This article was written in conjunction with TaxConnex.
Sales and Use Tax and Property Tax compliance can prove to be a heavy time and expense burden on internal tax and accounting departments. Many corporations opt to outsource compliance in a cost-effective manner that allows them to focus their time and capital on core business functions. There are many issues that a full outsource of state and local tax compliance can solve for.
In conjunction with our partners at TaxConnex, we have compiled six benefits of outsourcing state and local tax compliance and why it is the best path for corporations in the modern business landscape.
1. Solve for the challenges of attracting/retaining the right talent. The Great Resignation may be over, but businesses still claim to have difficulty finding qualified talent to manage their sales and use tax and property tax obligations. In a survey conducted by TaxConnex at the end of 2023 of financial professionals, over 62% stated that their organization struggled to attract/retain staff with sales tax expertise. This struggle to attract the right talent has led to many negative outcomes for businesses including:
Outsourcing solves this issue holistically. By outsourcing to experts in state and local taxes, businesses can gain expertise on critical functions and export additional work, all without adding to their headcount.
2. Reduce legal liabilities for you and your business. Risk and liability fall entirely on corporations when they handle sales tax and property tax compliance in-house. And that could mean the CEO, CFO, Tax Director, or Controller, not just the business. An LLC does not protect the officers and executives from personal responsibility laws related to state and local taxes.
While it’s common for businesses to want to maintain control over financial processes and procedures, punishments for non-compliance are high risk (again, potentially on the individual,) and can range from assessments, penalties, interest, and liens, to the use of aggressive collection agencies. The risk of considerable damage to one’s business can be lessened or even completely avoided by leveraging an expert who works in sales tax and property tax every day.
3. Add focus back to your core business functions. Outsourcing can sharpen overall efficiency and accuracy while freeing internal resources to focus on other, higher-value tasks. Managing sales tax and property tax takes time, and for most businesses, it’s more than an annual filing like income tax. Instead, filings can be monthly, bi-monthly, quarterly, or bi-annually. Not to mention that filing dates for monthly returns can happen on multiple days.
4. Gain expertise with dedicated compliance personnel. Having an expert available for questions or concerns without adding extra stress internally can make a huge difference with all the complex changes happening in sales tax and property tax. Outsourcing your state and local tax compliance functions brings you experts who live and breathe the nuances of this requirement every day. This valuable component ensures the intricacies nationwide and throughout the year are being handled with precision.
5. Strategically deploy invested capital into other areas of the business. Outside providers save on expenses of in-house operations such as wages, salaries, health insurance, and office space – at a time when businesses need all the cost savings they can get. Another major cost and efficiency benefit is the automation of the sales and property tax process through technology. Tax dedicated outsource options have technology at scale and can offer the most customized software solution for your operations and bear all the burden of associated expense and contract management.
6. Gaining an efficient centralized internal tax process. Relying on an internal accounting or tax department to keep up with jurisdiction changes, filing requirements, and exemptions is a risky endeavor. Managing filing dates alone takes valuable time and resources from internal personnel. Keeping up with changing laws, statutory guidelines, freeport exemptions, and understanding sales and shipping processes to know where you’re responsible for collecting, takes significant time and expertise. Outsourcing tax processes allows for even more control than that which is possible with an internal team. Centralizing this function to experts who live and breathe sales tax and property tax provides access to experts, assurances compliance, and allows the ability to manage the process through one single point of contact fully engrained in all unique aspects of one’s business and reporting requirements.
If you are considering outsourcing your sales tax and/or property tax compliance, contact us today. With a network of state and local tax professionals in all 50 states, we are able to provide comprehensive outsourcing services to multistate operations ensuring not only compliance, but also optimal tax savings nationwide. Learn more about our property tax compliance process here, and our sales tax compliance process here.
