Embracing technology solutions such as Avalara for sales tax filings can streamline your processes, but it's crucial to safeguard against overpayments and ensure compliance. Here are eight essential tips to protect yourself.

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1. Understand Your Business Activities

Gain a comprehensive understanding of your business activities and the jurisdictions you operate in. Varying sales tax regulations across states and localities necessitate tailored approaches. Be aware of how different states factor in wholesale sales and remote employees when establishing your tax account.

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2. Monitor Nexus Changes

Stay vigilant about your sales and changes in nexus laws. Conduct audits every six months across all states to identify any new additions. Major tech companies might alert you before filing is required, potentially causing confusion. Assess if certain tax accounts need closure to avoid unnecessary filings and expenses.

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3. Conduct Regular Audits

Periodically audit your sales tax records to detect discrepancies or errors early on. Avoid significant problems by cross-referencing Shopify reports for each state with your total sales and tax collected against what's shown on your returns.

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4. Verify Tax Rates Regularly

Utilize your tax service, such as Shopify Tax, and state-provided address lookup tools to confirm that your tax technology provider applies accurate codes and jurisdictions. Regularly verifying tax rates ensures precision in your tax calculations.

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5. Seek Professional Advice

Consult a tax professional or accountant well-versed in sales tax regulations. Their insights can offer guidance tailored to your specific business situation, ensuring compliance and preventing overpayments.

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6. Document Everything

Maintain meticulous records of sales transactions, exemption certificates, and communications with tax authorities and service providers. Robust documentation is your defense in case of an audit, providing a clear trail of compliance.

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7. Training for Staff

If multiple team members handle the sales tax process, ensure they are trained to use the system correctly and understand the nuances of compliance. Our team can assist in training your staff to optimize your tax processes.

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8. Evaluate Other Solutions

Regularly assess alternative sales tax automation solutions in the market to ensure you use the best technology for your business needs. Technological advancements may present more efficient and cost-effective options.

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Remember, in case of overpayments, big tech firms may attribute blame to your data and setup. Implementing these measures will bolster your defense against overpaying sales taxes when utilizing technology solutions like Avalara. Regular monitoring, staying informed, and leveraging available resources are key to effective sales tax compliance.

Contact Piper for a complimentary audit, and let us guide you in optimizing your sales tax strategy.

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