BlogNov 21, 2022
5 Steps to Efficient & Compliant Automation of Employee Benefits Reports
The Blue dot Team
The Blue dot Team
Managing, recognizing, calculating, and reporting the tax on employee benefits has unique challenges and hidden costs determined by work processes and expense management capabilities, as well as the business environment.
As the global business landscape becomes increasingly complex, multinational companies must constantly adapt to regulatory changes in different countries. They may face significant financial penalties for failing to properly account for location-based, time-based, or expense-type-driven liabilities.
In today’s hybrid, remote working model, a decentralized workforce presents a complex expense and reimbursement landscape that creates inefficiencies and increases the risk of non-compliance.
These challenges have highlighted the need for cross-functional, tech-driven support between expense management, human resources, payroll, and finance teams to ensure effective and efficient tax reporting.
There are several ways that businesses can mitigate the growing challenges and inefficiencies and streamline processes, enabling finance and tax teams to help their companies avoid costly mistakes and ensure compliance with global regulatory requirements.
Let’s take a look at the five core areas that affect employee benefits reporting, with recommendations for best practices to reduce risk and ensure accuracy, efficiency, effectiveness, and tax compliance.
Discrepancies between employee-submitted reports and the submitted receipt evidence, or lack of it, are not uncommon. Employees may not have the training or financial background to fill out expense reports accurately, resulting in critical weaknesses for data integrity.
This can cause serious issues when calculating employee benefits tax, compounded by traditionally manual reporting processes, which are often more error-prone than a technology-driven solution. Implementing an automated and streamlined expense reporting process can mitigate these risks, improving data accuracy and efficiency while helping to reduce the overall burden on employees.
Tax teams focusing on employee benefit taxes are responsible for several mandatory checks and data-intensive activities related to expense reports and tax structures, often across many countries.
Tasks that can be streamlined by automation include verifying data, checking for accuracy, maintaining records, and providing support to other departments. Without comprehensive software, support tax and payroll teams may be left under-prepared and overworked.
The constantly changing tax laws on employee benefits can be very challenging for tax and finance teams. Not only do they need to spend significant time and resources validating expense reports and matching them to company guidelines, but they also need to update their tax knowledge and resources to ensure continuous compliance.
By staying current with the latest tax laws and using available resources, tax and finance teams can help ensure compliance and minimize the burden on employees. Leveraging technology can reduce this burden, providing a dependable, centralized, and digitized compliance interface that is often cloud-based and accessible to all relevant stakeholders.
Spreadsheets are a popular tool for managing data, but they are not well suited for multinational companies that must comply with tax codes from multiple countries. Version control is a significant problem with spreadsheets – it is difficult to track changes and ensure everyone is working with the most up-to-date version.
Another issue is human error; it’s easy to make mistakes when inputting data or formulas into a spreadsheet. Broken formulas can lead to incorrect calculations, and data management can be time-consuming.
A centralized employee benefits program requires unified policies and procedures, but this is often difficult to achieve when teams operate in different locations. Spreadsheets are not an efficient or effective solution and cannot meet the standards of accuracy and dependability compared with a dedicated software solution.
In today’s business world, efficiency is critical. That’s why more and more organizations are turning to modern software and technology solutions to improve their process management and reduce overhead.
Nowhere is this more evident than in the finance department. Traditionally, finance teams have been tasked with tediously combing through expense reports to pick up on incorrect employee input and coding and ensure the benefits tax reporting is compliant.
But by adopting AI and ML software, finance teams can turbocharge their productivity and reduce repetitive tasks. By automating the report coding process, AI and ML can help finance teams save time and money, which is essential in today’s competitive business landscape.
Relying on manual data entry to populate expense reports and credit card statements introduces data duplication and redundancy to the workflow. Using manually entered data across different software platforms increases these risks, and the time-consuming process can also lead to missed deadlines or incorrect filings. Automating the data entry process and subsequent process flow can help businesses avoid these issues and improve compliance with tax regulations.
Finance and tax teams worldwide spend significant time, human resources, and effort to address the challenges of employee benefits reporting. Tax compliance is a difficult task that requires specialized skills and knowledge, and changing regulations compound the job’s complexity. As a result, financial teams must be constantly vigilant to ensure their organizations comply with all relevant laws and regulations.
While meeting tax compliance can be a daunting challenge, it is essential for the success of any organization. By taking the time to understand the requirements and develop robust, effective, and efficient procedures, financial teams can help their organizations navigate the ever-changing tax landscape.