A Better Way for Convenience Stores to Manage Sales Tax
- Sales and Use Tax
- July 1, 2016 | Aberdeen Group
Convenience stores (c-store) face numerous challenges and obstacles when it comes to sale tax filing. From determining the taxability of countless products and keeping abreast of sales tax updates, tax holidays, and exemptions, to navigating point of sales calculations, and managing the risk associated with errant filings (which include audits, fines, and penalties), c-store owners and managers really have their work cut out for them.
Given the complexity of the situation, it is no surpise that c-store owners view overcoming tax-related challenges as a top strategic priority. As can be seen in Figure 1, automated calculation of sales tax was the overwhelming call to action by 70% of all respondents in Aberdeen Group's Convenience Store Excise Tax Compliance Survey (Mar 2016). The next two items were automated updates to tax rules by UPC code (62%) and automated updates to tax rules based on jurisdiction (58%).
Figure 1: C-Store Operators' Approach to Overcoming Tax-Related Obstacles
Comprehensive Solutions Provide the Functions You Need
There are numerous platforms out there that are capable of providing the automation c-store operators are looking for. However, the most attractive solutions are comprehensive in nature.
Comprehensive solutions possess many notable features. They can account for variances in the tax code across state/province lines, as well as across product-type. They can handle automated filing and reporting, analytics, and even issue a range of alerts (to tax code updates, discrepancies in anticipated filings, etc.). Finally, they can be fully integrated into back office accounting systems or ERP, thereby enhancing the quality and analytical value of critical financial data to finance and treasury teams in a timely fashion.
Figure 2: Leaders Maximize Automation When Managing Taxes
Though an overwhelming number of respondents (70%) indicated that automating calculation of sales tax is their top strategic action, those with comprehensive solutions were 81% more likely to have this capability. Those with comprehensive solutions were also 2.1 times as likely to have a Point of Sale system in place, and 2.2 times as likely to have sales tax preparation and filing solution. Since point-of-sale calculation, along with preparation and filing, present c-store operators with so many headaches, it's easy to understand the appeal of comprehensive tax solutions.
Considering the broader functionalities, as well as the potential to fully integrate with ERP and back-office accounting systems, the benefits of comprehensive solutions, as opposed to individual, point solutions, or even worse, manually maintained spreadsheets, is obvious.
Audits, re-filings, regulatory scrutiny, and penalties can be better avoided with the robust data and automatic updates afforded by comprehensive tax solutions. This, too, is a good reason that, as a c-store owner/operator, it is in your best interest to carefully consider all that is at stake, and what you risk, if not managing sales tax with a comprehensive solution.
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