Tax administration is a very important aspect of organizational operation.
By its very nature, tax administration is the execution of the core activities for collecting taxes and implementation of tax laws stipulated by the tax regulatory bodies in a country.
Without it, businesses are liable to pay hefty fines and penalties for failing to comply with the aforementioned laws stipulated in their countries.
That’s why companies are always on the lookout to recruit specialized tax administrators who can handle the rigors and demands of tax compliance.
In today’s article, we’ll briefly cover some of the best tax administration practices which may help to streamline tax administration processes for your own company.
So, let’s get started.
What are the best practices to adhere by in tax administration?
Correct tax management by companies and greater legal certainty in tax matters, lead to sounder financial results, reducing risks, including reputational risk.
Here are some of the ways in which a company can keep in tip top shape when it comes to regulatory tax compliance.
1. Always maintaining integrity
What is integrity?
Well, it’s defined by the Cambridge dictionary as the quality of being honest and having strong moral principles that you refuse to change.
Therefore, tax officials need to demonstrate the highest standards of integrity to maintain the public’s trust in the fairness of the tax system and its administration.
Working with transparency and in good faith and cooperation with the tax agencies involved is good business practice.
The direct benefit here is that such compliance leads to a reduction in significant tax risks such as fines and penalties that are brought about for failure to abide by the rules and regulations outlined by the authorities.
2. Giving clear correspondence support
Tax administrators offer support and provide internal tax advisory services and support on business operation matters to various departments within an organization, including:
- Legal; and
- other user departments.
Whatever the method or mode of correspondence that is used, be it an analytical report or a graphical summary of tax findings, the details should be clearly explained.
Companies should therefore ensure that their tax administrators avoid the use of taxation structures that are of an opaque nature and that do not co-operate with the measures put in place by the tax authorities.
3. Timely document filing
Tax preparation and filing is a time-sensitive process that requires specific knowledge and access to state and local tax agencies and forms.
A tax administrator’s duty is to maintain all the necessary forms to properly process and file the appropriate return on your behalf and to ensure that each filing is made in a timely manner to avoid accrued penalties or interests.
For related reading, we have another article which comprehensively details the role of a tax administrator.
You should check that out to get the full picture on what strategic benefit these people offer to organizations.
4. Solid compliance risk management
The central task of a tax administration is to collect the taxes levied in accordance with the law and comply with certain obligations.
What this entails is coming up with necessary compliance risk management.
By definition, this is a systematic process to identify, analyze, determine, prioritize, treat and evaluate the risks of non-compliance and what it would mean for the company.
Through setting up such a contingency, the company is always in a position to handle any non-compliance issues should they unexpectedly arise.
In most businesses, tax administration is handled by the finance department, which can consist of one person or an entire division.
In either case, the allocation of resources to this department can drain the company’s profitability.
For such situations, outsourcing is a viable alternative that can ensure the company is in compliance with state and local tax laws.
At the same time, it can minimize tax liabilities and streamline business practices.
At Flexi Personnel we offer tax administration as an outsourced service.
Our payroll and tax administration spectrum includes things like:
- Net payments;
- Employee benefit allocation; and
- Annual tax filing
We have highly trained and experienced resources who are efficient at handling all requirements for both your employees and legislative tax authorities.
Should you be interested in such services for your own business, feel free to schedule a free consultative meeting