Joni Johnson-Powe, Founder and Principal of Taxnologi Solutions, recommends four steps that any size company should incorporate into the plan when implementing (or upgrading) their sales tax solution.
#1 - Tax Matrix
Johnson-Powe states, "Too often companies assume they can rely on taxability determined by their third party software. In reality, taxation is a gray area that requires a company to apply their own analysis of a tax authority’s rules and regulations based upon knowledge of the company’s products, services, and business practices. Moreover, each company is unique and every tax rule can be interpreted differently."
#2 - Requirements
"When considering your tax requirements and software selection, knowing your tax requirements can help you avoid purchasing software that is not the right fit for your business; which can be very costly if discovered too far along in a project."
#3 - Gap Analysis
"The gap analysis is critical because it identifies and documents those areas in the tax system where tax calculation or reporting inaccuracies may exist. This analysis allows a company to plan and design a work-around or future enhancements to fill identified gaps. It also helps to identify potential tax exposures early on in the project."
#4 - Test Planning
"There are a number of tax solutions that are so-called “plug-n-play”, so there is significantly less effort involved with developing a connection between your accounting or ERP system and the tax software. Nonetheless, adequate testing planning for validation of tax system calculations, reporting and processes is crucial."