fashion and is that filing taking a chunk of time or costing precious accountant hours that could be better spent elsewhere?
Every business that is liable to collect and remit sales tax carries the implicit risk of being audited. As a sales tax collector for the state, the state has the right to govern and monitor your business activities, income and collections in order to ensure you are sending the correct amount of tax revenue. The time it takes for an audit to be performed can vary, as can the stress. But the average cost of an audit has been estimated at $34,000 plus for a business with small infractions, and this risk could make or break a small- to medium-size business.
If your process introduces greater risk of error and therefore, audits, this increases the chance that you will be liable for penalties, fees and interest. Once that starts happening, then sales tax management becomes a hindrance to your business growth and strategic viability. Manual processes introduce greater risk of human error. Performing your own research may be daunting and involve great time and effort that are not being spent building the business but rather keeping the business in compliance.
How Strategic Planning and Sales Tax Work Together
Working at a strategic level, improving sales tax processes reduce overhead, manual labor and audit risk, making it a business benefit to outsource and automate. Automation and outsourcing enable you to rely on sales tax experts to apply their knowledge to your business without the overhead of full-time employees or the necessity of becoming a sales tax expert yourself.
So what are you waiting for? Empower your business by automating and outsourcing the time-consuming activities of sales tax management. Learn more about AvaTax today.