Should firms outsource Sales Tax Department? The question is quite relevant in today’s context, and sales tax department outsourcing is growing at a fast rate. The basic reason behind this growing trend is the extended client services offered other than traditional return preparation services.
Those who are looking for outsourcing sales tax department operations should be beware of certain factors that can help in deciding and employing right outsourcing services.
Extent of Internal Sales Tax Expertise
Extent of internal sales tax expertise is the prime thing to be analyzed while seeking the service of a sales tax department service provider. Internal sales tax expertise generally affects multi-state business more when compared to small and mid-sized businesses. Multi businesses are usually engaged with sales tax nexus, registrations, taxability, audits, or exemption certificates. It will be really difficult to handle the day to day issues if the business lacks internal sales tax expertise. In such situations the service of sales tax department service provider will be really helpful. Small and mid-sized businesses can also seek services of an external provider to increase speed in operations, reduced cost and better streamlined work flow.
Need for Unique Process Support
The need for efficient process support is often needed in firms managing sales tax credits. This sales tax credit occurs when a sale is made and its tax is being charged on the invoice. The client short-pays the invoice and issues an exemption certificate. In case of an accounting company, they are responsible for sales tax payment and this result in the creation of a sales tax credit. Usage of this credit is unique and this varies with company also. An outsourced sales tax department can handle these situations more efficiently and in a client-friendly approach.
Business houses must be flexible to change. There may raise situations in which firms look for new acquisitions, ERP systems, technology updation or restructuring. Managing changes in such situations are important for ensuring flexibility and hence business maintenance.
Managing Multiple Processes
Need for managing multiple operations simultaneously often cause firms to outsource sales tax department. Some firms find it difficult to manage the treasury or payment process at the same time. In such cases, firms seek the service of two separate vendors, each responsible for different portion of the process. This results in wastage of money and lack of a centralized approach in operations. An outsourced sales tax department can manage both the operations under one roof.