Digitizing legal entity data can improve your bottom line

Demand for quick insights

Many C-suites are pursuing operational changes, such as to supply chains, and other strategic investments, requiring upfront tax analysis. In addition, ‘tax’ is a top policy issue for the C-suite due to the continuing instability of global and US tax environments. C-suites need data-driven acumen based on scenario or ‘what-if’ planning, as well as modeling of federal, state, and global tax impacts to understand potential tax increases and avoid unexpected tax bills.

Legal entity data is the foundation for all of the above – across many functions. Planning and executing strategy quickly is difficult if your legal entity ‘picture’ is not accurate. Tax in particular needs accurate, up-to-date organizational structure charts and related data at its fingertips for reporting – not just a current snapshot, but historically as well.

Timely and accurate reporting

Companies are facing mounting compliance requirements and heightened complexity around the world. Rising reporting burdens underscore the need to have core information in real-time, from a secure source, without manual ‘checks’ with other functions.

For example, we’re seeing tax functions track only a limited scope of legal entity data such as names, addresses, ID numbers, ownership percentages, and entity classification for tax purposes. Other important information – such as local tax IDs, officer appointments, functional currencies, qualifications to do business in particular jurisdictions, branch information, and who prepares returns – may be stored somewhere else and not ‘matched’ with core data.

The power of digital

C-suites are focused on digital transformations across the organization, yielding incredible efficiencies and capabilities. At the same time, we’re seeing companies struggle with slow-moving manual updates to core legal entity data that many functions rely upon. The good news is that companies can apply the same transformation ‘mindset’ to address this challenge, but still utilize a platform that can be either ‘off-the-shelf’, as well as fully customized to meet the company’s specific needs.

Leveraging an industry leading digital approach such as Entity Ops can address many fundamental difficulties with which companies are grappling, such as:

• …tracking historical data, e.g., understanding what the legal entity structure looked like at a specific point in time in the past, which is critical to current year tax reporting. Companies using a manual, ad hoc approach experience bottlenecks when data is requested between tax teams and other functions, with limited ability to track who made changes and when. Imagine sifting through emails and documents to pinpoint prior years’ data during a complicated tax audit – this may not be the right allocation of time and resources when significant dollars are at stake.
• …generating a detailed organization chart for all or part of the legal entity structure. Companies using a manual approach incur significant hands-on effort to do this accurately.