How Prentke Romich Company Automated Sales Tax What QAD Users Need to Know About Managing Sales Tax...

How Prentke Romich Company Automated Sales Tax

What QAD Users Need to Know About Managing Sales Tax

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© Avalara

Making sales tax less taxing

Introduction

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Mike AlpertMike Alpert is the Strategic Alliances Manager with Avalara focusing on Avalara's product integrations with QAD. Mike performed his first ERP implementation beginning in 1991 while working for Accenture. Since then, his experience involves a variety of roles in the software industry including developer, development manager, business development, project management, and sales.

Mary BingMary Bing is the IT Director at Prentke Romich Company (PRC), an employee owned company in Wooster, Ohio that designs and manufacturers technology products for people with speech disabilities. Since 1999, Mary had guided PRC IT strategy, including implementing QAD and Avalara’s AvaTax. She also serves as Chair of the ESOP Communications Committee, a position she’s held since 2008.

CONFIDENTIAL & PROPRIETARY |

© Avalara

1. Sales Tax is Hard2. You Try It3. How PRC Conquered Sales Tax4. About Avalara5. Questions and Contacts

What we’ll cover

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100,000 + distinct taxability rules

Exempt Products

Exempt Organizations

Tax Holidays

Thousands of changes each year

State-provided info often missing, misleading, or wrong

Sourcing rules14,700+ distinct tax jurisdictions in North America

Nexus rules

Situs

E-commerce rules

Destination based

Origin based

Home Rule States

Hybrid sourcingZip codes don’t match tax jurisdictions

Sales tax is hard.

Making sales tax less taxing 5

Sales Tax: The Challenge


Do I have to collect (and if so, for whom)?

How do I know what to charge(and is that info accurate)?

How do I register, report, and remit?

For what do I have to collect?

YOUARE

HERE


• 150+ million mailing addresses

• 11,000+ jurisdictional rules

• 35,000+ sales / use / rental tax rates

• ~ 30 M product / service exemptions

• 750,000+ buyer / seller exemptions


Understanding nexus.Knowing where you need to collect.

“Nexus” describes the connection between a state and a business

Having nexus allows a state government to require an out-of-state company to register and collect tax

The out-of-state company must have “physical presence” – but that definition is ambiguous and always up to interpretation


Understanding sourcing rules – “situs”.

Origin-based states for products (destination-based for services)

Arizona, Illinois, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Utah, Virginia

Mixed source states

CaliforniaI Counties are origin-

based; Cities & STJs are destination-based

I Services are always destination-based

Texas I Cities and counties are

origin-based based; STJs are destination-based

I Some services are destination-based

Destination-based states

All the Rest


Product and Service Taxability

What is taxable in one state, may be exempt in another

Check with each jurisdiction for unique product taxability laws

I Product taxability laws are not consistent

I Similar products might be taxed differently

I Different industries have varying taxability rules

TaxableNon-taxable


You Try It – Find the Tax Rate

• Seller:– Avalara

100 Ravine LaneBainbridge Island, WA 98110

– Assumption: Seller has Nexus in Missouri

• Buyer:– American Business Futures (ABF)

1111 E BroadwayColumbia, MO 65201

– Assumption: ABF is non-Exempt

• Product: Canned Software, Shipped on Disc

What is the Correct Tax Rate?


The Answer Is…



4.725%

But Wait…There’s More!



Prentke Romich Company

Pioneers in the field of assistive technology and augmentative communication for people with speech disabilities


Who is PRC?

• Pioneer in the field of using technology to help people with speech disabilities

• Design, manufacture, and repair hi-tech medical products• Provide services to support language acquisition• 140 employee owners• 5 divisions


PRC Locations

• PRC, located in Wooster, OH, has field representatives in about 36 states, giving them a presence and nexus

• Saltillo, located in Millersburg, OH has field representatives in 7 states

• Subsidiaries in UK, Germany and Australia



PRC Systems

• QAD – SSM, PCO/PCR, Vertex– Installed in 2004

• Subscription service websites (available in US, UK and Australia)AAC Language Lab – Therapy materials & lesson plans

iShare PRC – File sharing and data storage

Realize Language – Analysis of language samples

http://www.aaclanguagelab.com/

http://www.ishareprc.com/

http://www.realizelanguage.com/


Saltillo Systems

• Quickbooks Pro• Ecommerce site



Factors driving change

• Rapid growth in nexus for Saltillo• Vertex license limited to one server connection• Building out services websites• Adding UK and Australia to services websites



Objectives

• Provide tax solution for a subsidiary running Quickbooks• Provide tax solution for website subscription services• Provide VAT tax solution for subscription services in the

UK and Germany• Centralize sales tax management and transaction

records• Automate returns and gain efficiencies in accounting

department


Possible Options

• QAD– Global Tax Management: manually configure tables

– Vertex and Sales and Use Tax Interface (SUTI)

• Quickbooks– Manually configure tax tables in QB

– Purchase Vertex license

– Purchase license from another vendor

• Ecommerce– Purchase additional Vertex license

– Purchase license from another vendor



Action Plan

• January – Saltillo and Quickbooks Implementation• February – Saltillo AvaTax Returns• April – Saltillo e-Commerce site implementation• May – Install QAD Connector• June/July – QAD configuration and testing• August 1 – QAD go-live• September – services website implementation• October – PRC AvaTax Returns



Saltillo Action Items

• Configured Saltillo company in Avatax Admin console– Set up Nexus

– Set up tax rules

– Set up automatic returns

• Quickbooks – implementation 1 week– Installed plug-in

• Web services – 1 day– Install api and modify custom shopping cart


PRC Action Items

• QAD Implementation - 60 days– Installed api

– Configured tax class, tax usage, tax rate, tax zone, tax environment

– Cleaned up customer and item records

– Selected product codes

– Exemption overrides

– Special tax rates

• Website Services – 1 day– Install api and modify shopping cart


AvaTax vs. Vertex – what did we gain?• 50% reduction in annual costs and fees• Licensing flexibility• Revenue savings used to expand services – automated

returns• Simple and easy installation• Reduced administration – no monthly updates• Large selection of product codes, taxability managed by

Avalara• Collect VAT tax for UK web services business


Just like outsourcing payroll, companies that outsource sales tax benefit by:

Achieving compliance

Cutting costs

Increasing efficiencies

Focusing on growth


How does it work?

QAD


Sales tax end-to-end compliance


Avalara’s capabilities continue to grow

Expanding IntegrationHundreds of integrations on all major commerce platforms

Improving TechnologyAdded support for Lat/Long, new REST API, UPC taxability, and high-availability cloud deployment

Avalara ServicesExpanded offering to customers with related applications

CONFIDENTIAL & PROPRIETARY | 28

How Prentke Romich Company Automated Sales Tax What QAD Users Need to Know About Managing Sales Tax...

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