As we enter the new year, businesses face a familiar challenge: managing sales tax compliance in an ever-changing regulatory landscape. According to a recent survey* by Avalara, nearly half of U.S. tax professionals and business owners surveyed say their biggest challenge with sales tax compliance is staying up to date with dynamic sales tax laws that impact their independent retail clients and businesses.
Let’s explore how to transform your sales tax management from a source of stress into a streamlined process for the year ahead.
The growing complexity of sales tax management
The numbers tell a compelling story about the current state of sales tax compliance. Business owners are spending increasingly more time on sales tax activities as their operations grow. While smaller businesses might dedicate 1-10 hours monthly to sales tax activities, companies with higher revenue often find themselves spending upward of 20 hours per month on these tasks.
This time investment becomes particularly concerning as we approach critical deadlines. With 1099 forms due at the end of January, businesses are juggling multiple tax obligations simultaneously, making the need for efficient systems more crucial than ever. And did you know Avalara has a solution to easily e-file and manage 1099s online?
Why manual processes no longer cut it
The landscape of sales tax compliance has evolved significantly. Consider these revealing statistics from Avalara’s survey:
- 44% of businesses find “keeping up with changing tax laws” as their biggest hurdle
- 17% face challenges managing sales tax exemptions
- 15% struggle with calculating correct tax rates
- 12% have difficulty filing taxes on time
These challenges explain why 97% of respondents indicated they have automated or plan to automate their sales tax compliance process. The message is clear: automation isn’t just a luxury—it’s becoming a necessity.
Creating a streamlined approach for the new year
As you plan for the year ahead, consider implementing the following three strategies to simplify your sales tax management:
1. Embrace automation
Today’s businesses are increasingly turning to automated solutions like DAVO, with 56% of those surveyed already using specialized software and tools. DAVO’s automated system integrates seamlessly with your point-of-sale system, handling daily sales tax collection, filing, and payment without any manual intervention.
2. Ensure accurate daily management
Rather than scrambling at the end of each tax filing period, implement a system that manages sales tax daily. DAVO automatically sets aside the exact amount of sales tax you collect each day, ensuring you’re always prepared for filing deadlines.
3. Stay informed about tax changes
While 60% of surveyed businesses rely on software tools to identify tax changes, many still spend countless hours on online research (56%) or consulting with professional advisors (56%). With DAVO, you can focus on running your business while our system automatically adjusts to tax rate changes and new regulations.
Looking ahead
As business operations become increasingly complex, the importance of efficient tax management systems cannot be overstated. In fact, 88% of surveyed tax professionals stated it’s “very important” for compliance automation software to connect with platforms they already use, such as ecommerce, payroll, and accounting systems. DAVO’s seamless automation offers the perfect solution for restaurants and retail businesses looking to streamline sales tax processes in the new year.
Ready to transform your approach to sales tax management? Start the new year right by implementing DAVO’s automated solution. Contact us today to learn how we can help you achieve peace of mind with your sales tax compliance.
*The research was conducted by Censuswide with 250 respondents in the U.S. responsible for managing tax obligations at these business segments (accountants, bookkeepers, directors of finance, owners, managers etc.) between October 14 – October 17, 2024. Censuswide abide by and employ members of the Market Research Society, which is based on the ESOMAR principles. Censuswide are also members of the British Polling Council.
EN 
ES