The average tax software has between 1,500 – 2,000 codes. Are you using the right one?
You’ve just invested in a tax-automation software. So now, you can sit back and let the tax decisions make themselves, right?
Unfortunately, it’s not quite that simple.
Two of the things we see most frequently are (1) clients who have purchased a tax software, but aren’t sure how to classify their products/services into the myriad of tax codes that exist, and (2) clients who use a tax software but still face hefty audit liability or customer tax disputes because of inaccurate tax mapping. You’ve heard the adage before, “garbage in, garbage out.” The same is true with your tax software – be it Vertex, Avalara, or OneSource.
The reliability of your software is largely a function of the accuracy of your tax mapping – what codes are you using to categorize your products/services, where are you turning nexus “on”, and are you taking into consideration state-specific exemptions and local tax implications?
Of course, the more accurate you are in how you map, the better results you will receive from your tax software. This helps you keep customers happy and mitigate your audit risk.
Sometimes, tax codes can get technical. For instance, there can be 100 codes for software classifications alone, each of which can produce a different taxability result across various state lines. In other words, what tax code you select could drastically impact your taxability determinations. Having an expert who understands the tax implications of the codes you use can help you minimize risk.
Tax software is no substitute for real tax advice. Let’s face it, these softwares are designed to be a “one size fits all” and your business is not a cookie cutter business. That’s why having professional tax consultants assist with your tax mapping, troubleshooting, and general sales tax questions can be so advantageous.
Whether you are pre-implementation or post, looking for someone to map for you or to verify existing product classification, True Partners Consulting can help you map your way to success. And since you’ve invested so much in your tax software, don’t you want to make sure it’s performing at its full capacity?