Case Study – Small Mid-Size Business
ADAM Systems is a leading provider of affordable PC based dealership management systems (DMS). The expertise of the company is in implementing and servicing fully integrated, Windows based solutions that are comprehensive and easy to use. Adam Systems manages dealerships ranging in size from the very small to larger multi-franchised operations. The company serves over 1,000 franchised and non-franchised automobile dealers throughout the United States and Puerto Rico. By implementing these complex systems and having its sales representatives and technical integrators traverse the country, the Company realized that it is in all likelihood exposed to sales tax nexus in many states beyond that of Alabama, its primary place of operations.
Robbin Allen, the controller of the Company, responsible for sales tax compliance, says that until the company was audited by 4 different states, it operated under the impression that it had limited nexus; and, more importantly, that the product it sold, customizable software, was sales tax exempt. After spending hundreds of thousands of dollars in responding to the audit, and paying fines and penalties, the company was advised that its product was not customizable enough, rendering it to be taxable in many states, and no less important – that it should become compliant across the board, in all states where its products are sold and implemented.
The analysis that educated the company about its sales tax reporting obligations also indicated that this was going to be a monumental task. Given these reporting obligations, Ms. Allen indicated that the company would have needed to employ at least one Full Time Employee dedicated to sales compliance efforts alone. This would be in addition to the approximately 4 days each month that she would need to dedicate, as the Company Controller, to focus on transaction and tax reconciliation required to complete the necessary filings. This is a large expenditure for any company, and especially significant for a small mid-sized SMB business.
Outsourcing to Exactor the sales tax compliance efforts has proven to be a major cost saver for the company. In a direct cost savings analysis, Ms. Allen found that by using the Exactor sales tax compliance software, she managed to reduce the amount of time she was spending every month, 2 – 3 full days dedicated to reporting compliance with only 5 states, down to 2 hours.
Ms. Allen says that Exactor has “made my life easier.” As reported by Ms. Allen, one of the biggest appeals of the Exactor system has been the ease of use of the Exactor systems. The intuitive interface, and fully automated systems mean that, not only does she not need to spend money on employee training, but that the tax compliance efforts of the company assumed the proper position of being seamlessly controlled in the background, rather than a focal point of the company’s accounting department. Ms. Allen concludes that “I am extremely satisfied with the turn around time on getting back to me with answers to my questions. I do not need to place my daily tasks on hold waiting for a solution, which means that my productivity stays on track.”
Ms. Allen’s summary view of Exactor: “Any company would be lost without it.”
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