Your business will no longer have to look at sales tax as a liability or pay tax due amounts out-of-pocket.
You’ve done all the hard work of growing revenue and closing the books for the year, but somehow, your action item of rolling out sales tax still remains “the next priority” and you find yourself non-compliant. You’re still responsible for paying the sales tax amount that would have otherwise been collected from your customers, as well as any penalties and interest on the tax amount due. It happens to the best of us, especially in the fast-paced world of software startups.
Rolling out a sales tax regime can be a big help to you here. You’ll be able to monitor where you have sales tax obligations (i.e., where you’re approaching a state’s economic threshold or have remote employees) and where your products are taxable (i.e., where you’ll need to collect sales tax from customers).
To put the potential ROI into concrete financial terms, let’s take this example of how a state taxes software: Rhode Island has a state-only rate of 7.00%, and the penalties and interest applied to the sales tax amount are 50% and 18%, respectively. This comes to a non-compliance rate at about 11.8% of the revenue made in Rhode Island (depending on the time period the tax is left outstanding). By rolling out sales tax today, you would save that 11.8% to spend on other investments or departments to grow and expand your business, like hiring top talent or acquiring other businesses.
All of this means no more surprises or penalties and interest on outstanding balances—and no more stress about possibly missing details at the time of an audit. You won’t have to look at sales tax as a liability for your business anymore.
And if you aren’t ready to start collecting sales tax from your customers yet, that’s okay. Sometimes, sellers need leeway to communicate the change to their customers, thus adding buffer time before introducing sales tax to their sales price. Using a platform like Anrok will allow your finance leaders to control when they’re ready to collect tax from customers while immediately monitoring exposure and tax due amounts with no engineering effort required.
Automating the entire sales tax process saves you time, money, and headache—and frees up your time to focus on generating more money for the business.
Getting a handle on sales tax at any stage can be extremely difficult, especially if you’re selling software in a large number of states. The more you have to think about sales tax, the less time you have to improve operational efficiencies and help push the company forward.
The time spent on sales tax compliance can get… lengthy. Manually looking up customer addresses at the end of each month after you’ve invoiced the customer, preparing and gathering materials for or in response to audits—since software companies now need to worry about sales tax in places where they don’t have a physical presence—and other compliance tasks can quickly take up a lot of time.
Enter: automation. It goes without saying that automating those repetitive, mundane processes is a smart way to go for your teams and business. By implementing a sales tax tool, you can automate virtually every step of the sales tax process, from registration and backfilling transactions to customer collection, filings, and payments in every state you sell in. No missed steps, no missed deadlines. We like to call this sales tax for SaaS on autopilot—set it up and let it run for you.
You can invest in your business’s future and wellbeing instead of worrying about non-compliance.
When your team focuses on playing catch up with sales tax, you lose the ability to focus on growth opportunities. Engineering found an A+ candidate and wants to hire in a new state? Or sales wants to shift to a fully remote hiring model? All of these new hires could have sales tax implications. You may hold the team back from closing the best candidate or even discovering them in the first place. Without the right sales tax infrastructure, you are handicapping moving the business forward.
If software is taxable in that state, you’ll want to register immediately—and a sales tax platform like Anrok makes this easy and painless by offering an in-product registration flow, turning what can be a multi-hour process into a ten second in-app wizard.
With assistance in monitoring obligations and thresholds, in addition to a fully automated process, you’ll find yourself with more time in the day to make moves—monitor the market, better surface financial health insights, and grow the team.
As you can see, sales tax can be a headache for you and your company—but it can also be an opportunity to make a dent to your bottom line. There is a better way. You can save money and time, improve your employees’ jobs and happiness, and expand your business by rolling out sales tax sooner rather than later.
Anrok was built specifically for SaaS businesses like yours to help identify where exposures exist and effectively roll out sales tax. By utilizing Anrok, you can focus on what matters most. Contact Anrok today to find out what we can do for you and your business.