Taxes are a fact of life for just about every business on the planet. Sometimes, it’s everything you can do just to follow the rules. There’s a reason they call it a tax burden. For some tips on how regular businesses can improve their approach to taxes and accounting, we talked to John Perri, Director of NetSuite Sales at Avalara. Avalara makes tax automation tools that plug in to tools like NetSuite and help businesses navigate the complex world of taxes.
Give us a little background on Avalara, what sort of products and services do you offer?
Avalara is a technology company that offers cloud-based solutions to address the complexities of calculating, reporting, and filing sales and use tax as well as managing exemption certificates. We perform billions of calculations every year. Every day, $100 million is calculated on behalf of thousands of Avalara clients.
What do you offer on top of what one expects from a tool like NetSuite?
NetSuite—just as any ERP, accounting system, or ecommerce shopping cart—has a native function to calculate sales tax. It requires building individual tax schedules for each state whereby there is an obligation to calculate and remit, research the products and services sold, and update often inaccurate ZIP-code based rate tables every month. Avalara aggregates and delivers this content directly to NetSuite users via webservice calls that preclude the need to update rates, research arcane tax rules, or report and remit to disparate state and local authorities.
Many NetSuite users are small businesses. At what point in one’s growth does it make sense to look for a tax automation solution like Avalara?
The size of the business doesn’t necessarily correlate to the burden of compliance. Very small companies have the same statutory requirements as Fortune 500 businesses, and often don’t have the staff or expertise to manage them effectively. Much like payroll providers or PEOs, Avalara allows businesses of any size to focus on revenue-generating activities instead of researching and updating rates and filing returns—which only represent risks and costs to the bottom line. The more states that a business has an obligation to report in, the more complicated the task can be. That is why Avalara has thousands of “mom and pop” companies that rely on our expertise every day.
What’s the most common tax issue that NetSuite users face?
There are two major areas:
1. The basic laws that compel a business to calculate sales and use tax are in flux (nexus); many businesses don’t know when nor how they have triggered nexus which opens them up to significant penalties and loss in the event of an audit.
2. There are also the efforts around ongoing maintenance and updates after state and local tax schedules have been created that opens a company up to human error and omission. Depending on the products and services offered, there can be very complicated tax rules that govern how tax is or isn’t applied, and there isn’t consistency in the application of these rules from one state or locale to the next. For example, SaaS offerings like Avalara aren’t taxable in California but they are fully taxable in Washington state, taxable at 80 percent of the base tax rate in Texas, and not taxable in the state of Colorado except in the city of Denver.
Keeping these rules, ever-changing rates and jurisdictional boundaries; managing exemption certificates; and filing tax returns all are common threads among NetSuite users. Additionally, users struggle with self-assessing consumer use tax which is required when a vendor doesn’t charge sales tax on an Accounts Payable invoice. Avalara can streamline and automate these efforts far more accurately and less expensively than staff can.
How do you manage the complexity of different tax requirements around the world? Are any countries particularly straightforward or complex?
Avalara can calculate in ~198 countries worldwide and growing. Our base solution serves the US and Canada (including VAT, HST, PST) out of the box and we have offices in the UK and Belgium with experts on VAT and their requirements. Generally speaking, most of the UK and the EU are far less complicated on determining a rate (they typically have a single rate for the whole country) but the effort to report and file can require local representation and is highly intricate. Determining Landed Cost (which is the sum of the VAT rate plus freight, tariffs, and insurance) is one of the challenges of international compliance. Countries like India, China, and Brazil are arguably more complicated than the US, which is saying a lot.
Do you use analytics to do your job? How?
As a Sales Director, I’m constantly using analytics for forecasting, keeping track of my team’s activities and pipeline, and most importantly keeping an eye on our attainment to our short and long term opportunity and bookings goals.
What emerging enterprise technologies are you excited about?
What’s interesting about enterprise technology is how cyclical it is. The era of centralized computing in the ‘80s made mainframe computing all the rage. Every resource you needed was part of a giant mainframe. In the ‘90s, mainframes were “out” and the era of decentralized computing was upon us. We started leveraging various applications on the web to supplement our company’s technology needs. Starting in the late ‘90s and into the early ‘00s, with the dawn of the cloud, you could subscribe to nearly any business application. Now, when you look at sophisticated technology and how it can impact global markets, the shift will again sway back toward centralized computing. We work with technologies that are taken apart and brought back together only to be taken apart again.
John Perri is the Director of NetSuite Sales at Avalara. Visit Avalara.com for more information.
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