Technology Record - Issue 30: Autumn 2023

112 VIEWPOINT Making tax less taxing MEG HIGGINS: AVALARA Businesses can reduce risk and costs by automating their tax management, which, in turn, helps generate greater productivity and agility Throughout much of 2023, experts from all industries have been debating the possibility of recession, driven by rising inflation, volatile consumer confidence and a myriad of other factors. Regardless of the conversation, many businesses have heeded even the slightest warning of economic downturn and turned their focus from growth towards efficiency. To reach goals around efficiency, businesses are leveraging technology to automate backend operations and processes in an effort to cut down on costs, time, and resources spent on low value business requirements, like tax compliance. According to research by Avalara, small and midsize businesses spend a combined 163 hours and more than $17,000 per month on manual sales tax management. That’s 163 hours that tax professionals could spend on numerous other and more important tasks to support their business’s bottom line. Every hour spent on tax management is an hour lost on other parts of your business – creating a drain that has a waterfall effect. It’s also important to note that the cost of manual tax compliance goes beyond time and money. Like many human-centric tasks, manual tax management is an error-prone process. Using outdated methods, like spreadsheets, makes it increasingly difficult for tax professionals to keep up with constantly changing tax rates and rules. The uncertainty surrounding manually managed tax rates and rules that are used to make tax determinations for a business creates unnecessary risk. Tax can also serve as a barrier to business growth and expansion. Entering new markets and adding sales channels, employees, products, and/or services can trigger new tax obligations to register and file in more locations. In difficult times, businesses are exploring new solutions to deliver efficiency in complex areas such as tax compliance. Like most investments in technology, tax automation helps generate greater productivity and agility, while also maximising the lifespan of technological infrastructures and enabling greater employee productivity. When businesses are looking for areas to cut costs and resources, and drive overall efficiency, tax compliance can quickly become the poster child for automation because of the low value that managing it provides to a business. When you add in the risk of getting tax wrong and the impact it can have on a business, the decision to automate makes even greater sense. Automation not only allows businesses to reduce the time and money currently spent on manually managing processes that can be handled more quickly and accurately with technology, but it also reduces barriers to growth and enhances the value of existing technology and systems. Automation decreases the tax complexity that often comes with business growth. The effort required to remain compliant in a few states is vastly different when you do business in most of the USA. Selling into more countries adds a whole new level of complexity. With automation, it’s easier to scale. Hickory Farms, a leading retailer of food gifts and specialty foods, found this to be exactly “At Avalara, our focus is on making tax less taxing for businesses”