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If your company is not based in the United States (or even if they are!) there are business mysteries behind banking and taxation that don’t exist in many other places and sometimes don’t seem to make a lot of sense. A lot of those requirements originate from state and federal level regulations. This blog series will uncover what those mysteries are and how to understand them as systems that can be easily managed with Microsoft Dynamics NAV and Dynamics 365 Business Central.
The system of sales tax for US-based companies can be incredibly complex. The reason they are collected is to allow state and local governments to collect tax to support public services. Since the regulation of sales tax is maintained at the state level instead of at the federal level, much like banking regulations, each state can (and does) have a different set of rules to follow. In an economic environment where many companies, especially those who sell online, are now obligated to collect and remit sales tax in many states instead of only a few, the burden of data maintenance, interaction with more customers related to sales tax, and higher workload for filing state level tax returns continues to increase.
At a high level, these are the considerations to be made when determining how to correctly configure, collect, and remit sales tax in Dynamics NAV and Dynamics 365 Business Central.
Using software like Dynamics NAV and Dynamics 365 Business Central can help with tracking all these rules. These are our recommended best practices for using this software to collect and remit sales tax correctly.
You may also decide that the sale tax situation at your company is sufficiently complex to require an add-on solution to maintain this complicated process. There are plenty of products out there available to manage this. Many have different levels of services including not just rate update services, but address validation, tax calculation and collection, and monthly and quarterly filing services. If you find you need more than a part-time person to manage sales tax for your company, you may find the return on investment of an add-on product worth the cost.
If you’d like some help with de-mystifying business processes and correct system setup related to US-based accounting practices, please get in contact with us to discuss how New View Strategies can help. We have specialists with deep accounting expertise in using Dynamics NAV and Dynamics 365 Business Central who can move quickly through the requirements for your company and establish clear and accurate processes to manage these complex business needs.
Looking for more topics related to US-based accounting? Check out the rest of our related blogs at the links below.
Why is the U.S. still using paper checks and what to do about it (Part 1 of 3)
Why is the U.S. still using paper checks and what to do about it (Part 2 of 3)
Why is the U.S. still using paper checks and what to do about it (Part 3 of 3)
The good, the bad, and the ugly side of US bank reconciliations
Pay me now or pay me later: managing 1099s throughout the year
What’s wrong with U.S. sales tax and how to make it right with your ERP system
What is South Dakota vs. Wayfair and why should companies who sell online care?
O Canada! GST, HST, GIFI and other three- and four-letter words related to Canadian taxes