How to find the best indirect tax software for your business

1. Does your sales tax software automate the entire global indirect tax process?

Indirect tax software provides the most value when it automates the entire process end-to-end. This starts with the calculation of sales, use, value-added (VAT), and goods and services (GST) taxes, address validation, automatic rate and rule updates, and use tax accruals, exemption certificate management, and dynamic reporting all the way through to compliance with signature-ready returns.

2. Does your indirect tax software integrate with my current enterprise resource planning (ERP) system?

Integration with your current business systems is critical to ensure consistent and accurate tax calculation and reporting.

3. Does your indirect tax software support real-time automated global tax determination for both sales and purchase transactions?

Through integration with your existing ERP system, the latest indirect tax software enables transaction data and attributes to flow through to the tax solution. That data is used to make consistent, repeatable, and scalable tax calculations, and even post tax collections and accruals automatically to the general ledger.

4. Does your sales tax software include geographical information systems that define jurisdictions?

Comprehensive sales tax software should include geographical information systems (GIS) that define tax jurisdictions accurately. These GIS capabilities enable the software to identify and apply the correct tax rates and rules based on precise geographic boundaries, ensuring compliance with local regulations and reducing errors in tax determination.

5. Does your indirect tax software support the ability to “re-determine” the tax for error-prone transaction systems via a scheduled batch process?

The “re-determine” function allows you to more accurately file and remit your global tax liabilities by applying — re-processing — your desired tax policy and treatments on transactions from one or multiple systems consistently, and without a technical systems integration effort.

6. Does your indirect tax software provide a method of housing and tracking exemption certificates?

A robust indirect tax automation solution provides an easy method to maintain exemption certificates for the customers to which they pertain. Additionally, the indirect tax software knows when the exemptions apply, such as blanket exemption, product exemption, retail, or manufacturing.

7. Does your indirect tax software provide easy access to audit defense data and capabilities? Does it provide a graphic report module?

The indirect tax software you choose should allow detailed audit reports each month via web portals, enabling you to easily analyze tax results and put a process in place that facilitates Sarbanes-Oxley compliance.

8. Does your sales tax software provide robust reporting, reconciliation, and tax return preparation?

The indirect tax software you choose should run various non-statutory reports for audit purposes, customer inquiries, management, and reconciliations. This includes ERP reconciliations, state summaries, and tax authority details. Once your reconciliation is complete, the software should be able to generate signature-ready state and local returns that can be e-filed or printed and remitted.

9. Does your indirect tax software provide continuous global tax research and updates that are certified and compliant with SSAE 18 and ISAE 3402 standards?

Continuous tax updates supported by trusted researchers with industry experience enable you to stay ahead of global tax legislation, without spending time on research and code adjustments.

Only a few of today’s “best of breed” technology providers have in-house teams comprised of CPAs, tax lawyers, and former auditors, coupled with tax research processes annually certified and compliant in SSAE 18 and ISAE 3402 standards. Rate updates should be provided monthly, at a minimum. In addition to rates, product taxability, rules, and logic should also be updated.

10. Do you offer a highly rated global cloud-based solution? Do you control and own your cloud-based solution? Do you have a disaster recovery plan?

With cloud-based indirect tax software solutions, your tax team, and even other departments, can increase collaboration by accessing tax information anytime, anywhere.

Additionally, cloud offerings remove reliance on internal IT teams for maintenance and updates. Cloud data centers should be rated at tier 4, which is the highest level with minimum downtime.

If a cloud solution is leased, the vendor is at the mercy of the provider of the cloud. It is typically better to go with a provider who owns their own cloud data centers. Of course, a disaster recovery plan is imperative.

11. Are your policies compliant and audited frequently? Do they successfully pass annual SSAE 18 and SOC audits?

When dealing with your organization’s sensitive information, it’s essential that the appropriate security measures are in place. Policies and procedures should be certified by a third party to ensure procedures are SSAE 18 and ISAE-3402 compliant.

12. Do you partner with all Big 4 firms for implementation?

From implementation to configuration, your vendor should have a close working relationship and strong partnership with your advisors.

13. Do you offer personal support, as well as adequate training, documentation, and support materials?

No matter how much you scrutinize potential vendors, there will always be post-implementation questions. You should choose an indirect tax software vendor that offers ongoing, convenient support. This may include 24/7 priority support.

14. Does your indirect tax software include auto-scaling, self-healing, or zero-down time?

Auto-scaling automatically adds resources as demand increases. Self-healing automatically fixes fatal errors, while the zero-downtime feature provides automated integration of application and system upgrades.