Don't let lapses in tax compliance put your tech or high-growth company at risk
November 29, 2016
PitchBook Dealmakers Column By Pascal Van Dooren, Chief Revenue Officer, Avalara
Sales and use tax compliance can be a big challenge for growing companies. Unfortunately, many accounting and finance departments don't realize the litany of tax requirements that come with growth until after they’ve been exposed to risk, which can bite the company down the road.
Company executives typically don't want to take time to think about complex domestic and global tax issues, but it's important to do so. Here are just a few areas where high-growth companies have holes in their compliance:
Economic "Nexus": Online sales of more than $500,000 is reason alone to file and remit taxes in many states; employees, warehouses, and/or contractors on location are not required.
Remote employees: Adding remote staff in a new state or employing contract employees are just a few actions that create an obligation to register, file, and remit taxes in that state and in all its local jurisdictions.
Adding products/services: Adding new products or services to a SaaS company, as well as selling digital goods, can make compliance tricky. In the US, for instance, software is taxed 450 different ways across 45 categories.
The best way to remove risk in tax compliance is to offload it. Tax automation software is a reliable way to stay on top of compliance as you grow.
Click here for a handy guide from Avalara on what high-growth companies need to know about tax compliance.
This article represents the views of the author only and does not necessarily represent the views of PitchBook.