Choosing an ERP System: Tax Compliance Considerations

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Choosing the right ERP that’s going to get the job done for your business is a tall order. Successfully implementing that system so it properly adds value to your business requires a great deal of forethought and consideration of the impact the system will have on all departments.  But it’s not just the impact the ERP will have on departments, but on compliance as well.  What many businesses don’t realize is that compliance (both in tax and in reporting) plays an important role in your ERP choices, from the core ERP you choose, to each module you include, to the 3rd party solutions you integrate.

Not taking the proper time on the front-end of the process will result in a shiny new ERP system that’s not going to support your business complexities the way you’d hoped.

Here are 4 compliance issues to consider when implementing a new ERP system:

What framework(s) do you need to be compliant in?

If you’re dealing with SOX Compliance or COBIT, you’ll want to pay very close attention to the audit controls your ERP system provides and make sure all of your bases are covered. Non-compliance risk doesn’t just occur in the core financial functionality. Audit risk can arise in modules like Project Accounting, Distribution, Inventory, and Credit Card Payment, just to name a few.

Understand where you have tax compliance requirements

What’s your business? If you do business in a supply chain or offer services like installation and repair, basic sales tax probably isn’t your biggest concern. But exemption certificate management and use tax certainly are. Will your ERP help you simplify exemption certificate management? What about reporting on use tax transactions?

Scale the workload

The fact that you’re looking at implementing an ERP, alone, shows that you have business complexities and, by proxy, tax complexities. How will your accounting team be handling tax rates and rules in your new system? Are you looking at manual research and tax rate entry in your chart of accounts? Manual management can be costly, time consuming, and error prone. Consider automating the process in your ERP to save time and cost.

Retrieve and send information quickly

How are you currently filing and remitting returns? How will you do it in your new system? While ERP is great for streamlining business complexity, it can actually add extra steps to your filing process, depending on what kinds of modules you use. Make sure you talk to your vendor about how the ERP system can help you file, remit, and report on taxable transactions and what functionality is available to simplify that process.

The bottom line is, ERP systems can be a breath of fresh air for your business, when implemented correctly and an audit nightmare if not.

Learn more about tax compliance issues in the ERP by attending our upcoming webinar “The Hidden Danger in Your Tax Rate Tables.”

Webinar Details:

Date: Wednesday, April 23, 2014
Time: 1:00pm Eastern / 10:00am Pacific





by Avalara, Microsoft Dynamics ISV

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