{"id":20469,"date":"2022-09-28T17:26:54","date_gmt":"2022-09-28T11:56:54","guid":{"rendered":"https:\/\/open.money\/blog\/?p=20469"},"modified":"2023-07-05T15:40:16","modified_gmt":"2023-07-05T10:10:16","slug":"smbs-can-save-time-and-money-with-tax-automation","status":"publish","type":"post","link":"https:\/\/open.money\/blog\/smbs-can-save-time-and-money-with-tax-automation\/","title":{"rendered":"How SMBs can save Time and Money with Tax Automation"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Over 60 million small and medium businesses account for about one-third of India\u2019s GDP. These SMBs play an important role in maintaining the circular flow of income in the nation\u2019s economy. They are highly inclined toward digitisation, but the tax implications are still daunting. This has led to prioritising <\/span><b>tax automation<\/b><span style=\"font-weight: 400;\"> as one of the most critical aspects of a business&#8217;s success. Currently, SMBs seek the government\u2019s infrastructure when optimising automated tax compliance.<\/span><\/p>\n<h3><b>Challenges faced by Indian SMBs with the changing tax regimes<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Given the progress of tax practices over the past three years, the pandemic caused <\/span><a href=\"https:\/\/www.ijilr.org\/9-emerging-gst-issues-due-to-covid-19-and-its-impact-on-the-indian-business\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">significant tax shortfalls<\/span><\/a><span style=\"font-weight: 400;\"> across the nation. SMBs tried hard to cope with the changing dynamics of consumer behaviour. There were gaps in how they responded to the reporting and compliance requirements that came along with the new regime of indirect taxes<\/span><span style=\"font-weight: 400;\">.<\/span><span style=\"font-weight: 400;\"> These limitations paved the way for automation in tax systems.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">SMBs faced challenges while adapting to the government\u2019s makeover of the latest \u2018<\/span><i><span style=\"font-weight: 400;\">indirect tax system\u2019<\/span><\/i><span style=\"font-weight: 400;\">. These challenges included:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Understanding the official provisions to re-frame the distribution strategy\u00a0 for tax return filing<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Defining new business policies that will help eliminate loopholes while claiming GST Input Tax Credit (ITC)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Studying its impact on the running costs and the working capital<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Considering the resources available for SMBs, calculating and collecting indirect taxes while ensuring compliance becomes a major challenge. Data extraction, collation, analysis, reconciliation, validation, etc., eat away at businesses\u2019 valuable time.\u00a0 Ultimately, there rises a need to replace the existing indirect tax system with a streamlined and unified tax system.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Setting up an efficient and fair tax system is, however, far from simple. <\/span><span style=\"font-weight: 400;\">For businesses, this task gets pretty tedious without tax automation. <\/span><b>The iterative task of managing item-level invoice detail, maintaining entry sequences, reconciling sales and purchase registers, etc., demands automated tax compliance.<\/b><span style=\"font-weight: 400;\"> In case of inaccurate reporting, the business\u2019s compliance gets adversely rated. India\u2019s GST regime compels firms to have a defined harmonisation standard with the system. This is between a taxpayer\u2019s application, such as an ERP, accounting, or invoicing software, and the government\u2019s taxation (GST) system. <\/span><\/p>\n<h3><b>SMBs adapting to the &#8216;New-age Tax Practices&#8217;<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Considering the rapidly evolving tax practices, taxpayers must evaluate the automation alternatives that comply best with the latest regulations. Factors such as intuitiveness of reconciliation, validation and tax determination, data security, storage, and privacy policies, are crucial.<\/span><\/p>\n<h5><b>Here\u2019s how Tax Automation can help Small and Medium businesses scale effortlessly:<\/b><\/h5>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Cloud-based technology solutions<\/b><span style=\"font-weight: 400;\"> enable businesses to manage, change and validate their data on the fly. With this, they can collect, pay and report all their taxes correctly.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><a href=\"https:\/\/www.cnbc.com\/2020\/01\/25\/heres-when-your-tax-return-could-spark-interest-from-the-irs.html\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">most common ground<\/span><\/a><span style=\"font-weight: 400;\"> for small businesses to get audited is <\/span><b>underreporting sales tax<\/b><span style=\"font-weight: 400;\">. Tax automation adds a trust factor with consistent and accurate tax reporting, which can help mitigate audit risks.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses can avoid underreporting or saving extra funds and put their assets to better use, regardless of the regulations involved.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax automation can help businesses accelerate overall growth with one-click report generation. Automated tax reports allow them to accurately represent and understand how they collected or paid taxes while responding to audits.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses must maintain consistency with tax policies throughout their growth journey. It&#8217;s not only the initial stage that seems difficult with all the evolving regulations. The more challenging part comes later as the business grows and accounts are not managed precisely.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As a business evolves, technology and tax automation empower it with the right toolkit to help plan its future tax obligations. Cloud-based tools can automate planning, minimise capital expenditures and give businesses direct access to changing regulations.\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Apt planning and tax automation can be a huge plus for business growth, allowing businesses to respond to changes and allocate resources better. <\/span><\/p>\n<h4><b>Let\u2019s get on to the top 5 reasons &#8211; Why SMBs must prioritise implementation of Tax Automation<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">An intuitive tax automation tool can level up a business\u2019 tax management game like never before!\u00a0<\/span><\/p>\n<h5><b>1. Amplify productivity while upholding compliances<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">Keeping up with the ever-evolving tax codes can burden the finance team. Tax automation empowers businesses to keep up with the latest regulations as they replace the older ones. This enables them to define their resources for better productivity smartly.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, failing to track tax compliance returns can welcome audit-inducing errors. Tax automation tools help oversee and manage reports clearly and concisely.<\/span><\/p>\n<h5><b>2. Avoid the overage cost tucked away in accuracy maintenance<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">Errors in business tax compliance attract adverse consequences. Manually formatting taxes, finances, and sales data propagate errors that only fuel the fire. On the other hand, automated tax compliance enhances data accuracy, clears up the sticky compliance scenarios, and helps reserve funds for fitting business activities.<\/span><\/p>\n<h5><b>3. Small e-Commerce businesses to validate indirect tax details hassle-free<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">When it comes to trading online, the burden falls upon the seller to know, understand, and comply with the tax collection and reporting. It becomes essential to manage business compliance efficiently, which is challenging. Technology can provide real-time insights and data on changing tax regulations anywhere the company does business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When considering e-Commerce businesses, inaccurate shipping details might cost numerous unwanted charges. Shipping addresses are used for indirect tax calculation for every transaction. In that case, incorrect shipping details can cause massive complications than minor logistic issues. Businesses can maintain all such shipping databases for instant validation. This way, they can ensure precise tax reporting for every transaction, regardless of the customer\u2019s location, with tax automation.\u00a0<\/span><\/p>\n<h5><b>4. Invest in technology that offers a roadmap to scale<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">It&#8217;s important to have the right tools to help the business augment at a good pace. Nonetheless, it limits businesses\u2019 flexibility when they start trying to keep up with the pace by just adding IT or accounting staff. The correct choice of tools equips enterprises to plan, mitigate expenses and stay on top of the changing regulations with a quick response to the evolving market standards.<\/span><\/p>\n<h5><b>5. Plug \u2018N\u2019 Play with the existing infrastructure, leverage the best suitable solution<\/b><\/h5>\n<p><span style=\"font-weight: 400;\">Integrating with the right tax automation tool that matches the current billing and finance system increases efficiency. Integrating existing tech or choosing a new tech for a superior tax automation system requires dedicated resources and time.\u00a0<\/span><\/p>\n<h3><b>Why is OPEN\u2019s Tax Management Solution best suitable for SMBs?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">At OPEN, we have been helping businesses, including startups, efficiently manage their business finances and taxes. Our in-depth experience enables us to understand clients\u2019 unique business banking requirements better. We formulate solutions, incorporate industry best practices, and empower business owners to streamline their operations systematically.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether filing tax returns, making challan payments, or monitoring tax reports, OPEN\u2019s Tax Management solution has covered it. Not just that, considering all the latest GST implications, OPEN helps businesses scale along with being compliant. No business would want to let go of an opportunity to make it future-ready with OPEN\u2019s intuitive tax management solution.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Explore how to be in control of your taxes with OPEN\u2019s Tax Management Solution. <\/span><\/p>\n<p style=\"text-align: center;\">[su_button url=&#8221;https:\/\/register.open.money\/compliance\/&#8221; target=&#8221;blank&#8221; background=&#8221;#663399&#8243; size=&#8221;7&#8243;]Explore Tax Management with Open[\/su_button]<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"Over 60 million small and medium businesses account for about one-third of India\u2019s GDP. These SMBs play an&hellip;","protected":false},"author":56,"featured_media":20470,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","footnotes":""},"categories":[447],"tags":[],"class_list":{"0":"post-20469","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-archive","8":"cs-entry"},"_links":{"self":[{"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/posts\/20469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/comments?post=20469"}],"version-history":[{"count":0,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/posts\/20469\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/media\/20470"}],"wp:attachment":[{"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/media?parent=20469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/categories?post=20469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/open.money\/blog\/wp-json\/wp\/v2\/tags?post=20469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}