The Importance of a Single Source of Truth for Sales Tax Calculation and Reporting

Feb 19, 2024, 09:41 AM by User Not Found
As tax season begins to approach, you’ll want to get a head start on ensuring your records are in order—including your sales tax records. Sales tax calculation and reporting can be a challenging task for B2B businesses. From accommodating tax-exempt customers to configuring sales tax for customers outside your state to the constantly changing tax regulations, sales tax can quickly become a time-consuming process with costly results if done incorrectly.  A single source of truth for sales tax reporting and calculations helps avoid human error and saves time and money for your organization. In this article, we will cover the importance of having a JD Edwards-compatible tax reporting solution for your organization.

What Is a Single Source of Truth?

A single source of truth (SSOT) is a philosophy regarding data collection. A single source of truth is “the practice of bringing all business data to a single location.” Essentially, it’s a centralized location for collected data so that anyone working with the data can access it quickly and easily. An SSOT helps keep information organized and avoids issues surrounding duplicate data or spending too much time looking for something specific.

For tax reporting and calculations, an SSOT could look like a tax software system that houses all sales tax-related data, automatically calculates a purchase’s sales tax, and gives up-to-date information regarding tax regulations and regional taxes. These features ease the burden of sales tax calculation on your workflow by keeping all the information you need in one central location. 

Benefits of Sales Tax Calculation and Reporting Integration

There are several benefits to a sales tax software solution. Investing in a JD Edwards SSOT for sales tax compliance will boost your business’s productivity, accuracy, and customer satisfaction. We’ll cover the five main benefits of a sales tax calculation and reporting integration for your ERP platform. 

Tax Data Is Secure

Ensuring your tax data is secure is essential to gaining the trust of your customers. A security breach, especially surrounding sensitive tax information, can be a hard blow to your credibility with your clients. An SSOT tax reporting software solution can help minimize this risk for your business through upgraded data protection. 

Modern SSOTs for tax reporting are often cloud-based solutions. Cloud software allows for increased security of the stored data in a couple of different ways. Firstly, by having all your tax data and records in one centralized location, you can easily create a high-security barrier to prevent a data breach. Secondly, many cloud solutions will have built-in security as a feature—making a cloud-based SSOT one of the best solutions for reducing security risks.  

Up-To-Date Tax Regulations

One of the biggest challenges associated with sales tax is the difficulty of keeping up with tax regulations and ensuring tax calculations are correct for the location of your customer. However, tax software provides sales tax calculations across states and different jurisdictions so that it’s automatically updated when a customer makes a purchase. 

This way, your customers can purchase from anywhere within the United States or internationally without you having to deal with the headache of figuring out the correct sales tax for their order. If you were unable to expand your market into other regions due to sales tax complications, an SSOT for tax calculation is the solution for your expansion. 

Furthermore, digitized solutions for tax calculation and reporting updates with new rules and regulations within the software to keep your company up-to-date on tax laws almost instantaneously. No more having to spend hours of research on the latest tax laws—your sales tax SSOT can do it for you as soon as the regulations are put in place.

Decreased Risk of Incorrect Tax Calculations

Not charging the correct tax rate or missing exemption certificates can put your organization at risk in the case of an audit. An audit can be tricky to navigate and may cause your customers to question your accuracy with their information. The best way to avoid these issues is to prevent an audit in the first place through sales tax calculation and reporting software solutions.

Sales tax compliance solutions automatically calculate for tax-exempt customers to avoid charging them wrongly, helping you avoid IRS trouble and losing customer confidence. With the up-to-date tax regulations for each jurisdiction, you also avoid having to manually calculate the sales tax for a region—which could be subject to human error and an increased audit risk.

Sales Tax Automation 

Even without any complications such as national or international tax rates or exempt customers, sales tax calculation can be a costly, time-consuming process. You have to spend valuable resources to calculate the total costs with tax and ensure that it’s accurate. Sales tax solutions remove the middleman by doing these calculations automatically for your organization. Instead of being a lengthy process, sales tax can be calculated in an instant—freeing you and your employees to spend your time and energy on more pressing matters.

Direct Line of Communication and Accountability 

One of the main goals for any organization is to leave your customers feeling satisfied with their experience. Customers appreciate transparency and direct lines of communication with the company they are working with—which is exactly what sales tax reporting solutions can provide. 

On both your end and the customer’s end, you’ll see accurate, up-to-date information about tax information for the account. If an error does occur, the customer will be able to contact you as soon as it’s discovered so you can fix it quickly and efficiently. 

It also allows for either you or your customer to do business anytime from anywhere. Your customers are no longer restricted by your business hours, and you can provide information to your customers from anywhere in the world. This ease and convenience will increase your customer satisfaction and can help expand your repeat buyer pool.

SmarterCommerce Provides JD Edwards Tax Compliance Solutions through Avalara

If you want to remain competitive in the marketplace and mitigate your risk of an IRS audit, a cloud-based tax compliance solution is crucial to your ERP. At SmarterCommerce, we partner with Avalara to provide a cloud-based, JD Edwards-compatible tax solution. With SmarterCommerce and Avalara, you’ll receive

  • Native JD Edwards integration
  • Precise tax rates
  • Seamless sales tax exemption support
  • Geocoding technology 
  • Sales, use, and value-added tax calculations
  • Document level processing
  • Transaction processing controls 

If you’re ready to get started with an easy, all-in-one JD Edwards tax solution, contact us today!