Both individuals and businesses must pay taxes. Individuals are obliged to pay income tax, also known as PAYE, which stands for Pay As You Earn. Income tax is the tax charged on a person’s income or profits. Individuals also pay the Goods and Service Tax (GST) on the products they buy. On the other hand, businesses pay corporate, advance, sales, and local taxes.

For PAYE, the taxed amount is automatically deducted from your pay and sent to the relevant authorities. The taxed amount is dependent on your tax bracket. To get an idea of the taxes you owe, a PAYE calculator could help you with the calculations.

Furthermore, understanding your net income after taxes is crucial. To calculate your net income accurately, you can use a reliable net pay calculator that considers various deductions and provides a clear picture of your take-home pay.

Meanwhile, GST is an indirect tax that’s added to the price of goods. GST is paid through each purchase you make to vendors, with no additional steps required on the customer’s end. The businesses will be the ones to send these taxes to the relevant authorities. Whether you’re a customer or business owner, you can calculate the GST using a GST calculator.

These two calculators can help you get acquainted with automated tax compliance. The technology of automated tax compliance is vast and can simplify the taxation process for businesses. This article looks at automated tax compliance at a deeper level for you to apply it to your tax obligations. Read on to learn more.

What Is Automated Tax Compliance?

Automated tax compliance is a system or software that performs various tax obligations on your behalf. For instance, an automated tax compliance system calculates, verifies, and tracks your taxes.

The first step to automating tax compliance is selecting a system or software. After choosing an automated tax compliance system, you will need to give it your business’s information for it to generate the correct details. We’ve discussed how to choose the right system for your business below.

How To Choose An Automated Tax Compliance Software

When choosing automated tax compliance, there are specific factors you should look for in the system or software. Here are some of them:

• Functionality

As a business, there are specific things you want to achieve from automated tax compliance. For instance, you may want a tax compliance system that does record keeping accurately and timely. You may also want a system that processes financial figures quickly to save you time.

Furthermore, you should also consider the company you’re dealing with. You must do thorough research to ensure that they’re reliable and have built a good reputation for providing good services. One of the best places to find this information is through reviews. 

• The Onboarding Process

You can enjoy the benefits of automation beginning with the onboarding process. The ease of a software’s onboarding process can tell you more about its system. During this process, you learn about the scope of work that’ll be covered, the information required from you, and the expected costs you’ll cover.

You can decide which specific software you’ll use from these factors. For instance, if there are several additional costs in the onboarding process, choosing a provider with less onboarding costs may be better as long as the software can deliver its work. 

• Price

When choosing an automated tax compliance system, you can estimate the money you’ll spend by considering various costs such as upfront costs, maintenance costs, and soft costs, among others.

Upfront costs include the money you spend on training and subscribing to the company’s service. On the other hand, maintenance costs are the costs you’ll incur to keep the software healthy and functioning. As for soft costs, this is the time you spend on the system. Once you’ve calculated all these costs, you choose the software that fits your needs while still staying within your budget.

Using Automated Tax Compliance Systems

After selecting the proper software for your business, there are several ways you can use it to your advantage. Below are some tasks you can complete by using an automated tax compliance system:

1. Verifying And Calculating Your Taxes

As mentioned earlier, there are several taxes you’re expected to pay. The type and amount of taxes you pay are determined by the products or services your business supplies, whom you sell to, and your business location. Some of these taxes are also obtained from what you charge your customers.

An automated tax compliance system can determine the type of sale, verify business tax IDs and VAT numbers to avoid tax fraud, and evaluate the kind of products purchased. It can also gather and store customer location evidence and compute the tax amount at the point of sale.

2. Sending Tax-Compliant Documents

Businesses must give customers invoices that include the details of their purchase and the tax charged. Both the business and the customer must have a copy of the invoice, with each invoice requiring relevant information such as the business name and address, your business’s tax ID, date, amount of product or service purchased, and the final amount inclusive of tax.

An automated tax compliance system can save you from the hassle of inputting this information manually. Depending on your chosen provider, it can also automate the tax billing for each transaction.

3. Tracking Your Business’s Tax Obligations

Over time, your business may grow to a point where a customer from a different jurisdiction will purchase from you. These areas will have different tax regulations from your jurisdiction, making it challenging to keep up with your tax obligations.

Fortunately, an automated tax compliance system can make it much easier for you. It can automate the creation of customized invoices meant for another jurisdiction by converting the currency and using the applicable tax rates.

Summing It Up

Both individuals and businesses have tax obligations they must comply with. However, businesses can find it challenging to be tax compliant, especially as you juggle different responsibilities. Furthermore, changing tax laws and regulations can be hard to follow.

Using automated tax compliance will reduce the stress and hassle on your part as a business owner. While it may be an additional cost to your business, using an automated tax compliance system can help you avoid fines for missing documents and late submissions, thus saving you money in the long run.

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