5 reasons why accountants are already using automation (and how it can help you)
Accounting firms are turning to automation to expand their services and grow their business. In fact, your competition may already be using automation. Find out why more firms are warming up to tax compliance software and how it could help your firm, too.
The future is now, and it's here to help
Taxes and technology are evolving at a rapid pace. Everything from how clients operate to how people shop has undergone a drastic transformation. The seismic shift in the market has also made clients and online sellers reassess how they view their accounting partners.
These changes have impacted sales tax perhaps more than any other type of tax. New complications have many ecommerce clients grappling with maintaining compliance. As a result, they’re seeking more guidance from their accounting experts than ever before.
Businesses want support navigating the convoluted sea of changing sales tax rules and regulations, and they’re looking to their accountants for advice. This has accounting professionals seeking ways to do more with what they already have.
How are accounting practices making this happen? They’re improving efficiency by working smarter, not harder, through the power of sales tax automation.
What is sales tax compliance automation and why does it matter for accounting firms?
Sales tax automation is the modern solution to simplify sales tax compliance processes for accounting firms and their clients. Simply put, automation uncomplicates tax compliance by taking advantage of cutting-edge software, all from the cloud.
Tasks that may have previously taken hours or days can now potentially be done in a fraction of the time. What’s more, the time saved frees accountants to focus on the services at the core of their business.
It may even enable you to add new advisory services in the process. Everything from sales tax return filing to indirect tax research can be streamlined and made more efficient through automation.
Here are five big reasons why accounting firms are using sales tax automation technology, and what it could do for your firm.
1. Ecommerce explosion means more sales tax returns
Ecommerce adoption has been steadily growing for years; the COVID-19 pandemic just sped things up. Ecommerce grew 44% between 2019 and 2020 alone, but there was another big change that has impacted online retail: South Dakota v. Wayfair, Inc.
South Dakota v. Wayfair, Inc. is the 2018 Supreme Court decision that allowed states to require remote sellers to collect and remit sales tax. That means a lot of those new ecommerce transactions now require sales tax in different states where the seller has no physical presence. Online transactions may be subject to sales tax or value-added tax in different countries as well.
As a result, the number and overall complexity of sales tax returns required for clients can increase exponentially. A client that previously filed four or five sales tax returns per year may now have to file up to 20 or more. The additional time and effort to prepare, file, and remit sales tax returns can eat into productivity and profitability for accounting firms.
Automation can speed up and improve the sales tax returns process to allow practices to expand globally with the ease of the latest technology. Accounting firms can better serve their clients by saving time that would otherwise be spent on laborious manual tasks. That includes manually preparing and filing each and every sales tax return.
The result is an efficient and effective sales tax returns service that can impact profitability. And not only accounting firms can benefit from automation. CFOs across a range of industries are adopting automation to improve operational efficiency.
2. More time to focus on clients
Accounting is about more than math and crunching numbers. At its core, it’s about the relationships accounting professionals develop with their clients. For many clients, an accountant is a trusted advisor to guide them as they grow their business.
Regardless of where a client may need their accountant’s advice, automation helps to ensure firms have time to focus on their clients’ needs, rather than on rote assignments. Automation helps to remove the time-consuming tasks that hamstring the growth and profitability of your practice. By automating this work, accounting practices have more time to spend advising their clients, instead of doing paperwork.
And automation does more than help accountants keep their attention on their clients, it can also provide an opportunity to further increase value through additional services.
3. Opportunity to expand client services
Tax complexity combined with the rise of omnichannel sales have led clients to rely on the guidance of accounting professionals more than ever. In addition to traditional accounting work, clients now demand accounting practices provide an array of advisory services. Clients want convenience, and what’s more convenient than a one-stop shop for all things tax?
Automation gives accountants the tools they need to meet client compliance demands and potentially upsell them on a few new services. On top of that, adding automation does more than enable firms to expand into new services. It also helps make sure the services are profitable additions to a firm’s offerings.
Adding new advisory services to your accounting practice can be an effective way to explore new revenue streams to potentially improve your bottom line. Furthermore, these services can help firms retain existing clients and become more attractive to new ones.
4. Ever-changing rules and regulations put clients and firms at risk
As if the Wayfair decision didn’t make things complicated enough, sales tax rules and regulations constantly change. In 2019, there were more than 34,000 rate and taxability updates in the U.S. and Canada. These changes happen so frequently that it puts accounting firms and their clients at greater risk of inaccuracies that could lead to potential audits.
Following up on taxability rates and rules is a necessary but time-consuming job that takes away precious hours that could be spent on more profitable services. Tracking down the citations and statutes you need in the case of an audit can feel like searching for a needle in a haystack.
Through regular updates with tax automation software, accounting firms can be more confident in the accuracy of their data. This can protect both the firm and its clients from the risk of audit while also saving time. The result is that everyone can feel more confident they’re compliant and sleep better at night.
5. Automation helps future-proof accounting firms
Beyond the immediate potential benefits of applying automation are the ways in which it can future-proof your practice.
Technical debt is an issue that affects businesses across all industries, including the financial services sector. It’s a term common to software development that describes the future issues that can arise by not assessing or addressing potential technological shortcomings, or opting for a quick fix rather than a full solution. A bigger issue with technical debt is that the longer a company waits to address it the more difficult it will be to overcome.
However, technical debt applies to more than developers. It can also impact accounting practices. For example, an accounting practice may continue to use outdated systems or software for which it can no longer count on regular updates. Relying on these old systems can cause problems down the line and potentially hurt your quality of service.
Implementing a leading automation solution coupled with a robust application programming interface (API) helps businesses overcome technical debt quickly and effectively. With the strength of an API comes the flexibility to support virtually any enterprise resource planning (ERP), accounting, or billing platform and integrate seamlessly into tax compliance applications.
This way, accounting practices can be more confident they’re ready to handle the rigors of the 21st century.
Automation helps accountants stay ahead of the competition
With myriad possible applications, it’s not hard to see why there are accounting firms diving headfirst into sales tax automation. Thanks to an assist from the latest sales tax technology, accounting practices are prepared to add the services they need to improve profitability now and be successful in the future. Maybe it’s time your accounting practice considered automation as well.
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