Getting small business excise tax returns right — and right on time
We recently discussed the challenges many small businesses within the fuel industry face when filing excise tax returns. Most importantly, there are a number of pitfalls distributors should avoid — particularly when it comes to reducing the risk of audits and penalties.
If you want to be certain your business is doing everything possible to stay compliant, there is good news. To see how you can affordably file accurate, timely returns, let’s take a quick look at several key steps every company can take to ensure compliance — and how automation can be used to simplify the process.
3 fundamental steps for filing accurate, timely excise tax returns
Despite the complex nature of excise tax returns, there are a few relatively simple steps your small business can take to significantly streamline the filing process.
1. Centralize transaction data
First and foremost, it's important to have all of your transaction data consolidated into one central location. This not only allows you to file returns in a timely manner, but also makes it easier to quickly locate information when you're asked to provide additional details or answer follow-up questions.
We've seen small businesses remove a lot of guesswork with this one step alone. Rather than spending hours combing through multiple spreadsheets, the consolidated collection of data allows staff to extract information within minutes.
2. Stay ahead of rule and rate changes
Once you consolidate your data, the next step is to get ahead of the latest filing requirements. We can't stress this point enough: Waiting until it’s time to file to get up to speed on new regulations is one of the biggest mistakes a business can make. Rushing the process can increase your chances of missing an update, and even a small change can lead to costly penalties.
Instead, take time now to continually monitor and track changes in every jurisdiction where you do business, so you’ll be ready when it’s time to file. If you lack the time and resources for ongoing research, specialized software can be used to regularly aggregate the latest changes.
3. Prepare for a wide variety of formats
Unfortunately, filing excise tax returns isn't always as simple as filling out an electronic form and adding a signature. Some states want to see submissions in a Microsoft Excel format, some want signature-ready forms and others require EDI. Even then, there’s always the chance a state will require a specific format one month, then switch to a different one the next.
It’s important to have a system in place that makes it easy to generate returns in many different, and potentially frequently changing, formats.
Easing the returns process with excise tax returns automation
To be clear: While the above steps are crucial, they shouldn’t take up a lot of your team’s
time. The more hours you spend managing transaction data and monitoring jurisdiction-by-jurisdiction changes, the less time you’ll have to focus on improving your business.
The key is to find ways to turn your raw transaction data into signature-ready returns quickly, efficiently, and accurately — rather than resorting to doing it manually, whether on a state website or through a web portal.
That’s where small business excise tax returns automation comes in.
Historically used at the enterprise level, Avalara Returns Excise makes it possible for distributors and other small fuel companies to generate signature-ready returns ... without having to invest in a complex or costly system. It includes all the advantages of an enterprise system, but at a small business rate.
Avalara Returns Excise can now be used by small businesses to:
Consolidate transaction data
All you have to do is upload a spreadsheet to import your data. Once imported, everything is centralized in one location for fast, highly accurate preparation of excise motor fuel tax returns. Returns Excise not only uses your raw transaction detail to automatically prepare forms, but also makes it easy to identify and extract data as needed.
Automatically apply updates
Because rates, rules, and form updates are regularly made at the jurisdiction level, excise tax returns automation eliminates the need to scour state websites. It’s the same exact monitoring process used by enterprise-level excise companies, but included in software that’s been scaled to meet the needs of small businesses. As a result, it’s much easier to avoid the inefficiencies and errors commonly caused by manual tracking.
Generate the correct formats
With an automated platform, there’s no need to determine which type of return you need to file in each jurisdiction. Signature-ready returns are automatically generated on schedule and in the correct format, whether electronic or paper-based, at the federal, state, county, city, and local levels. All you have to do is review, sign, and submit.
And because it’s a SaaS offering, the system is simple to use and doesn’t require a complex IT project to implement. There’s no need to load software, maintain a server, or even update your technology.
Which brings us to the biggest takeaway of all:
You don’t have to have a big budget or large IT staff to generate timely, accurate excise tax returns. There’s no reason to take risks or spend countless hours on compliance. Instead, you can take just a few minutes to import your data then rely on advanced automation to:
- Create signature or e-file ready excise motor fuel tax returns
- Prepare terminal operator reports
- Stay ahead of changes with regular rate, rule, and form updates
- Run ad hoc reports with detailed schedule data
- Get ahead of deadlines with a filing calendar
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.