Sales tax management is a complex task and can take up valuable time for your Software as a Service (SaaS) company. Regulations are constantly evolving, which can make managing sales tax challenging.
Because tax rules can differ between states and offer complicated terms, your SaaS company may need to take extra steps to remain compliant. As these regulations are continuously updated, it’s vital to remain aware of the latest changes to avoid fines and penalties.
Challenges of Sales Tax Compliance for SaaS Companies
You likely have customers across different states, meaning you’ll need to comply with the tax rules in each one. The complexity of this can make it challenging to accurately calculate and collect the correct amount of sales tax for all your transactions. If your company is a small to medium-sized enterprise, you might also encounter difficulty with devoting resources to an internal team to manage this aspect of your business.
Subscription billing is a commonly used billing method in the SaaS industry, but it can create problems with sales tax management because of the varying rules around sales tax for recurring payments. You must ensure you’re charging the correct amount of sales tax on every subscription payment and remitting this money to the appropriate tax authorities.
Manual processes for sales tax management take up a considerable amount of valuable time and leave your company open to the risk of errors and inconsistencies, potentially leading to fines, penalties and audits. This issue results in your company spending more time and resources on solving tax management problems, which can take the focus away from other important aspects of running your business.
The best solution is to automate your sales tax management so that you can reduce risk and set your company up to be ready to enter new markets.
How We Can Assist With Sales Tax Compliance and Reporting
Compass East consists of a team of experts geared up to help you simplify your sales tax management. We can customize our tried and true solutions to best serve your SaaS company. Our cloud-based technology offers efficient data collection and gives your company the opportunity to grow its financial and accounting operations.
We can also help you achieve a streamlined process for profit identification and contract management. When you have an efficient system to track your revenue cycle and data collection, you incorporate processes essential for productive SaaS reporting.
Our services can provide you with financial insights into vital SaaS metrics such as churn, customer acquisition cost, average accounting rate of return (ARR) and lifetime value. This information is useful for strategic business planning as your company grows.
Yours is a modern business in an original industry. Allow our process to simplify the financial and accounting aspects of running your company, which begins with re-evaluating the foundation of its finances.
Our Service Benefits
Sales tax management is a continuously evolving aspect of tax law, which is why continued support in this area is vital for your SaaS company. We will assist you with improved accuracy, minimized audit risk and reduced costs while running your sales tax management operations.
Improved Accuracy
Outsourcing your sales tax management to us will help you achieve accuracy in your calculations and filings thanks to our specialized expertise and tools. We will also ensure that our sales tax management strategies are up to date with the latest regulations and requirements to help you avoid expensive fines and penalties.
Minimized Audit Risk
Sales tax audits can be time-consuming, disruptive and costly, particularly if your company is found to be non-compliant. We can minimize this risk for you so that you can rest assured in your business. We will ensure that sales tax filings are accurate and timely, and we will provide the correct documentation supporting your company if you are ever audited.
Reduced Costs
By outsourcing your sales tax management to a reputable firm such as ours, you make a wise business decision. Setting up an internal team to manage this process can be a lengthy and costly drain on your company’s resources with the expenditure of hiring and training required staff.
When you take advantage of our service, you free up valuable company time to focus on other profitable business processes for a fraction of the cost. You can confidently count on us to manage your sales tax to avoid any expensive penalties that can arise from non-compliance.