Having efficient financial management is very important for any business striving toward growth and profitability. This is especially true when the business grows to a considerable size; as the profits grow, so do the expenditures, as well as operational and administrative needs such as finance operations.
Keeping your accounting clean of any irregularities and incorrect information is essential, especially when it comes to taxes. Keeping good track of your taxes ensures accuracy and compliance with tax regulations, thus reducing the risk of errors and penalties associated with tax management.
Fortunately, NetSuite has a solution for tax management and automation that can help you significantly reduce the need for tax monitoring and manual tax calculations, thus ensuring compliance with indirect tax and transactional tax obligations. This article will discuss NetSuite tax automation, why it matters, and how it can help your business streamline its financial operations.
NetSuite is a cloud-based ERP (enterprise resource planning) software solution that provides a wide range of different features, such as accounting, inventory management, customer relationship management, while offering integrations with third-party software, such as Shopify.
It provides a unified overview, as well as detailed insight into different aspects of your business, and helps automate many of its processes, thus enhancing the efficiency of your operations and granting you the ability to make informed decisions that are based on real-time data provided by the platform.
NetSuite tax automation functionality provides a configurable tax engine that delivers end-to-end tax management. It allows your finance teams to effortlessly generate detailed reports, analyze transaction tax, ensure global tax compliance, reduce manual tax calculations, and ultimately save time and reduce operational costs.
The tool features a built-in tax logic that determines taxability and calculates tax on every transaction in the system, down to the individual item level. It also provides monthly global tax rate updates for 110 countries around the world and retains historical tax rate changes, which allows the platform to automatically apply the right rate to every transaction, every time.
One of the greatest benefits of NetSuite tax automation software is its ability to automatically update tax rates across multiple jurisdictions, including the US, VAT countries, and Brazil. This feature significantly reduces manual data entry, thereby minimizing the risk of human error and ensuring higher accuracy.
Efficiently manage diverse local tax requirements for various subsidiaries, including VAT, withholding taxes, and U.S. sales and use taxes. This capability ensures that your tax calculations are always compliant with country-specific laws.
With precise tax rates applied to every transaction, accounting, purchasing, and sales teams can operate with confidence. The automation eliminates uncertainty and ensures compliance with the specific tax regulations of each country.
NetSuite seamlessly integrates tax determination and reporting functionalities within your existing systems used for sales, billing, revenue recognition, payment processing, and other financial operations. This integration further streamlines processes, enhancing overall efficiency.
The automated tax calculations and report-generating functionalities are embedded within the same platform, streamlining adjacent operations and driving greater efficiency throughout your financial processes.
Tax calculations aren't without their unique challenges, many of which can actually lead to issues down the road unless adequately addressed. One of the greatest challenges addressed by tax automation is the complex compliance requirements, with businesses having to navigate a whole sea of tax laws that vary significantly across different regions; this is further highlighted by frequent legislative changes.
The manual process is also a problem because it's susceptible to human error, such as misentries, calculation errors, or incorrect tax code applications. These can lead to significant compliance issues and financial discrepancies, further jeopardizing the accuracy of your financial reporting.
Not to mention that the whole process demands substantial human resources to perform, especially when completed manually. This labor-intensive process can often drain resources from other strategic functions, which can hinder efficiency and growth.
Lastly, there are audit complications; audits require meticulous records and quick accessibility to historical transaction data. Considering that they're prone to errors and often lacking in systematic organization, the manual system often increases the risk of penalties, further straining the relationship with tax authorities. It's challenges like these that really underscore the need for an automated system.
Tax compliance is a critical aspect of financial operations, but it’s often quite complex and very time-consuming to manage manually. NetSuite offers different features to automate this tax compliance process, helping your business stay compliant while also reducing the risk of errors and penalties.
The integrated tax logic will automatically determine taxability, with ongoing calculations for every transaction across numerous jurisdictions. Considering that the tax rates are updated from 110 countries every day, NetSuite can serve as a comprehensive, professional tax management solution that not only does your tax calculations but also validates all the customer and vendor VATs, thus calculating the correct taxes.
These calculations also apply to the sales taxes across the US, which often demand full-time attention from the entire tax team. This often requires extensive monitoring by the tax team, which incurs additional costs. NetSuite eliminates this problem by delivering updated monthly tax rates for all US jurisdictions, which reduces the massive costs associated with monitoring compliance.
All the compliance details that matter to auditors, as well as tax calculations by line item, are included in the invoices generated by the NetSuite platform. There are options to override the tax jurisdictions from the platform, but those aren't available to everyone but the authorized users.
Lastly, NetSuite provides real-time visibility into your sales tax and VAT positions, with automated summaries and report generation, through all the aforementioned features combined. The configurable reports that are generated by the platform also provide comprehensive insight into the current financial health of your company, which is crucial information when making more impactful decisions.
With its automated tax processing, compliance-focused operation, and versatile reporting capabilities, NetSuite tax automation helps improve business efficiency, reduce error, ensure compliance with regulations, and increase profits.
If you're interested in upgrading your financial operations by automating your accounting and tax processes through the use of a comprehensive enterprise resource planning solution, don't hesitate to contact ScaleNorth.
