It’s really important that startups track their customer’s addresses from the beginning. By not tracking customer addresses from the get-go, you can cause some real hassle down the line for your startup accounting team or your CPA (like Kruze Consulting).
Make Sure you Use a Customer Relationship Management System!
At Kruze Consulting, we implore all startups out there (especially those who work with us) to please use a CRM (customer relationship management system) that tracks your customer’s addresses. If you don’t track those addresses, we know from personal experience that you will be subject to some really painful moments when your CPA asks for that information!
Without customer addresses it’s very hard for your CPA’s tax team to go through invoicing and invoicing-to-sales apportionment processes. If you haven’t got your customer’s addresses to hand in those scenarios, then you have automatically created a lot more work than necessary.
Why CPAs Need Customer Addresses for Tax Returns & Sales Tax
From the perspective of a CPA, when we do a 1120 income tax return and tax nexus we actually have to apportion the sales based on where the customers are in the United States, specifically which states they are in. The need for customer addresses is also applicable to sales tax, but for this example we’ll discuss tax returns.
We need to know where your customers are because we have to be able to see how much revenue or sales occurred in each state. This, in turn, triggers the tax nexus which triggers sales tax obligations.
Unfortunately, there are a large number of startups that simply do not track this information. So when it comes to completing the income tax returns and sales tax they have to do a crazy catch-up on all of the missing data. This is a heavy process where you will have to do one of the following:
● Acquire all new information
● Slog through the records and dig up the addresses one by one
● Pay someone to procure all of the addresses for you
An Easy Solution
The solution is easy, but you need to implement it when you start making sales. If a startup has tracked client addresses in a CRM system from the start, none of that extra work needs to be done. They would simply download the information from the CRM system, give their CPA the reports they need, and the CPA would get to work on the actual tax return.
By tracking, saving, and storing your customer addresses, you will:
- Save your startup money
- Spend less on your CPA
- Save a lot of time for everyone involved
And, ultimately, everyone can focus on growing the business instead of solving unnecessary compliance issues.
Track Your Client’s Addresses!
So, the bottom line is, please track your client’s addresses from the start. You definitely need a CRM. Tracking your client’s addresses will make life easier for everyone involved. If you have any questions on CRMs, startup rent, valuations, startup investing, startup accounting, taxes, or venture capital, please contact us. You can also follow our YouTube channel and our blog for additional information on accounting, finance, HR, and tax for startups!
