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The pandemic has inevitably accelerated the digital transformation of companies. There has been increasing pressure on businesses to become digital and also a great increase in demand in the field of Tax Management. Regarding this context, we had an extensive conversation with Liz Armbruester SVP, Global Compliance at Avalara, a pioneer in sales tax automation, about the subject.
Could you tell ERP News readers about yourself and your role at Avalara?
I’m the senior vice president of global compliance operations at Avalara. In this role, I oversee Avalara’s global returns business, which is responsible for preparing, filing, and remitting tax for our customers around the world. My day-to-day job is focused on delivering automation and efficiency for our customers, which means I have the opportunity to work across our company with teams from the product, engineering, and more.
Avalara was named a leader in two IDC MarketScape: Worldwide, Cloud-Enabled Sales and Use Tax Automation Software reports for small and midsize businesses and enterprise businesses. What is the secret behind this success?
Avalara has always been a pioneer in the world of sales tax automation. We were among the first to apply SaaS to tax and have spent the past 18 years creating an industry-leading partner ecosystem of more than 1,200 signed partner integrations so that we can easily integrate into the business systems of our customers – something that has been key to our success. Because of Avalara’s integrations into nearly every invoice, billing, and other business system, businesses can easily automate compliance as part of their digital transformation initiatives or as their business grows and encounters tax management challenges, like expanded sales into new jurisdictions.
Another benefit of Avalara is our end-to-end compliance offerings, including everything from nexus assessments and business licensing to tax calculations and returns. Businesses can turn to Avalara to automate nearly every step of their compliance journey.
Avalara has historically been focused on mid-market businesses. However, as our IDC MarketScape recognition illustrates, the company has made significant strides in serving the small and large ends of the market.
Streamlined Sales Tax is critical for many businesses. What is Streamlined Sales Tax (SST) and in that regards what benefits does Avalara offer businesses?
Streamlined Sales Tax (SST) is a state-run program designed to make sales tax compliance easier and more affordable by offsetting the cost of using a tax technology provider, like Avalara. Across 24 states, businesses can have their tax management costs covered and automated using a Certified Service Provider.
The benefits offered by Avalara through the SST program are boundless. Businesses can benefit from:
- Unlimited real-time calculations are delivered to your shopping cart in participating states
- Prep, filing, and remittance of sales and use tax returns
- Access to the latest boundary and rules data
- Registration in 25 states (Pennsylvania has a similar program to SST)
- Economic nexus tracking of where you have new sales tax obligations
- Audit support
As time passes by, technology continues to change rapidly and transform businesses. The kind of software small and medium-size businesses use plays a huge role in their future success. So why should small and medium-size businesses use Tax compliance software?
Not only is technology transforming business – it’s also transforming tax. Authorities have adopted tax policy to capture revenue from sales across digital platforms just as businesses have embraced technology to sell across more channels and into more jurisdictions.
Historically a manual task, compliance has been and continues to be in many cases, managed by individuals in finance teams, outsourced to accounting firms, or dealt with by business owners themselves – all of which costs businesses countless hours of personnel time and operational cash burn that provide no value to customers. Keeping these costs and the complexity of tax in mind, it’s absurd to think that businesses should manually manage compliance in a digital world.
There are numerous reasons why a small and medium-size business should use tax compliance software, including:
- Create a foundation for growth – As a business grows, so does their tax compliance requirements. By using tax automation software, businesses can easily scale their tax compliance management as needed to ensure that they don’t run into compliance barriers that could slow or halt growth.
- Establish a clear audit trail – Technology creates an archive of your business’s tax reporting history to be prepared if and when an auditor comes knocking.
- Save time and money – My two previous points also fall into this category. Tax automation can help businesses save time and money spent on tax management, especially as their tax footprint grows. The data speaks for itself – a 2021 survey found that small businesses spend on average 131 hours and nearly $12,000 per month manually managing sales tax.
Were there any changes considering the Tax Compliance requirements of companies in the post-Covid era?
Tax compliance requirements are constantly changing. In the post-COVID era, one of the main changes impacting the tax requirements of companies has been the acceleration of e-commerce and shift to omnichannel commerce.
The pandemic pushed the world online. Since then, we’ve seen in-person shopping resume, but digital sales haven’t pulled back to what they were pre-pandemic. The result is an omnichannel economy where companies sell through several channels to reach customers where they are. When it comes to tax, omnichannel sales expand a company’s footprint for potential tax obligations.
Where a company may have been selling through a single storefront and an e-commerce store pre-pandemic, they’re likely selling through marketplaces, social media, and other channels today as they work to stay competitive. As sales grow across channels and into new jurisdictions, so do tax obligations.
Needless to say, tax compliance in the post-COVID era has gotten more complex and will continue to do so.
Could you elaborate on Avalara’s plans and goals to carry on its success in the future?
Tax compliance isn’t limited to sales tax and Avalara understands that. As we look ahead, Avalara is building a global compliance platform to help businesses of all sizes automate and streamline their compliance requirements. This includes other types of indirect tax, as well as support for direct taxes, business licensing, compliance content, and more. We’re building this platform by investing heavily in our technology and APIs, as well as expanding the way in which we work with our partners to deliver compliance automation to businesses.
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