Is your company overlooking tax compliance abilities in its ERP system?

October 21, 2014
Posted in ERP
October 21, 2014 TM Group

Is your company overlooking tax compliance abilities in its ERP system?

Tax compliance is simpler and more effective with the right ERP module in place.

While enterprise resource planning software started off as a solution based in the manufacturing industry, successive generations of the software have made the benefits of ERP available to businesses of all sizes and types. The history of ERP still affects the perceptions businesspeople hold of it, however. Companies don’t always understand the full range of benefits that ERP offers, whether those advantages come from additional modules or individual customizations. One need that is sometimes overlooked is tax compliance and management, an incredibly important aspect for any business.

Growing businesses often enter new markets, expand product offerings and make other changes that can have an impact on taxable income and compliance, MS Dynamics World pointed out. The gains made by a developing company often result in changed or additional tax issues including some that organizations may not even realize exist. For that reason, having an ERP module that connects across business operations and tracks new and different tax requirements is a distinct advantage. Businesses can move forward in their plans to expand and grow with the confidence that they aren’t overlooking a tax-related requirement or compliance issue. This software module also helps businesses avoid potential overpayment of taxes and the tedious auditing process that goes along with trying to get that money back after the error is discovered.

Just a few of the many aspects to consider
Tax compliance software maker Avalara highlighted a host of different compliance issues in a recent white paper, noting that some decisions made by companies have unintended tax consequences. One area is the hiring of independent contractors, a move often made by businesses for temporary positions and consulting work. Avalara pointed out that documenting contractors is a different and more complex process than for full-time hourly or salaried employees. Expanding businesses, which often have a temporary need for specific skill sets, are especially vulnerable to these tax laws.

There are also many aspects in the product formulation and packaging realms to consider when it comes to taxation. The type of packing material used – a secondary concern for many businesses – can impact whether an item is considered taxable or not, as can a changing or broadened intent for a product’s use. Avalara pointed out that U.S. tax codes related to products can change millions of times per year overall. Businesses that want to avoid tax compliance issues should consider working with an ERP partner who can help them implement a solution into their current system.

To learn more about common tax compliance issues, download Avalara’s white paper by following this link.

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