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Business Management and Process Consulting Blog

Use Avalara's AvaTax to Navigate Tax Compliance Issues

Asyma Solutions Posted by Rob Greeno
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Posted on October 1, 2014 at 9:00 AM

When your business grows, it grows everywhere – including in sales tax requirements. When this happens, you appear to have only two choices: to sink time and energy into sales tax management, which doesn’t make you money, or carry the risk of being non-compliant, which could cost you money.

Or is there a better way?

CASE STUDY: Joe’s Bike Shop in San Diego, California.

Joe’s Bike Shop started out as a booming brick and mortar store, with local cyclists eager to buy bikes, cycling apparel, and any other cycling equipment Joe had for sale.

From a sales tax perspective, Joe has to consider the following things:

What is the current sales tax rate at his current location?

This is important because he must charge his customers that rate on their purchases and states, cities, municipalities, etc. can all have their own sales tax requirements.

How much does he file to the local taxing authority versus the state taxing authority?

This is important because it’s not necessarily an even split, so Joe must find out which organization gets what amount.

How are different products taxed in his area?

This is important because sometimes things are taxed at different rates, so he needs to know if his cycling clothing is taxed at a different rate than his bicycles.

Does he have tax exempt sales?

This is important because Joe must decide if he wants to turn away customers with tax exempt status or if he wants to invest in managing exemption certificates.

Does he owe if he sells online?rules__regulations

This is important because if Joe opens an online store, his sales tax requirements will change drastically. Some online stores charge the sales tax rate of the state in which the customer resides. Some online stores don’t charge sales tax but send a summary of purchases to each customer to report to the IRS. Some online stores charge the sales tax rate of the state in which their inventory is stored.

Going online also opens up filing questions – when to file how much with whom, and rates and rules questions – when will the rates and rules change in his shipping regions.

Joe gets all this sorted out and everything is going well, so he decides to go global. Now he’s selling to other countries and taking advantage of a bigger market, which means more sales and higher profits.

Business couldn’t be better, but again, the sales tax requirements have increased. Now Joe must contend with different systems of indirect tax, like Value Added Tax, in addition to all the other tax issues he’s already worrying about.

Ultimately, what does Joe do about his sales tax compliance? Does he spend a lot of time and resources making sure everything is perfect or is he a little less exacting but risking issues if he’s ever audited?

Or does he choose to adopt sales tax technology that will automate the whole process?

Increasingly, businesses are turning to Avalara’s AvaTax to handle their sales tax compliance issues. When Joe chooses this option, he knows that as his business grows, the capabilities of AvaTax grow too, so he can save time and resources and keep his risk low while still being 100% compliant.

In other words, Joe can focus on growing his business instead of worrying about his growing tax compliance requirements, because with Avalara’s AvaTax, he knows he’s covered.

Get ahead of the game by reading the Sales Tax Survival Guide. In it, you’ll learn the top eight business activities that increase your tax burden – and how to survive them.

Or, you can contact Asyma Solutions for more information.

 

Rob Greeno
Written by Rob Greeno

Rob Greeno graduated with a marketing diploma from Lethbridge Community College and a business management degree from Mayville State University. He has been with Asyma Solutions for over ten years. Rob meets with prospects to help them create the process needed to reach their biggest goals. He has a passion for providing businesses with systems and procedures that work the way they want and need. Rob’s goal is to catch the flaws before they have the potential to cause problems. When not working Rob likes hunting, skiing, camping, and spending lot's of time with his two sons.

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