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Managing Excise Taxes: To SaaS or Not to SaaS?

Are you considering moving your excise tax management process to the cloud? Do you need proof that cloud-based excise tax software is both safe and efficient?

It’s time to discover the benefits of SaaS over deployed solutions.

SaaS, or Software as a Service, has revolutionized the way companies interact with everything from spreadsheets and word processors to tax calculations and compliance documentation. In the complex world of excise taxes, companies are able to streamline tax calculations and simplify the reporting process—without having to shell out big bucks for deployed solutions, which are installed onto onsite computer systems.

Still, many organizations are still hesitant to trust these cloud-based solutions. In this post, I’ll explore the biggest differences between deployed and SaaS options, and how your company can ensure it’s making the right decision.

The Ups and Downs of Deployed Solutions

There are definite benefits to having excise tax management solutions deployed onsite. Namely, the company has complete control over software and security through its IT department. In the delicate world of excise tax reporting, data security is crucial.

The downside? The company has complete control over software and security.

This means your internal IT team or consulting partner maintains full responsibility for all updates, upgrades and day-to-day maintenance. Depending on your needs and usage, the resources associated with this management process ranges from time-consuming to disproportionately costly.

Any time an update is needed, any time a glitch is discovered, any time a new security threat surfaces...a specialized employee or outsourced expert will need to make the change. And if your company supports frequent travel or has a lot of remote employees, additional hours will be required to set up specialized Citrix servers and virtual desktop infrastructure.

Anyone who’s waited hours or days to get a response to a support ticket knows firsthand the backlogs this can cause.

Before you begin nodding in frustrated agreement, it’s important to understand this:

It’s not their fault. Your IT team is taking on tremendous responsibilities. There will be times when they’re understandably overburdened.

How SaaS Excise Tax Software Works

Although cloud-based tax management software has been around for more than a decade, it still faces resistance. I know this to be true. After assisting numerous organizations in the decision to migrate from deployed excise tax management solutions to SaaS platforms, I’ve noticed a recurring sentiment:

Many executives have a fear of allowing access to sensitive information outside their company’s firewall. After years of corporate policies prohibiting this practice, some deep-seated anxieties around security and connectivity have developed.

What many of the leaders at these organizations don’t realize is that security is often safer and stronger with cloud-based solutions. Because costs are scaled over thousands of users, specialized SaaS teams of experts can be dedicated to ongoing security updates. Fixes, updates, upgrades and migrations all happen automatically without the need for another support request.

There are other benefits. There’s no need to buy or outsource storage space and servers (which, by the way, has the potential to create nexus in another state). Managing excise tax calculations and reporting in the cloud can also make it easier to streamline compliance reporting, exemption certificates, exchange rates and other processes. This is because integrations with other SaaS platforms allow you to easily send information back and forth to your CRM, ERP and other cloud-based solutions.

SaaS Essentials

If you do decide that a SaaS solution is right for you, I highly recommend looking for several non-negotiables in any excise tax software vendor you consider:

First, be sure data is encrypted both while it's "at rest" in your database and when it's emailed or otherwise put in motion. Secure Sockets Layer (SSL) will protect traffic of sensitive information between your browser and Internet servers. Even the standard 128-bit SSL would take a trillion years to hack, by some accounts.

Next, ask about the level of certifications at the organization. Two important ones to inquire about are ISO 9001 and SSAE 16. These indicate that the SaaS provider has taken the steps necessary to keep your sensitive data secure.

And lastly, do your due diligence to ensure your excise tax software provider can articulate its backup recovery plans and policies for the rare event they might be needed.

If you have more questions, or you’d like to better understand the benefits of cloud-based excise tax management, visit fuel.avalara.com for additional resources to help with your decision.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Bubba Lange
Avalara Author Bubba Lange
Robert "Bubba" Lange is the Senior Vice President, Solution Engineering at Avalara. He has more than 35 years of ERP implementation, sales and distribution, business development, finance, and transportation experience. As senior vice president of solution engineering, he has direct responsibility for pre-sales solution definition across all excise tax automation product lines.