How technology can simplify your sales tax compliance

Jake

I’m your host, Jake Jones, Multimedia Producer and Brand Influencer at Zone & Co, and I’m joined this week by two of our partners from Avalara: George Padilha, Senior Strategic Alliance Manager, and Sam Blass, Sales Executive. Thanks for joining us again today, guys.

George

Appreciate it—thanks for having us back.

Sam

Thanks for having us, Jake.

Jake

Over the past few episodes, we’ve introduced the complexities of sales tax, talked about how it can easily get complicated for your business, and we’ve heard real-life examples of dealing with tax compliance. Along the way, we’ve hinted at hope for a solution, and today we are going to talk about how you can use technology to improve your sales tax compliance. George, Sam, I’m really glad to have you both back on for this finale episode on compliance. Before we start talking about some of the hope we’ve been alluding to in some of our other episodes, I do want to give you guys space to remind our audience of who you are, who Avalara is, and what you guys do. 

Sam

Of course, Jake, we’re excited to be back. Avalara is a sales tax compliance cloud helping our customers and prospective clients navigate the waters of sales tax, whether that’s with research and services, and/or compliance automation, we integrate into thousands of ERPs and accounting systems. Again, just to ease the burden that is sales tax compliance. 

George

My name is George Padilha. I work with Zone & Company. My job is to maintain that relationship with Zone and make sure that your clients are always taken care of in the background. Whether it’s helping with an upgrade or if you have an implementation that needs some adjusting, I know how to because I’ve been here for almost six years and fortunately I love what I do, and I work very closely with Zone just to make sure everything is running on all cylinders. 

Jake

Absolutely. We appreciate both of you and what you do for us here at Zone and how you help our clients and customers. Really glad to have you guys back. You guys started this whole arc off talking about the complexities of sales tax and now we have you back to talk a little bit more about the hope. So, we’ve had some episodes talking about the complexities of sales tax and what it’s like to struggle with compliance, and we’ve also talked a lot about hope for a better way. And that’s what we’re here to talk about today and really focus on, so let’s start with the question: How can a company use technology to prove their sales tax compliance?

Sam

Jake, great question. Tying it back to episode one, it’s understanding your Nexus. So that’s where I would start. Leveraging a solution like Avalara allows a software to track your sales activities and any future obligation to register and collect new sales taxes. In the first episode, we talked about the complexities of local jurisdictions and aligning tax codes to zip codes and how there’s not a clean overlap there. So leveraging a solution like Avalara allows you to get a little bit more granular detail in regards to a rooftop-level calculation, so you’re tracking your business activities for future expansion, to ensure that you’re collecting everywhere you need to, you’re allowing a team of experts to manage the content, the rules, and legislations that go into these tax laws to accurately calculate your tax rates based on the products and services that you sell. And then automating the remittance of that back to the states as well. Let’s allow our finance and accounting individuals to put out fires elsewhere and not bang their heads against the wall filling out returns back to the states. Yes there’s some states’ returns that are very easy and simple, and then there’s other complex returns that can take hours out of your day to manage that, so through the automation that Avalara can offer, that’s really where the hope comes in—let’s take it off the table. Let’s sweep this pass-through activity that is sales tax, let’s take it off the table so we can focus elsewhere.

George

In terms of technology, in helping advance and solve your sales tax problems, Avalara really does have a competitive advantage because we were built on the cloud and we have real-time updates as sales tax changes happen. As I mentioned in the last podcast, there were 32,000 changes in the last couple of years alone. The reason why is because there are 12,000 different taxing jurisdictions. So, by having us update in the cloud, it just makes everything a little more fluid and easier. Not to mention the fact that we have over a thousand connectors and bundles as well that can seamlessly connect a NetSuite ERP to something like an ecommerce store or a CRM, like Salesforce. So we can connect everything seamlessly and have a full picture of a solution for you in automated sales tax. 

Jake

I love that. I like how this is all brought back to automation, right? Like, this is such a complex thing and, as we’ve talked about in other episodes, there are so many facets to this, whether it’s cross-border, whether it’s the fact that sales tax is constantly changing. But the truth is that this is something that can be automated, and Sam you brought up a great point: When we automate this, we take this off the table for your team. And so I want to talk about is, what is it like to live with seamless tax compliance? To have this process automated? And what opportunities does that open your business up to?

Sam

That’s a great question. It all comes down to the roles and responsibilities within the org. A client that I was working with was able to focus more on customer issues in regards to billing. “Hey, we accidentally billed this person incorrectly,” right? And going and actually retroactively focusing on the clients in regards to the finance and accounting portion of those bills, and so instead of being focused on pulling a liability report and detailing out in this form and sending it back to the state down to the penny, down to the jurisdiction, and including all my local details—you know, that’s not much fun to do. I can tell you from experience it’s something that Avalara requires their sales executives to go and feel what it’s like to fill out these forms, and you could understand why folks are willing to invest in a nominal fee to automate the remittance back to the states. And, when it comes down to the collection portion, it’s not having to constantly go back and report on where are our sales, where did we sell our products last month? Okay, let’s ensure that we didn’t cross a new threshold in regards to taxes, right? By connecting a system that has the logic to track everything for you, it’s something that is incapable by just a regular person, unless they are spending a lot of time focusing on that data. 

George

I would probably say—building off what Sam said—is thirty years ago, people had their payroll in house. Now, fast forward to today, no one has that in house. Why? Because it’s a non-revenue-generating activity. And I think it’s safe to say that calculating sales tax, whether it’s calculating sales tax, filing those sales tax returns, or managing those exemption certificates, are a lot more complicated than payroll. Have your finance department do something more productive, like streamlining your accounts receivable department or streamlining your accounts payable department, or trying to figure out a go-to-market strategy on a new product within a certain demographic. That’s a more revenue-generating activity that would be a little more beneficial to any of your clients. 

Jake

George, I love how you brought that all together. Your finance team is currently focused on a non-revenue-generating practice of making sure we’re compliant with the laws of sales tax. If we could take that away, they could focus on more revenue-generating activities. And I think that’s such an excellent way to think about it. Are there any final tips you’d share with a company that’s maybe starting this sales tax compliant journey? 

George

So, for me, what I’d suggest is that we have a lot of different solutions that can help you get into the door of automating. Now, whether or not you are ready to fully automate or let’s say you don’t know, we have something called a sales tax risk assessment where we’ll analyze exactly what your liabilities are in the states that you’re doing business in. We’ll do that as a service. Additionally, let’s say you know you have liability but you don’t know what to do. You’re kind of putting your head in the sand. We also have a solution called voluntary disclosure agreements, where we’ll represent Zone & Company’s clients anonymously to these states and say, “Hey, we have a client that knows they owe money, they don’t know what to do, they want to make things right.” We represent them anonymously and only until we come to a written agreement do we actually disclose that client’s information. And again, it’s on a case-by-case basis. We obviously can’t guarantee anything, but a lot of times we can get those penalties waived and a lot of that interest taken away by offering that solution. And then we can actually move into automating that sales tax, whether it’s adding the ABBA tax where we’ll calculate your sales tax rates, or adding that exemption certificate piece if you’re managing over three-hundred exemption certificates—you’ll really want to look at automating that. Then, finally, the main part that we have is automating your sales tax terms. Now, let’s say you don’t need the ABBA tax and you’re okay with native NetSuite or SuiteTax, we can actually add that sales tax returns portion to SuiteTax or native NetSuite and automate that process for you as well. So, there’s a lot of different solutions, but in terms of calculating Avalara through the ABBA tax versus native NetSuite, we have a couple of competitive advantages, and if it’s complex in any way, shape, or form, then you would want to be part of that conversation and then you can decide what’s best for you. 

Sam

You know, you ask what’s a tip for these companies, and it’s not allowing sales tax to fall on the back burner. Companies are often streamlining processes and sales channels and they’re adding systems, oftentimes they’re allowing that tax conversation to fall on the back burner. And they’re having to pull an audible or have a fire drill at the end of a project when, if they just would’ve had a tax discussion with a tax expert at the forefront, they could have aligned the track accordingly. Attack any sort of issues or make a change to the project plan according to a tax requirement. It may be minute, but it may have a large impact on the overall project. So, we’re going to need to handle this quote-to-cash process differently because of how our invoices are impacting taxability on those invoices. Or, how we’re billing our client. There’s a multitude of areas that, if you just would’ve had a conversation with a tax expert early, it would’ve avoided a lot of headache in the long run. 

Jake

Sam, George, thank you both again for being back on the show. This has been an awesome conversation about how we can live with seamless sales tax compliance. I really hope that our audience has gotten some great tips out of this and that they will, as you said at the end there, Sam, they’ll look at sales tax on the front end and not let it be something that’s on the back burner. So, thank you both again for sharing your expertise. It’s been great having you on for two shows now. Maybe we’ll have you on later in the future. 

Sam

Jake, we’d love to come back anytime you’d have us. It’s been fun talking sales tax with you. Hope your listeners do find this valuable as they navigate the complexities of sales tax. Avalara’s here to help and we’re happy to partner with Zone & Company.

George

Thanks a lot, Jake, I appreciate it. Really love our partnership between Zone & Company and Avalara—looking forward to many more years of working with you guys.