Streamlining your taxes with Avalara
You’ve just joined a company where taxes are calculated using a DIY tool that Joey from the Tax department cobbled together, complete with a manual search for codes—think of it as tax preparation in the Stone Age. Then Kristie, the company’s tax consultant, casually drops the bomb that your sales have hit the magic number for economic nexus taxes in California. Buckle up, because navigating taxes with a homegrown system is about as fun as finding a parking spot in San Francisco! It’s clear that it’s time to invest in a real tax tool before Joey starts using a crystal ball!
Common Customer Use-Cases
In addition to automatically calculating taxes, customers often need a taxation tool to aid with the following use cases:
Mix of taxable and non-taxable products
Non-US tax compliance
Manage tax exemption
Sending tax information to external systems
Avalara is the industry-leading tax automation tool with a myriad of features that help customers resolve most common scenarios and more. Their feature set includes:
Automatic tax calculation & risk assessment
Exemption Certificate management
Nexus and Economic Nexus
International Compliances
However, its pivotal feature is the pre-built connectors with over 1200 platforms, including Salesforce and NetSuite. These connectors allow you to integrate your CRM and/or ERP with Avalara to manage and maintain your company’s tax needs with no customization needed for standardized use cases.
Pre-Work Checklist
Selecting a tax tool can be a daunting task. You must consider the cost of implementation, licensing, and maintenance. It is crucial to define and refine internal business processes, and plan when your company will bear the fruits of their return on investment (ROI). Before embarking on this journey, here are some essential pre-work recommendations to guide your team:
Identify and document your tax requirements
Start defining your plan by identifying the different use cases to address. Taxation laws and percentages vary by state, geographical region, and product type.
Documenting your use cases will help illuminate:
Compliance requirements across regions, states, and products
Minimum functionality needed for successful Go-Live
Reporting requirements & KPIs
Data required for tax calculation
Visibility and system access
Determine necessary external system integrations
It is critical to analyze key system requirements to determine necessary external integrations.
What is the source of truth for finalized tax? Does the tax information need to be sent to an ERP? Does your company process e-commerce transactions? How does the data flow between your business systems?
Here are some key points to consider:
Define and identify data types, formats, and structures across the integrated systems
Determine the cost associated with setup, maintenance, and licensing
Identify external system versions and upgrade schedule
Identify the triggers for sending tax information
Setup error handling processes
Define essential business processes
Clearly outline your business processes for collecting and managing tax data to identify the critical and high-volume use cases for calculating taxes first. Leverage this information to identify edge cases and define business processes to manage them.
During this phase, remember to discuss these key processes with your team:
How does your business identify non-taxable entities?
Are all products, services, and transaction types taxed?
How and when are tax records maintained?
Bonus Tip: The output from this phase can be leveraged to train new users, develop FAQ documentation, and empower your super users to provide ongoing support after the rollout.
Avalara Overview
Selecting the right taxation tool can be challenging due to the intricate nature of tax regulations and the unique needs of different businesses. To streamline the decision-making process, keep the following features and considerations in mind to maximize the benefits of Avalara’s tools and maintain smooth tax operations for your organization.
Automatic Tax Calculations
While Avalara's auto-tax calculation features are designed to streamline processes, they may not always sync perfectly with rapid changes within CPQ. To avoid discrepancies, note the following:
For the most accurate results, confirm final tax amounts through the client’s accounting system once the invoice is generated
Treat tax calculations within Salesforce as estimates. Additionally, including a note about this on the Quote Template can help manage expectations
Multi-Company Functionality
Avalara’s Multi-Company feature is designed to handle different tax-filing entities efficiently, but it has specific operational parameters:
It uses an AvaTax-native lookup field on the Account for company identification, which may limit customization.
The field mapping is hard-coded, so while setup may seem restrictive, it ensures consistency across the system.
For clients needing to manage multiple subsidiaries, consider setting up a dedicated Account hierarchy. This approach helps streamline operations and adapt to complex structures.
By keeping these considerations in mind, you can maximize the benefits of Avalara’s tools and maintain smooth tax operations for your organization.
Address Validation
Avalara’s address validation feature ensures precise sales tax calculations by validating and normalizing addresses directly within Salesforce. It streamlines operations by automatically standardizing addresses (usually in USPS format), freeing up valuable time for your team. Additionally, Avalara updates its address verification databases monthly, ensuring that addresses remain accurate and reducing the need for manual corrections.
Cloud Giants Advantage
Cloud Giants provides consulting services in the Salesforce ecosystem looking to accelerate revenue operations. Our team comes with deep expertise on the Salesforce Platform, specifically Salesforce CPQ with an unparalleled track record of success. We have advised and implemented several engagements involving AvaTax with Salesforce CPQ in array of industries including:
SaaS
Manufacturing Equipment
Cybersecurity
To learn more about Cloud Giants or receive information about how we can assist with your next tax integration, leave us an inquiry here.
About the Authors
Loveleen Kaur is a Senior Lead Consultant at Cloud Giants and has been in the Salesforce space since 2008. Her expertise is in Salesforce CPQ, Solution Design, & Enterprise Architecture.
Loveleen holds 6+ Salesforce Certifications including Salesforce CPQ Specialist.
When not Salesforcing, you will find her hiking or tending to her gardens. Connect with her on LinkedIn.
Ean Lawrence is a Lead Consultant at Cloud Giants. His expertise in Revenue Cloud helps clients optimize their revenue processes, drive growth, & achieve impactful business outcomes.
Ean holds 8+ Salesforce certifications including Revenue Cloud Consultant, CPQ Specialist, and Data Cloud Consultant.
Outside of work, Ean is a licensed private pilot and an enthusiastic hiker. Connect with him on LinkedIn.