Small businesses have long relied on tax professionals or CPAs for year-end compliance needs, compiling, reconciling, and correcting their clients’ books and producing financial reporting. With the increasing adoption of cloud-based business systems, these small business owners have turned to outsourced CFO, tax, payroll, and bookkeeping services, giving them real-time guidance and daily operational support from these financial and business experts.
Unfortunately, there’s still one major area of business operations that’s overly complex and vexes many entrepreneurs: sales tax compliance. In the U.S., there are more than 12,000 taxing jurisdictions, including states, cities, counties, and a variety of special districts. Each has unique tax rates and rules defining taxability of products and services, including special exemptions, sales tax holidays, and other factors that can pose significant tracking challenges for businesses trying to stay compliant. In addition to these inherent complexities, states are continuing to adapt and amend sales tax regulations related to economic nexus following the South Dakota vs. Wayfair Supreme Court ruling in 2018.
“Many small businesses don’t know how hard these local taxes can be until they are already facing a sales tax audit,” says Brian Miller, a CPA and tax director at indinero. “As a trusted advisor, we see where our clients do business, where they have sales and staff, and we proactively bring up the sales tax issue with them. But even with our staff of 230, we don’t have the bandwidth or expertise to manage the tedious requirements of sales tax compliance across thousands of jurisdictions. So we recommend our clients use Avalara.”
