Your excise tax manager is retiring – now what?
Disruptive new tech start-ups helmed by millennials seem to emerge every day. Many of the world’s most valuable companies are so young they wouldn't be able to vote if they were a person. Given this bend toward youth and novelty, it can be easy to forget the value professionals with deep historical knowledge deliver to many long-established businesses.
However, companies in the fuel supply and distribution market are well aware of these experienced professionals’ value and the difficulties associated with replacing them as they leave the workforce. For years, these professionals have been using their excise tax management skills, familiarity with different geographies’ excise tax rules, and decades-deep knowledge of their companies’ operations to make sure their firms’ excise taxes are correctly calculated, and all forms are filed in a timely and accurate manner. Yet, over the next few years many of these professionals will be enjoying a slice of cake at their retirement party and then walking out the door — taking their specialized excise tax skills and know-how with them.
Simply dumping all their work on someone else in the accounting department isn't an option — these teams usually stretched as it is, and they don't have the unique knowledge and experience needed to accurately calculate the company’s excise taxes. This presents fuel suppliers and distributors with three options on how to manage excise taxes moving forward:
- Hire someone new or train an existing employee to take over excise tax management
- Outsource excise tax management to an outside accounting firm
- Automate excise tax management
There are pros and cons to each approach, and understanding those can help you decide which option might be best for your business.
#1 Hire or train a new excise tax manager
- Pros: Bringing in a new employee is an attractive option for a company about to lose its excise tax manager. For the most part everything remains status quo as the new hire or trainee would simply take on the role of the previous manager. And hopefully, the new hire would develop the same historical knowledge as the previous expert over time.
- Cons: As is the case in any business, finding specialized expertise is no easy feat in today’s tight labor market. Not only that, training requires a long lead time and significant investment of monetary resources — on top of the salary and benefits required to pay a dedicated excise tax manager. Additionally, a new hire is likely starting the job with a steep learning curve, which could lead to significant risk and costly errors.
#2 Outsource to an accounting firm
- Pros: By outsourcing to an accounting firm, a company puts the responsibility on the firm to provide adequate expertise. This option is faster than training a new hire, and leaves time for your team to focus on more strategic projects outside of excise tax.
- Cons: While outsourcing is attractive, there's no guarantee on the strength of that firm’s excise tax management skill and knowledge. Your company will have less control, possibly missing opportunities to reduce liabilities or exposing yourself to greater risk. And, the process can be very expensive — even more than an in-house professional — increasing overall excise tax management costs.
#3 Automate excise tax management
- Pros: Automated excise tax management, particularly cloud-based solutions, are easy to use, secure, and reliable. Either as a standalone entity, or integrated into back-end financial systems, it's easy for existing accounting teams to automate tax calculation. They maintain current tax rates and rules and keep updated with any form changes as well. Your team can reduce risk, save time, and still stay in control.
- Cons: Moving to a new cloud-based solution does require some additional work from the existing accounting team — though it’s exponentially less work in the end than calculating taxes manually. It is just enough to know that things are being done accurately. Subscription fees and some costs related to initial deployment also apply, but these are usually significantly lower than the cost of a dedicated in-house professional or an outside accounting firm.
Have staff thinking about retiring soon and want some help investigating options? We can help. Give us a call at 877-803-9818.
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