CPA Practice Advisor

JUN 2016

Today's Technology for Tomorrow's Firm.

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14 June 2016 • www.CPAPracticeAdvisor.com SALES & USE TAX SYSTEMS Reviews Sales and Use Tax Systems By Mary Girsch-Bock W ith the complicated rules, and the inordinate amount of time it would take today's business owner to research and implement tax rates for cities, counties, states, and even countries, it's imperative that today's business owners invest in a sofware product that can easily manage these calculations. While the number of tax jurisdictions in the U.S. vary, most tax institutes agree that the number hovers around 10,000, making sales and use tax tracking impossible to handle manually for anyone selling outside of their own city or state. And because revenue from sales and use tax is essential to these governmental entities, they take col- lection of these taxes very seriously. While very small businesses may be able to keep track of sales collection and payment, those selling in multiple cities or states can quickly fnd themselves overwhelmed with the amount of information they need to manage, as well as possibly facing some serious repercussions if reports are not fled and taxes paid promptly. Another complication is tracking temporary tax rates put into play by cities looking to fund a project, or the new popularity of tax holidays that many cities and states have implemented in recent years. Add to that the fact that these tax rates can change much more frequently than standard income tax rates, and even the small business owners can fnd themselves in trouble. One solution to the problem is to have an accountant or CPA handle sales and use tax calculations and pay- ments; a solution that is being seen more frequently as more businesses expand their selling network to include nationwide, or even worldwide, sales. But for those that wish to track sales and use tax in-house, it's imperative that they utilize a product that is designed to do just that – track sales and use tax, provide up-to-date tax rates, and even fle those taxes with the appropriate parties. So what should you be looking for in a sales and use tax product? Here are just a few suggestions: • Are the tax rates provided in real time? Make sure to implement a product that ofers constant tax updates, can handle local taxes as well as state and county tax rates, and can determine taxable liability. • Can you get in and start using the system quickly, or is setup and implementation complicated and time consuming? Keeping it user-friendly is vital. Tis is particularly important for the business owner who will be using the system. • Does the product fle tax returns? Again, this is particularly important for the small business owner. It's great that the system is tracking the tax liability, but what you do with that information is just as important. For businesses not using an accounting frm to manage their taxes, this may be the most important feature of all. Whether business owners choose to let their accoun- tant handle sales and use tax management or choose the do-it-yourself solution, they must be given the proper tools to handle the process adequately. And because business needs can vary, the sales and use tax products we reviewed vary as well. Te products we looked at in this review cover three very distinct areas: • Rates & Forms Tools – Tese products provide quick access to current tax rates for thousands of tax jurisdictions, while also providing users with access to a library of tax forms that can be accessed and completed for fling. • Integrated Sales Tax Engines – Tese products are designed to provide solutons for larger busi- nesses that have more complicated sales and use tax needs. Most are designed to integrate with existing accounting sofware, working in tandem with that product to provide accurate, up-to-date tax calculations on any sales transactions processed. • Sales Tax Preparation – Tese products are designed to prepare and fle sales and use tax returns and ofen contain the ability to e-fle returns with the appropriate agency while also paying taxes electronically. So whether you're looking to implement a sales and use tax product in your own frm to assist your clients, or are simply looking for a product that your client can use with current accounting sofware, the overviews provided will helpfully steer you in the right direction. In a global economy, where businesses can fnd themselves shipping products thousands of miles away, it's imperative that sales and use tax be tracked and managed for accuracy and timely fling. ● BASIC SYSTEM FUNCTIONS E-COMMERCE & AUTOMATION REPORTING TOOLS INTEGRATION HELP/ SUPPORT OVERALL RATING Avalara Avatax Avalara TrustFile BNA Sales & Use Tax Rates & Forms CCH Sales Tax Offce from Wolters Kluwer CFS Tax Software CA and NY State Sales Tax Preparer Vertex SMB Wolters Kluwer CCH SureTax Mary Girsch-Bock Mary Girsch-Bock began her career as an accountant in the property management and healthcare industries. She is now a feelance writer specializing in business and technology issues and is the author of her frst book, several HR handbooks, training manuals, and other in-house publications. She can be reached at mary.girschbock@cpapracticeadvisor.com .

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