Tax Calculation using Business ByDesign

Feature Article | March 13, 2009 by John Viglione, Vertex Inc.

Calculating accurate sales and use taxes is usually a tedious, multi-step process. Companies need to manually research the current sales and use tax rates for all applicable jurisdictions, calculate correct tax amounts, and apply the appropriate tax rules (usually manually via spreadsheets).

Without the proper tools, it’s difficult to stay current on rate and rule changes for state and local jurisdictions; since 1997, there have been a total of 7,786 new and changed sales and use tax rates – an average of 708 per year (Vertex 2007 Sales Tax Rate Report (2007). Audits and fines await the slightest misstep. It doesn’t have to be that way.

Vertex Tax Service offers variety of functions

SAP has partnered with Vertex Inc. to provide a best-of-breed solution to help SMEs handle their taxes: Vertex Tax Service, an on-demand tax calculation engine scaled for SMEs using the SAP Business ByDesign solution. It is a robust tax engine that enables customers to take advantage of extensive research and codification of tax rates and rules for all U.S. jurisdictions.

Vertex Tax Service provides:

  • Precise, automatic sales and use tax calculations on every sales and purchase transaction;
  • monthly, automatic tax rate and rule data updates (based on Vertex’s best-of-breed, SAS 70-certified tax research);
  • accurate identification of taxing jurisdictions for every transaction;
  • support of special-purpose jurisdictions (such as stadium and mass transit);
  • automatic application of complex, jurisdiction-specific rules for key industries using SAP Business ByDesign.

“The combination of SAP Business ByDesign and Vertex Tax Service allows SMEs to enjoy the same benefits of tax automation that hundreds of larger corporations have been experiencing for decades,” says Jack Ferraioli, Vice President of Customer Relationship Development at Vertex.

Affordable and easy to configure

“SMEs don’t have the time or resources to efficiently deal with the myriad of U.S. state tax regulations—until today,” states Christoph Behrendt, SAP Senior Vice President Small and Medium Business. “We knew that tax management software would be a crucial element that separates SAP Business ByDesign from other solutions in the marketplace. With Vertex Tax Service, our customers get, on demand, the industry’s most respected tax management platform seamlessly integrated with SAP Business ByDesign. No other solution comes close.”

Its robust, automated functionality helps enhance tax compliance by eliminating the errors that arise from manual tax calculations. In addition, Vertex’s automatic updates to sales and use tax rates and rules for thousands of tax jurisdictions help reduce the risk of audit penalties and enable SMEs to recoup valuable lost business time and resources.

This offering is quick to configure and easy to enable. Customers simply select the option for Vertex Tax Service during the configuration of SAP Business ByDesign, which automatically directs them to the Vertex website to order and pay for their license key. After they enter the key into SAP Business ByDesign configuration functionality, the customers’ SAP Business ByDesign solutions are connected to the SAP-hosted Vertex solution. There are no servers or software to install. And no hardware upgrades, maintenance, or additional training is required.

“The alternative is to use the native tax functionality within SAP Business ByDesign, which requires that companies manually configure all relevant county, city, and local tax jurisdictions; research and assign the correct tax rates for them; and research and assign correct taxability treatment,” explains John Minassian, Vice President of Tax Content Development at Vertex. “They also need to update rates and rules as they change to ensure compliance. With the Vertex Tax Service, all of this is taken care of by Vertex in partnership with SAP, so companies have greater confidence that they are applying correct tax rates and calculations.”

Benefits of Vertex Tax Service

  • Correct tax calculations on invoices, resulting in a better customer experience;
  • lower audit exposure;
  • greater compliance due to fewer manual errors;
  • reduced risk of interest payments and penalties associated with state and local audits;
  • seamless, on-demand scalability;
  • freedom to focus tax professionals and IT staff on more strategic activities;
  • centralized tax data and process control;

In addition, because Vertex Tax Service is available on-demand, customers also benefit from a low cost of entry and total cost of ownership with fast, flexible deployments. SAP provides all front-line support, and Vertex provides second-level support as needed.

A trusted partnership

For nearly 15 years, Vertex and SAP have been combining resources to offer their mutual enterprise customers a complete suite of integrated tax management solutions. “Vertex brings over 30 years of tax and technology experience,” says Ferraioli. “Vertex is the trusted advisor for transaction tax, and we’re pleased to expand our collaboration with SAP to address the SME needs.”

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