Sales Tax Automation within Your ERP
Less Sales Tax, More Sales
Enterprise Resource Planning (ERP)
Best-in-class companies understand that an Enterprise Resource Planning (ERP) system results in greater efficiencies throughout an organization. The centralization and automation of core functions means an easier way to monitor all aspects of the supply chain and lays a strong framework for compliance with an array of regulations.
But even the most robust ERP systems don’t always include an automated sales tax option, leaving back-office staff to manage the host of sales tax rate, rule, boundary, and taxability regulations manually.
Are you still using tax tables?
Without an automated solution, calculating sales tax within an ERP requires manually entering the city, county, and state where your company is required to collect sales tax, as well as tracking rate, rules, and boundaries changes as they happen. Additionally, address validation is limited to ZIP codes and can result in collecting the wrong sales tax and remitting it to the wrong jurisdiction.
Handling sales and use tax compliance manually expends time, energy, and money on non-revenue generating activities and simultaneously exposes your business to unnecessary financial risk from an audit. This undermines the very efficiencies an ERP is intended to create.
To better illustrate the difference between manual and automated processes, the following chart compares the functionality of manual tax tables to an integrated solution within the ERP that handles sales tax automatically.
Tax Tables vs. Automated Sales Tax Software
|Sales Tax Compliance Tasks||Tax Rate Tables||Automated Sales Tax Software|
|Jurisdictional Assignment||Manually entering the city, county, and state where your company is required to collect sales tax using ZIP codes can result in collecting the wrong sales tax and remitting it to the wrong jurisdiction.||Using geolocation to determine address validity ensures the correct jurisdictional assignment, and saves your company from unnecessary errors.|
|Rate Changes||Determining the correct rates and associated rules is difficult. As your business expands into new areas, the complexity multiplies. And since rates, rules, and boundaries change all the time, the job is never done.||Utilizing an integrated sales tax solution that tracks ever-changing sales tax rates, rules, and boundaries saves time and reduces risk of error and related audits and penalties.|
|Product and Service Taxability||As the number of products sold and jurisdictions served expands, managing sales tax can become tedious, complex, and take away time from profit-generating activities.||When it comes to product and service taxability, states apply a host of rules, sales tax holidays, and exceptions that only an automated system can track. Use automation to increase product and service accuracy.|
|Exemption or Reseller Certificate Management||Compliant exemption certificate management requires accuracy, timeliness, and the appropriate application of exempt transaction rules. Handling paper copies and sending reminders for missing certificates is time-intensive and error-prone.||An automated exemption certificate management protocol within the ERP includes storage and automated notifications, leading to increased accuracy and the correct application of exempt transaction rules.|
|Use Tax||The onus of tracking and remitting use tax on tax-free transactions lies increasingly with the seller.||An automated sales tax solution within your ERP allows you to track transactions that require remittance of use tax – making the process more efficient and accurate.|