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Sales Tax Outsourcing | Why Outsource Your Sales Taxes

By July 18, 2019January 19th, 2021Outsource Accounting, Small Business

You’re starting to feel like a fish out of water. Lately you’re hearing about all these legislative changes and additions regarding online sales tax compliance. To top it all off you’re trying to figure out a way to make the process of collecting, filing, and remitting sales tax as easy as possible. (For more information on these topics click here). You just don’t have the time to do it all in house while trying to grow your company at the same time. It’s just common knowledge that fish don’t do well out of water. They kind of just flop around and it’s hard to watch.  Therefore, you should consider sales tax outsourcing to help you get swimming again as soon as possible.

Outsourcing Sales Tax Considerations

You might be thinking that flopping around is better than the alternative. Trusting someone else with such an important part of your business seems like a big step. 

Reliability and Experience

You might be worried that the outsourcing company won’t do as good of a job as an inhouse staff. It’s understandable that you want to stay in control of the process. It’s hard to trust someone else with something so important to you. Having your own in-house sales tax team may seem like a good idea at first. However, there are less people entering the tax field and many in house departments have a high turnover rate (with you getting stuck with those costs). The people that work in outsourcing firms have a lot more experience; they are usually highly focused on your taxes. They also are very aware of the current laws and can help you make sure you follow them correctly. This ensures that you are sales tax compliant and don’t have to pay those pesky penalties and fees.

Costs Versus Benefits

Another thing to consider is cost. This is influenced by the size of your company and the complexity of your sales taxes. If your company is very small and you only have a few sales tax returns every month, then maybe it is more cost effective to keep your sales tax services in house. When you start having more than a few sales tax returns every month (usually somewhere between 15 to 20) it might be more cost effective to outsource.

If your sales taxes are more complex because you’re selling on multiple channels and in multiple states, it might also save you time and money to outsource. If you are experiencing growth, it may be worth it to outsource your services even as a small business. This helps set you up for long-term growth without the hassle of having to find a good outsourcing firm later. You can just focus on trying to grow your company.

Tax Software Considerations

Can’t companies just find some miracle sales tax software and then call it good? Outsourcing companies have experience with helping businesses know which sales tax software would best meet their needs. Not all sales tax software is the same. (For more information on sales tax software click here). Many outsourcing firms have already done their homework when it comes to sales tax software options. They know the ins and outs and have already put in the huge initial investment in time to familiarize themselves with it. You probably don’t have that kind of time to invest in that process while running a business.

Above and Beyond Automation

On top of that, sales tax software alone may not be enough for your business needs. At LedgerGurus some of our top sales tax professionals have the experience to know this. They follow more in depth processes to make sure the software is getting things right. Software is helpful, but it can make mistakes and be unforgiving when things aren’t matching up. At LedgerGurus our professionals verify the client’s data.

The Process

LedgerGurus professionals verify client data by:

  1. Pulling reports from their selling platforms (Shopify, Amazon, etc.).
  2. Summarizing key numbers such as gross sales, taxable sales, amount collected, number of transactions and applicable states and local jurisdictions using Excel Pivot Tables. This better shows if the software captured everything it should have.
  3. Look for key issues. Such as if the client collects more than what the software collects. It’s important to make sure they remit the whole amount. It’s illegal to pocket any of it. This is especially important for businesses who use software such as TaxJar. Sometimes TaxJar uses its own number for certain states and this creates an excess. This creates the need to manually file or file an amended return at a later time.
  4. Make needed manual adjustments. LedgerGurus professionals take care of these manual steps that would otherwise be tedious and time-consuming. We guarantee that companies remit all that was collected. We also manually adjust transactions as needed to show the correct amount of taxes so that you don’t remit more than is necessary. Every filing is approved before it is filed. We can help automate a lot of your sales tax process. But the software (automated or not) will not manually check that data for you to ensure your sales tax isn’t over or under-stated. That’s where we come in!

Offload to LedgerGurus

If you are looking into your options when deciding whether to outsource your sales tax needs, then take into account considerations like time, cost, experience, and your business needs. Whether your sales tax staff have too much on their plate, or you are just starting off on the sales tax journey, we are here to help. Feel like a fish out of water? Flop no more. Outsourcing your sales tax can help you ride those tides of growth!

For more information on how LedgerGurus can take on your sales tax load click here.