When is it worth getting a business problem off your plate? Businesses outsource tasks every day, from marketing to operations to finance. But is there more you should be outsourcing? Does it make sense to keep things in-house if you don’t have an expert on staff? According to TaxConnex’s recent market survey of 100 top finance professionals, this could be the year to outsource sales tax services.

Three-quarters of respondents reported that online sales as a percentage of revenue have increased in the last two years – yet three out of five also said they’re “not completely satisfied with the way they are managing sales tax.”

Three of these execs’ biggest in-house deficiencies to managing sales tax in 2022: bandwidth, internal knowledge and the right partner or solution. Over half of those surveyed also still use internal sources to prep and file sales tax returns, remit payment to tax jurisdictions, and handle tax notices. Seems like something needs to change.

Sales tax compliance involves everything from determining if your company is obligated to collect and remit sales tax in a jurisdiction (aka nexus) and monitoring ever-changing tax laws to maintaining filing calendars, collecting data and filing the correct forms on time. You need someone on staff who understands evolving rules and regulations; can track a galaxy of filing deadlines and notices; and understands how your company growth changes tax obligations. 

That’s a tall order. Here are four reasons why it might be a good idea to start looking outside your office for sales tax help.

1. Tough employment landscape. The Great Resignation continues to siphon workers from the labor pool, leaving you or your remaining staff to pick up the slack. And chances of errors multiply as fewer people try to do the complex work of sales tax compliance with more on their plate or without the proper expertise.

How many staffers will it take to handle your current and future sales tax obligations? What resources will they need to handle this new responsibility? What will be their reaction to the new workload – and will that workload be a factor in their quitting down the road?

2. Legal liability. The risk and liability is all on you if you handle sales tax in-house. And that could mean you, the CEO, CFO or Controller, not just the business. An LLC does not protect the officers and executives from personal responsibility laws related to sales tax.

It’s only natural to fear outsourcing this piece of your business because you want to maintain control over the process and your finances. But punishments for non-compliance (again, potentially on you) can range from assessments, penalties and liens to the use of collection agencies. You could be looking at considerable damage to your business, a risk you can lessen or even completely avoid by leveraging an expert who works in sales tax every day.

3. Outsourcing can free your business to do what it does best. Outsourcing can sharpen overall efficiency and accuracy while freeing your internal resources to focus on other, higher-value tasks. Managing sales tax takes time, for the majority of businesses, it’s more than an annual filing like income tax can be. Instead, filings can be monthly, bi-monthly, quarterly, or bi-annually. Not to mention that filing dates for monthly returns can happen on multiple dates! Managing filing dates alone can take time away valuable time from you and your staff. Add in keeping up with changing laws, understanding sales and shipping processes to know where you’re responsible to collect, takes even more time and expertise. 

4. Support and savings when you need them most. Having an expert available for questions or concerns without adding extra stress to your own team can make a huge difference with all the changes happening in sales tax. Outside providers can also save you such expenses of in-house operations as wages, salaries and office space – at a time when businesses need all the help they can get for such costs. 

With the cascading changes in sales tax continuing into 2022, compliance is clearly not getting any easier. If you’re looking to reduce costs, increase efficiencies and minimize the substantial risk of noncompliance, reach out to an expert. Consider working with TaxConnex. Contact us to learn what it means when sales tax is all on us.

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.