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How to make sure your sales tax engine goes the final mile

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Last Updated

How to make sure your sales tax engine goes the final mile

Anrok | Streamlined sales tax for SaaS

In a previous post, we uncovered the truth about your tax engine and how it can fail to meet the needs of SaaS finance leaders. We specifically touched on where it falls short in monitoring exposure, calculating sales tax correctly, and reliably integrating with your financial stack. But that’s only a part of the picture.

This article examines the tail end of the process. We’ll look at what you need when it comes to reporting, filing, and remitting sales tax – and why it’s important.

Robust reporting is key

When you’re evaluating tax engines, you might not even realize all the features you need. Calculating your financial exposure correctly seems like half the battle, but being able to reconcile those calculations from a macro-perspective is also crucial.

Be on the hunt for a tax engine that provides granular, flexible, and above all, reliable reports. With a robust reporting system, you can readily prepare for internal and government audits. It should be easy to trace and verify how refunds and other related transactions impact what was reported in a return. Clear visibility into your financial data also has knock-on effects for managing your cash flow.

Additionally, your sales tax engine should be able to keep up with changes as you make them. Take delayed true-ups: if your SaaS business is seat- or volume-based, it’s common to have a delay between the initial invoice date and when a true-up actually happens. If your tax engine isn’t in step with your billing and accounting system, it may miss crucial changes to an invoice. As a result, it’s harder to guarantee reconciliation and match ledgers.

Powerful reporting tools also arm finance leaders with the tools to make better strategic decisions. A modern tax engine should let you aggregate and view transactions several ways, such as by which return they are associated with, a specific time period, or jurisdiction. You should also be able to tie it with your general ledger or ERP and readily match the dates and reconcile the relevant information.

For instance, with Anrok, your tax team can use the sales page to aggregate transactions by jurisdiction for any needed timeframe. You are able to filter and analyze your transactions in real-time, all within your sales tax compliance platform.

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Anrok | Streamlined sales tax for SaaS

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Sales tax returns shouldn’t be a hassle

Manually filing your tax returns is a time-intensive process that increases the possibility of errors and lost revenue paid in penalties, interest, and fees. The rise of “automated filing” has helped many businesses minimize mistakes, from inaccurate data to missed filing deadlines – but too often is the automation offered too simplistic. Purely outsourcing filing to a third-party is not true automation.

Let’s consider your sales tax filing frequency. How often you’re required to file usually varies based on your revenue in the jurisdiction. As your revenue grows, your filing deadlines become more frequent. These revenue thresholds and how it maps to filing cadence vary widely across jurisdictional lines, making it difficult to track what your filing obligation is and when it changes. You’re still on the hook if you fail to file on time, even if a local tax bureau changes its filing thresholds or cadences.

Unfortunately, many finance leaders start off on the wrong foot by picking the wrong filing frequency or start date after registration. It’s also easy to overlook a jurisdiction’s changing filing guidelines or the point where your sales exceed limits that move you from quarterly to monthly filing.

Fortunately, modern tax engines can help. The best engines automatically suggest your ideal filing frequency by jurisdiction and detect when you may need to make changes. And Anrok is the only tool that monitors and alerts you when your filing frequency changes so you can stay ahead of the game.

Plus, Anrok automatically associates the relevant transactions into the appropriate returns, so when it’s time to file, all you have to do is sit back, sip your coffee, and let your tax engine do the heavy lifting.

Entering the home stretch: filing and remittance

Filing and remitting sales tax is the last step in the sales tax process (assuming you don’t undergo a costly audit). It’s important to calibrate your sales tax process to account for all the nuances, so you don’t waste time plugging the gaps at filing time.

One such sticky issue is how filing works in home rule jurisdictions. Home rule jurisdictions charge sales tax separately from the state tax bureaus. For example, even though the state of Illinois doesn’t tax SaaS products, Chicago does, which means you have to track and collect sales tax on your Chicago sales.

Most tax engines aren’t attuned to account for home rule jurisdictions (or require a user configured work around). For example, legacy tax engines miss crucial home rule jurisdictions like Chicago and Boulder, whereas Anrok is built specifically to suit the needs of SaaS leaders who frequently sell to users in these cities. With Anrok, you don’t have to manually file and remit for these common cities that tax software.

Your tax engine should also check the box when it comes to automated tax filing and payments. If not, you may have to manually oversee the process, which can cost you thousands of dollars in man-hours and potential mistakes.

Using Anrok’s Easyfile feature, all returns are filed on autopilot. Of course, you can review and amend them first – for instance, to remove anticipated large refunds off your next tax return. Anrok fulfills the remittance and payments to each jurisdiction for every customer, no separate software or interface required.

Tax compliance relief is in sight!

If you’re a finance leader in the SaaS space, then you understand the burdens that sales tax can impose on your company is increasing as you grow. No matter how complicated it is, it’s up to you to pay the right taxes in the appropriate jurisdictions. You’re still responsible for any headaches caused by physical nexus from remote employees and the sale of digital subscriptions.

The right sales tax engine can account for and adapt to these nuances as they arise. At Anrok, we’ve built a sales tax solution that uniquely satisfies the needs of SaaS businesses. Our approach abstracts away the complexities of sales tax monitoring and calculation and backs it up with robust end-stage features, including:

  • Detecting filing frequency changes
  • Clear, modern reporting systems
  • Accounting for refunds and true-ups in real-time
  • Automated filing with Anrok Easyfile

Anrok is the ideal sales tax solution for the Internet era. The time you free up by avoiding manual compliance means more time for strategic planning. The accuracy gains from calculating and filing in home rule cities unlocks more revenue to reinvest in hiring and growing the company. Schedule a demo to see the difference a modern sales tax tool can do for your filing and remittance process!

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