By Marc Seewald, Senior Product Management Director, Oracle
April 18th has come and gone—everyone’s least favorite time of year when it comes to personal finances. Your year-end corporate tax provision is likely behind you now. But with tax day a recent event in your mind, now is a perfect time to think about how you can improve your SMB’s tax reporting processes for the next time.
Remember when your company was just starting out? It was just two or three people with a great idea and big dreams. You probably didn’t have to worry too much about taxes. Many startups don’t even make enough money to pay income tax; but your company is, we hope, growing like crazy. You might even have even opened your first office overseas (many fast-growing SMBs plan to in 2017)—and that means you need to rethink how you approach tax reporting (country by country reporting, anyone?).
The bottom line? As your company grows, so will the complexity of tax reporting.
Perhaps your SMB has grown to the point where you’ve invested in a cloud ERP solution to manage core financials. But a solution that manages core financials does not support tax reporting capabilities such as tax accounting, workflow automation, tax workflow, and transfer pricing.
This forces most tax reporting to be done in spreadsheets, and this results in two big problems for SMBs:
1) Processing tax reporting in spreadsheets will take longer and longer the bigger you get. Every year, the tax process will get more inefficient. And the answer is probably not bringing on people to form a tax department or pay premium dollars to an outside accounting firm.
2) Spreadsheets have no audit trails. So when the auditors come knocking on your door (and they will), it will be that much more difficult (and time consuming) to prove your numbers.
Most CFOs recognize that their underlying financial systems are not adequate for tax reporting, but understandably, they’re reluctant to throw money at the problem. After all, SMBs have other critical areas to spend their money —like product innovations, marketplace expansion, and growing their business. Unfortunately, the cost of not investing in a tax reporting system can be high.
But tax reporting is no longer just something that finance or tax department must worry about. With the increasing level of scrutiny that companies are under (even SMBs), tax reporting has become a executive-level concern. Potential investors and lenders to your SMB will want assurances that your financial house is in order, and they’ll want transparency into the way you do business. Audit trails and proof of compliance are a THE way to achieve both of those ends.
Luckily, there’s now a tax reporting cloud application that’s fully integrated with your core ERP cloud, pulling data directly from the source system to ensure accuracy. With this tax cloud solution, you have a complete audit trail from transactions to tax disclosures. So when the auditors show up, the process will be a lot less painful—well, as painless as any audit can be. When you need investors, you will have what you need to instill the confidence to get the funding you need ― to GO and GROW.
So, when April 18th rolls around again, use it as an opportunity to start thinking about how you can improve your corporate tax reporting, and perhaps make it a little easier—even with all the new requirements.