Key takeaways
- Wayfair reshaped sales tax compliance: Businesses must now register, collect, and remit tax in states where they have economic nexus—even without physical presence.
- Proactive SUT advisory drives profitability: Firms that monitor client nexus activity and automate compliance can transform reactive work into recurring revenue.
- Now’s the time to act: With post-Wayfair audits increasing, CPAs can use compliance risk insights and success stories to build stronger, scalable advisory services.
In short: Since the 2018 Wayfair ruling, sales tax nexus has become far more complex for businesses. CPA firms can make SUT advisory profitable by being proactive rather than reactive. This guide sets out four steps to build recurring revenue from it.
The 2018 South Dakota v. Wayfair ruling let states require businesses to collect and remit sales tax, even with no physical presence in the state. When the judge hit the gavel at the end of that Supreme Court case, sales tax nexus became far more complex overnight. We cover this in more detail in 8 Common Multi-State SUT Registration Issues (& How to Avoid Them).
State and local governments quickly began to pass new laws. These set out how they categorize and collect sales and use tax from businesses, and what their nexus thresholds are. At the same time, business owners were suddenly on the hook. They scrambled to understand their new tax obligations. Or in many cases, they stayed blissfully unaware that they had any.
Aware or not, hundreds of thousands of e-commerce sellers, SaaS companies, startups, and merchants became fully accountable for any SUT compliance mistakes. This happened as new nexus laws took effect and grace periods ran out. So how are CPA firms supporting these business owners?
Firms can also see how Taxually works with accounting firms.
Why is staying on top of SUT compliance no small task?
The biggest challenge for top CPA firms is working out how on earth to make SUT advisory profitable. Just keeping up with new laws takes a huge amount of time. And that’s before you analyze and identify nexus duties for clients. But it’s more important today than ever before, since the first Wayfair audit periods will be open in March of 2022.
So what’s the secret?
You want to build profitable SUT advisory services. You want to analyze, set up, and maintain compliance for your clients. The key to all of this can be summed up in two words: be proactive.
What are most firms doing today?
Are you waiting for clients to come to you after they’ve received a notice from a state agency? If so, your firm, like many others, is taking a reactive approach to SUT advisory. That means you step in to help after an avoidable violation has already happened.
This reactive approach costs both time and money. Your team usually faces a tangled mess of data. It must be collected from many sources and carefully sorted for a study. You’re unlikely to win recurring revenue from clients in this state. Their priority is to solve an urgent pain, not to find a long-term solution.
Now, let’s talk about how you can redesign your SUT advisory services. The goal is to make them more valuable for your clients, and more profitable for your firm.
What is a more lucrative SUT advisory approach?
A proactive approach lets your firm get ahead of any potential nexus and SUT compliance issues. You don’t have to respond after the damage is done. That sounds good on paper. But putting a practical solution in place takes careful thought.
Your firm is a business, after all. So first, you need to work out how to set up a SUT advisory solution that makes good financial sense. Right now, firms are slow to adopt a proactive SUT advisory mindset. That’s because managing it is complex and takes a lot of time. And frankly, it’s easier to make money in other areas of the business. But there is a solution.
What are the 4 steps to making SUT advisory profitable for your firm?
CPAs love a good formula. This one will help you build a strong menu of SUT advisory services and add-ons. These can generate reliable cash flow and long-term repeat clients.
1. Use smart tech to streamline compliance and prove your value.
Many business owners (your clients) are already in hot water with their nexus obligations, and they don’t even realize it! So if you show them where they are exposed, you can make the case for why they badly need your expertise.
This used to be a very manual process. But today, there are automated workflow tools you can use to measure your clients’ potential SUT compliance risk quickly and easily. These tools let you offer proactive monitoring to your clients with little effort.
It is critical that you can explain the threat businesses face with SUT compliance. It will likely open the eyes of more than a few of your clients. With compliance risk reports in hand, you can give a full cost-benefit analysis. This shows how much money your expert advisors can save them. Just compare your monthly fees to the expected costs of noncompliance fees and audits. This shows your value.
2. Expand your service menu.
With that critical piece in place, you can offer a whole new menu of services. These let you set up new recurring revenue streams. For example, your firm can provide a standard SUT advisory service for a flat monthly fee. Then, clients can choose add-ons and build a custom package that fits their needs and budget.
These add-ons can include state tax registration services and product taxability guidance. They can also include compliance management, reverse audit analysis, and voluntary disclosure agreement (VDA) management. Related reading: 8 Lucrative SUT Advisory Add-Ons Your Accounting Practice Can Offer Clients.
Each add-on increases your value to your client by saving them time and money. Some tools, like state registration services, offer an instant benefit. Others give options to businesses that need more insight into their risk. Together, all these services support your role in helping clients stay compliant. This protects them from state studies and audits. You can also read Offering Virtual SUT Advisory Services.
3. Collect success story data.
Once your firm is set up for success, start trialing advisory services with a handful of clients. As you do, collect social proof data along the way. You don’t need to put a name to the data. You can share details without revealing their identity. But do describe what industry the client is in.
If you can, profile different types of clients to broaden your success portfolio. This will help you make a strong case for how you support different industries. For example, you could start with a high-volume e-commerce seller, a well-funded fast-growing startup, and a SaaS company.
As you build use cases, there’s no need to name names. Just title the client as “E-Commerce business doing $X per year in business”. Then get their permission to share broad metrics. Record what the client’s compliance risk factors looked like when you started monitoring nexus obligations. Then record how they look today.
Also, ask your client to say, in their own words, how your expertise helped them through the murky waters of SUT compliance. Proof that you helped other, similar business owners become and stay compliant will help you grow your advisory business.
4. Use the upcoming audit deadline to your advantage.
States will begin to line up their first round of post-Wayfair audits in March of 2022. That makes it a great time to start marketing compliance services to current and past clients. Build your marketing message around damage control. Explain why clients must get their nexus obligations in order before states start issuing notices. To help your message land, use one or more of your case studies. Show the benefits for target client groups, sorted by business type.
Why is the proof in the profit potential?
It's time to move away from low-profit busy work that comes from reacting to your clients' nexus compliance obligations. It’s no secret that predictable recurring revenue is the key to long-term success. And you’ve got a golden chance to build exactly that.
Nexus law is still quite new, and it will only get harder to manage for the foreseeable future. That's why now is the perfect time to set up a proactive, scalable SUT advisory approach. It will help you stay on top of the nexus changes that are sure to come. This boosts your firm's ability to protect clients from audit risk.
A proactive approach also lets your firm broaden its services. It creates long-term revenue as you deliver great value to your clients. It's truly a win-win!
How Taxually handles this
Taxually’s LumaTax runs a nexus analysis on your sales, helps you register in the states where you must collect, and prepares and files multi-state sales tax returns, including Canadian GST/HST. LumaTax is currently available to enterprises and accounting firms. For the full workflow, read how to automate US sales tax filing in every state.
Related guides
Frequently asked questions
What did the South Dakota v. Wayfair ruling change?
The 2018 ruling allowed states to require businesses to collect and remit sales tax even without a physical presence, creating new compliance obligations for e-commerce and remote sellers.
Why did this make sales tax compliance more complex?
Each state, and often local jurisdictions, set their own nexus thresholds and tax rules, forcing businesses to track and manage multi-state compliance for the first time.
How are CPA firms adapting to post-Wayfair compliance?
Leading firms are shifting from a reactive to a proactive model, using automation and data analysis to identify client nexus risks before audits occur.
What services can CPAs offer to help clients stay compliant?
Common add-ons include nexus studies, state registration services, product taxability guidance, audit defense, and voluntary disclosure agreement (VDA) management.
How can firms make SUT advisory profitable?
By leveraging technology, standardizing workflows, and offering tiered or recurring advisory packages, firms can turn compliance management into a predictable revenue stream.
Can accounting firms partner with Taxually?
Yes. With Taxually for accounting firms, accounting and advisory firms can offer automated VAT and US sales tax compliance to their clients. See also Taxually for accounting providers.
