Navigating Avalara Tax Compliance for Businesses
Intro
In today's fast-paced digital realm, the conversation around tax compliance has transformed dramatically. Businesses are not just scrambling to keep pace with changing regulations; they are also leveraging technology to streamline their operations. Avalara stands out as a key player in this arena, offering solutions that cater to a wide range of tax compliance challenges. Understanding Avalara’s functionalities and relevance in tax compliance helps businesses not only to stay compliant but to thrive amid the complexities of taxation today.
As companies pivot to e-commerce and digital transactions, new compliance requirements emerge, often shifting the goalposts unexpectedly. Avalara’s automated solutions aim to cut through that haze, providing businesses with tools that adapt to the intricate web of tax regulations. This article will explore these solutions, the role of data analytics in compliance, and the potential hurdles businesses face as they implement these technologies.
Tax compliance isn't a one-size-fits-all equation. Various sectors have unique needs, and it's essential to recognize these differences to navigate compliance successfully. Join us as we delve into sector-specific requirements, the integration of Avalara’s systems into existing business processes, and pivotal trends that may shape the future of tax tech. This exploration aims to arm businesses with the necessary insights, ensuring they not only conform to laws but also leverage tax compliance as a strategic advantage.
As we unpack Avalara's offerings, we'll look at the latest innovations that enhance compliance processes, spotlights on promising startups in the sector, insights into investment opportunities, and strategies for entrepreneurs keen on thriving in this challenging landscape. Whether you're an investor, an entrepreneur, or someone interested in tech trends, there's plenty of ground to cover that provides a deep understanding of what Avalara brings to the table and how businesses can position themselves for future success.
The Importance of Tax Compliance
Tax compliance is a crucial component of a well-functioning business, especially in today’s intricate financial landscape. Businesses, regardless of their size, are bound by an array of regulations and laws that govern tax obligations. Navigating through this labyrinth isn't just about doing things right; it’s about security for the organization, credibility with stakeholders and ultimately, safeguarding its future. By understanding the significance of tax compliance, organizations can lower risks, optimize financial operations, and foster sustainable growth.
Defining Tax Compliance
At its core, tax compliance stems from the obligation of businesses to adhere to federal, state, and local tax laws. It encompasses everything from proper tax reporting to timely payments and accurate documentation. In essence, it’s about ensuring that businesses pay exactly the taxes they owe. The implications are far-reaching; this means maintaining meticulous records of revenue, expenses, payroll, and other financial activities to ensure complete and transparent submission of tax returns. Compliance is not just a one-time affair; it's an ongoing commitment that requires regular assessment and adaptation to evolving regulations.
Consequences of Non-Compliance
When businesses fall behind the eight ball and fail to comply with tax obligations, the repercussions can be severe.
- Financial Penalties: Fines can add up quickly for missed filings or inaccuracies in filings.
- Legal Ramifications: Tax evasion can lead to criminal charges, potentially resulting in hefty legal costs or imprisonment.
- Reputational Damage: A company known for tax woes may find it harder to attract investors or retain customers.
- Operational Disruptions: Non-compliance issues can lead to audits, which often consume valuable time and resources, hindering business productivity.
"In the game of business, tax compliance isn’t just a rule, it's a key play for success.”
For instance, consider a small tech startup that neglects its payroll taxes. Should the IRS come knocking, the fallout could not only drain the company's finances but also derail its talent acquisition efforts due to a tarnished reputation.
The Role of Technology in Compliance
In the digital age, technology plays an indispensable role in simplifying the compliance process. Automated solutions, like Avalara, have emerged as beacons of help for businesses grappling with tax obligations. Here’s how:
- Efficiency: Automated systems help eliminate human error by ensuring calculations remain accurate, and filings are timely.
- Scalability: As an enterprise grows, so do its tax responsibilities. Technology allows for scalable compliance that can adapt to changes in business size or complexity.
- Real-Time Monitoring: Advanced tools can provide real-time insights into tax obligations, which helps businesses stay ahead of regulatory changes.
- Integration with Business Operations: Technology solutions can integrate effortlessly with existing business systems, streamlining overall processes and saving valuable time.
In summary, the importance of tax compliance can’t be overstated. It dictates the operational soundness and ethical standing of a business in the market. As companies continue to grapple with complex tax laws, leveraging technology is becoming a necessity, rather than a choice.
Navigating Tax Challenges
In an era where businesses are continually adapting to new regulatory landscapes, navigating tax challenges becomes critical. Every business—small or large—faces unique hurdles when it comes to complying with tax laws. As such, understanding these challenges helps organizations ensure smooth operations and avoid hefty penalties.
For starters, tax regulations vary widely across different regions, requiring a keen eye and often significant resources to stay updated. Without a solid grasp of local and federal rules, a business can easily find itself entangled in compliance issues that might have been easily avoided. Further complicating this task is the speed at which rules change; staying compliant is not a one-time effort but a continual process of learning and adapting.
Being proactive in navigating tax challenges can foster trust and stability in business relationships and preserve resources by minimizing the risks of audits or fines. Below are some of the most common challenges businesses face while steering their way through the maze of tax compliance.
Common Compliance Challenges Faced by Businesses
Tax compliance for businesses is fraught with several challenges. Some of these include:
- Lack of Knowledge: Many organizations struggle with complex tax codes. Not understanding the implications of each regulation can lead to unintentional violations.
- Record-Keeping Issues: Maintaining accurate and organized financial records is essential. Poor documentation can result in inaccurate tax filings or difficulties during audits.
- Changes in Legislation: Keeping up with changing tax laws can be overwhelming. New regulations can introduce extra layers of complexity, requiring constant vigilance.
- Resource Allocation: For startups or small businesses, dedicating time and resources to tackle tax compliance can be a uphill struggle against existing operational priorities.
These challenges emphasize the necessity for robust tax compliance strategies. And this is precisely where an automated solution like Avalara comes to the rescue.
Impact of E-commerce on Tax Compliance
E-commerce has vastly transformed the landscape of tax compliance. As online shopping grows, so does the complexity of managing sales tax obligations. Retailers operating online often ship products beyond state lines, which can result in multiple tax jurisdictions coming into play.
The key impacts include:
- Different Tax Rules: Each state can impose varying tax rates. Understanding these differences is essential but can be taxing—no pun intended—for businesses.
- Nexus Issues: The establishment of a tax presence (nexus) in a state triggers tax obligations. E-commerce has expanded these notions beyond physical locations, complicating compliance endeavors.
- Marketplaces and Third-Party Sellers: Platforms like Amazon or eBay bring their own tax responsibilities. Not adapting to how each platform manages tax procedures could result in significant liabilities.
Thus, businesses must not only be aware of but also adapt to these shifting dynamics to maintain compliance and avoid potential pitfalls.
International Tax Compliance Issues
For businesses operating on a global scale, international tax compliance can feel like navigating uncharted waters. The myriad of laws governing international commerce means that a single misstep could lead to severe repercussions. Here are a few pivotal issues:
- Varying Tax Regulations: Each country has its own tax codes, which can be strikingly different from one's home country. Understanding and conforming to these diverse requirements can be daunting for multinational enterprises.
- Transfer Pricing Regulations: These rules govern how transactions between subsidiaries in different countries are taxed. Mispricing can lead to tax audits and penalties from tax authorities.
- Digital Services Taxes: Countries are increasingly implementing their own digital services tax regimes. Businesses must monitor these changes closely to ensure compliance and mitigate unexpected tax burdens.
Navigating international tax compliance requires vigilance and the use of sophisticated tools to manage cross-border obligations. Automated solutions like Avalara provide the means for this, allowing firms to remain focused on what they do best. As such, embracing these technologies is no longer optional for businesses aiming to thrive in a complex, interconnected world.
"Understanding the complexities of tax compliance in today’s market is no small feat; however, with the right tools and approaches, businesses can navigate these waters effectively."
The overarching theme here is that navigating tax challenges, whether domestic or international, is not merely a regulatory obligation but rather a strategic pursuit that can inform business growth and sustainability.
Avalara: A Comprehensive Overview
Understanding Avalara's role in tax compliance offers businesses a gateway to navigating the complexities of modern taxation. Avalara has been at the forefront of automating tax processes, making it simpler for companies to manage their tax obligations efficiently. This section emphasizes the importance of Avalara's services in enhancing accuracy, reducing manual workload, and ensuring compliance in the ever-evolving landscape of tax regulations.
History and Evolution of Avalara
Avalara was founded in 2004, back when the internet was beginning to drive a significant shift in commerce. Initially, the company focused on providing a simple tax calculation engine that alleviated much of the manual labor businesses faced when calculating sales tax. Over time, it recognized that as more businesses ventured online, the need for comprehensive tax solutions was becoming essential, to say the least.
- One of the major turning points for Avalara was its early adoption of cloud technology. This move not only allowed businesses to access services from anywhere but also simplified integrations with various e-commerce platforms.
- Fast forward to today, Avalara has expanded its offerings significantly, integrating services like filing and compliance management, effectively making it a one-stop-shop for tax compliance solutions.
This evolution reflects Avalara's responsiveness to market needs, positioning itself as a critical partner for businesses aiming for tax compliance in a digital world.
Core Features of Avalara Solutions
The solutions built by Avalara are robust, designed to support the diverse and nuanced needs of businesses across different sectors. Some of the core features include:
- Automated Sales Tax Calculation: Avalara stars in simplifying the calculation of sales tax across various jurisdictions. This feature ensures that businesses charge the right amount every time, reducing the risk of errors significantly.
- Tax Compliance Management: This aspect keeps businesses on their toes by managing all the compliance requirements, whether federal or state. Businesses stay updated with changes in tax rates and rules.
- Filing and Remittance Services: Avalara takes over the responsibility of filing tax returns, freeing businesses from the burdensome processes associated with tax filing, allowing them to focus on growth.
These features represent a culmination of technology and user-focused design, making tax compliance less of a chore and more of a streamlined process.
Integration with Business Systems
Integrating Avalara with existing business systems is another cornerstone of its effectiveness. The flexibility to blend with various ERP and e-commerce platforms means that all financial data flows seamlessly into the tax compliance workflow.
- Simplicity in Integration: Avalara boasts pre-built connectors for systems like QuickBooks and Shopify, making integration as easy as pie. This allows for quick setup times, so businesses can start capitalizing on Avalara's features almost immediately.
- Real-Time Data Exchange: Continuous syncing of data ensures transactions are up to date, providing accurate calculations without any lag. This real-time capability minimizes risks associated with inaccurate tax filings.
- Scalability: As a business grows, so does the complexity of its tax structure. Avalara’s solutions scale effortlessly to meet the demands of larger operations.
Avalara's integration with business systems epitomizes the idea that ease of use translates to efficiency — a crucial factor for any modern business tackling tax compliance challenges.
In summary, Avalara provides a comprehensive solution that not only automates compliance but also seamlessly integrates into an organization's operations. With its rich history, core features, and compatibilities, Avalara has carved out a significant niche in the landscape of tax compliance technology.
Automated Solutions for Compliance
In the current business landscape, where regulations are constantly evolving, automated solutions for compliance have become paramount. These solutions streamline processes, reduce human error, and provide a more agile framework for tax compliance. Businesses, regardless of size, can benefit significantly from implementing systems like Avalara that automate time-consuming tasks and enhance accuracy in reporting. By embracing automated solutions, organizations can focus on core functions while keeping themselves compliant with tax obligations.
Streamlining Sales Tax Calculation
Sales tax calculation can often feel like navigating a maze. Different states and localities have varying rates, exemptions, and other nuances that can make manual calculations prone to error. Automating this process alleviates a significant burden. With Avalara’s system, it can integrate with sales platforms, instantly updating tax rates based on the latest legislative changes.
When a transaction occurs, these systems can calculate the exact tax owed in real-time, taking into account all applicable laws. Automatic calculations not only save time but also ensure that businesses remain compliant without extra effort. Customers appreciate transparency in these transactions, knowing that what they pay at checkout is completely accurate and governed by the law.
Simplifying Filing Processes
Filing taxes is often a dreaded task for many. It is riddled with paperwork, deadlines, and the constant question of accuracy. Automated solutions can significantly simplify these processes. Avalara allows for the seamless collection of transactional data, enabling firms to prepare returns effortlessly.
- Automated reminders help ensure that deadlines are not missed.
- Streamlined documentation means fewer chances for mishaps.
- The system can auto-generate reports and forms needed for filing, contributing to a more efficient workflow.
With Avalara in place, companies no longer have to wade through mountains of receipts or guesswork. Instead, everything is organized and ready to go. Companies can trust that they are filing correctly and on time, avoiding potential fines or penalties.
Monitoring Compliance with Real-Time Data
In an era where data is king, monitoring compliance becomes easier with real-time insights. Avalara not only automates calculations and simplifies filings but also continually analyzes data against regulatory standards. This ensures that businesses are not just compliant at a point in time but are maintaining compliance on an ongoing basis.
It’s crucial to recognize that tax regulations change frequently. Keeping tabs on these shifts can be challenging, especially for multi-state or international operations. With automated monitoring, everyone involved can receive alerts for changes in laws or rates, enabling timely adaptations to avoid becoming non-compliant.
"Real-time data isn’t just numbers; it’s the pulse of your compliance health."
This proactive approach enhances both efficiency and peace of mind. It transforms the once tedious and anxiety-inducing task of compliance into a more manageable and straightforward experience.
Sector-Specific Compliance Requirements
Understanding the nuances of tax compliance is imperative, especially when considering the unique demands of varied sectors. Each industry carries its own set of regulations and challenges that can impact tax obligations tremendously. Having a tailored approach, like that offered by Avalara, can ease the strain of navigating these complexities. The right tools help businesses not only comply with rules but also optimize their tax processes tailored to their specific contexts.
Retail and E-commerce
In the retail and e-commerce sector, tax compliance takes center stage due to rapid digital transactions and varied tax rates across jurisdictions. Unlike traditional brick-and-mortar shops, online retailers are often liable for sales taxes in multiple states, depending on where their customers are located. This creates a quagmire of tax obligations that can overwhelm even seasoned entrepreneurs.
- Nexus Determination: Understanding nexus is crucial. A business may have a tax responsibility in a state if it has sufficient connection through physical or economic presence. This makes thorough tracking imperative.
- Varied Tax Rates: Different products can have different tax rates. For instance, clothing might be tax-exempt in some states but not in others. This variability requires sophisticated calculations that Avalara’s solutions can seamlessly execute.
- Streamlined Filing: Avalara provides mechanisms for automatic filing, saving time and reducing human error during tax returns. This aspect allows businesses to focus on growth rather than compliance fatigue.
"Navigating the tax landscape in retail and e-commerce is like walking a tightrope; one misstep could mean significant financial consequences."
Manufacturing and Distribution
The manufacturing and distribution sectors face their own set of compliance challenges. Here, the stakes are high, as failure to adhere to regulations can halt operations or incur substantial fines. Companies must understand how different tax obligations apply to the tangible products they produce and ship.
- Use Tax: When materials are purchased for production, manufacturers often face use tax implications, which varies by state and requires meticulous tracking of inventory.
- Import/Export Regulations: If a business operates on an international scale, understanding customs duties and international tax compliance rules is essential. Avalara bridges this gap, ensuring that businesses meet all necessary standards while optimizing shipments.
- Energy Tax Incentives: Some manufacturers qualify for tax incentives based on energy use or sustainability efforts. Awareness of these can lead to potential savings that should not be overlooked.
Healthcare Industry Regulations
In the healthcare sector, tax compliance involves a complex web of rules and guidelines that govern everything from billing practices to equipment purchases. Not only is this sector heavily regulated, but it also needs to operate under unique tax exemptions that could otherwise complicate standard procedures for other industries.
- Tax-Exempt Organizations: Many healthcare providers find themselves classified as tax-exempt under 501(c)(3) regulations. Managing these exemptions alongside operational tax responsibilities requires specialized knowledge.
- Medical Device Taxes: The Affordable Care Act introduced specific medical device taxes that can catch manufacturers off guard if they are not fully aware of the changes. Staying informed is vital.
- Sales Tax Exemptions: Healthcare services often have different tax implications compared to general goods. For example, patient care supplies might be tax-exempt in various jurisdictions, so companies should leverage Avalara’s analytics to ensure compliance.
Each of these sector-specific aspects reinforces the necessity of a comprehensive compliance strategy alongside automated solutions that can adapt to ever-changing regulations. The complexities of tax compliance across sectors underscore Avalara's invaluable role in creating tailored solutions that help businesses stay ahead of the regulatory curve.
Challenges in Implementing Avalara Solutions
When diving into the intricate world of tax compliance, the discussion naturally shifts to the hurdles businesses face while integrating solutions like Avalara into their operations. While these systems can significantly enhance efficiency and accuracy, the path to successful implementation is often fraught with challenges. Recognizing and addressing these challenges is essential for businesses aiming to streamline their tax compliance processes.
Data Integration Issues
One of the primary challenges in utilizing Avalara for tax compliance is the integration of data across various platforms. Often, businesses rely on multiple software applications for different aspects of their operations. For instance, sales, inventory, and financial reporting might all be handled by distinct systems. When implementing Avalara, ensuring that these systems communicate effectively becomes paramount.
The integration process can be technically demanding. Data from each platform must be accurately mapped and transferred, which can require substantial IT resources. This mapping isn't just about moving numbers around; it's essential to ensure that the data's format and context remain intact. If critical information gets lost or misinterpreted during this process, it could lead to compliance failures and subsequent penalties, which can be costly.
In addition to technical difficulties, businesses must also contend with legacy systems that may not be easily aligned with new technologies. This often leads to a reluctance to fully embrace cloud-based solutions like Avalara due to fears of disruption.
User Acceptance and Training
Once the technical integration is in place, the next hurdle often involves user acceptance and comprehensive training. Employees who have been accustomed to traditional methods may be hesitant to adapt to automated solutions. Most people dislike change, especially when it involves their day-to-day operations. The success of any software like Avalara hinges not just on its technical functionality but also on how well users embrace it.
Training programs are crucial, but they need to be thoughtfully designed. Just throwing a manual at someone and expecting them to understand everything won't cut it. Baic training sessions should be interactive, offering hands-on experiences that stimulate interest and ease the transition.
Utilizing various learning formats—such as webinars, tutorials, and one-on-one coaching—can lead to higher acceptance rates among users. Leveraging champions within groups who advocate for the benefits of the system may also act as a persuasive element in encouraging others to adopt the changes.
Ongoing Compliance Monitoring
Compliance isn’t a one-and-done deal. With Avalara's solutions in place, the next wave of challenges revolves around persistent monitoring and updating of compliance practices. Tax regulations can shift like quicksand, often unexpectedly. Businesses must be equipped to adapt quickly to these changes, or they face the risk of slipping into non-compliance.
This necessitates continuous education for teams, keeping them informed about regulatory changes and ensuring that the Avalara system is updated accordingly. A proactive strategy should involve regularly reviewing reports generated by the system, which can help identify anomalies or risks before they escalate into larger issues.
The interplay between maintaining compliance and managing business efficiency can be tricky. Without a methodical approach to ongoing monitoring, even the most sophisticated systems can falter. Businesses must foster a culture where compliance is prioritized consistently, embedding it within the overall operational ethos.
"The cost of compliance issues often goes far beyond penalties; it can damage a company's reputation and trustworthiness in the marketplace."
Analyzing Data for Compliance Insights
Understanding how data analysis intersects with tax compliance is crucial for businesses today. In an era where rapid changes in regulations are the norm, having your hand on the data pulse helps ensure that you are not caught off-guard. This section explores the importance of data analytics in tax compliance, how business intelligence tools can be leveraged, and the emerging trends that will shape future compliance activities.
Importance of Data Analytics in Tax Compliance
Data analytics has transformed the way companies handle tax compliance. Traditionally, businesses relied on manual processes for tracking compliance, which were often vulnerable to errors and oversight. In contrast, data analytics offers several benefits:
- Precision: Automated analysis helps in detecting discrepancies and ensuring accurate calculations. This reduces the chances of audits due to human error.
- Efficiency: Analyzing tax data quickly allows for faster decision-making processes. Time spent on tedious manual reviews can be redirected to strategic planning.
- Compliance Assurance: Real-time data monitoring ensures compliance with local, state, and federal tax regulations. If discrepancies arise, businesses can address them immediately, rather than waiting for annual returns to be filed.
In the context of Avalara tax compliance, data analytics provides insights that support not only tax calculation, but also filing and reporting processes, fundamentally changing how businesses approach their tax obligations.
Leveraging Business Intelligence Tools
Business intelligence (BI) tools, such as Tableau or Microsoft Power BI, have become essential in the tax compliance landscape. These tools allow companies to visualize and analyze complex data in comprehensible formats. Here’s why integrating BI tools is beneficial:
- Data Visualization: BI tools present data in visually attractive formats that make it easier to digest and interpret. Instead of looking at a sea of numbers, stakeholders can see clear graphs and charts that outline trends or red flags.
- Informed Decision-Making: With enhanced data visibility, organizations can make informed decisions regarding tax strategy and compliance approaches. They can identify when and where they might be at risk.
- Cross-Departmental Collaboration: BI tools enable different departments, such as finance and compliance teams, to work together more effectively. This synchrony ensures a more coherent approach to compliance.
Integrating these tools with Avalara's existing solutions will propel businesses toward achieving a more holistic and streamlined compliance workflow.
Forecasting Future Compliance Trends
As we gaze toward the future, several trends emerge in tax compliance that businesses must be aware of:
- Increased Automation: With advancing technology, businesses can expect further automation in compliance processes. This could involve automated filing, reporting, and even proactive identification of compliance risks.
- Real-Time Reporting: Regulatory bodies are increasingly demanding real-time reporting from companies. Keeping up with these rules necessitates a shift towards systems that can provide this capability.
- Enhanced Data Security: As data analytics grows, so does the sensitivity around data security. Protecting tax data will become even more critical, pushing businesses to adopt stringent security measures.
Future of Tax Compliance with Avalara
As businesses venture further into a digitized world, the future of tax compliance begins to shape itself around technological advancements and evolving regulatory landscapes. Avalara stands at the forefront of this evolution, offering innovative solutions that not only facilitate compliance but also enhance operational efficiency. It's crucial for industry stakeholders to grasp the implications of these changes as they prepare to face the looming challenges and opportunities ahead.
Understanding how Avalara's technology can transform compliance processes can empower businesses to not just meet obligations, but to strategically plan for future shifts. The critical elements to consider include:
- Adaptability: Avalara's solutions are designed to evolve. As new regulations emerge, businesses using Avalara can expect timely updates that keep them compliant without unnecessary disruption.
- Cost-effectiveness: By automating tedious tasks, Avalara helps businesses save time and resources, allowing them to focus on growth rather than being bogged down by compliance worries.
- Data-driven decisions: Avalara offers insights that can refine business strategies and improve tax planning through enhanced data analytics.
"In a world that constantly changes, staying ahead requires more than compliance; it demands foresight and agility."
Emerging Technologies and Their Impact
The horizon gleams with potential as new technologies reshape tax compliance processes. Tools like artificial intelligence and machine learning are critical in analyzing vast amounts of transaction data swiftly, helping organizations to identify trends and mitigate risks associated with non-compliance. Furthermore, blockchain technology promises increased transparency and security in transactions, which can streamline reporting practices.
- AI in Compliance: Automation minimizes human error, and AI can assist in real-time monitoring of compliance status, proving to be invaluable for businesses operating across multiple jurisdictions.
- Blockchain Benefits: By utilizing blockchain, businesses can maintain immutable records that simplify audits. This not only boosts compliance but builds trust among stakeholders.
Regulatory Changes on the Horizon
Tax regulations are not set in stone. Governments are continually adapting to changes in the economy and taxpayer behavior. Understanding regulatory trends is vital for businesses aiming to sustain compliance in the future. Countries are moving towards:
- Digital Taxation: This includes ensuring taxes on digital goods and services are adequately enforced, affecting both start-ups and established corporations.
- Global Cooperation: With the rise of multinational operations, expect cross-border compliance standards to become more uniform, demanding that businesses be proactive.
Businesses need to actively keep an eye on these trends. Recognizing upcoming regulatory changes can be the difference between seamless compliance and potential fines or penalties.
Building a Proactive Compliance Strategy
To navigate this complex landscape successfully, businesses must cultivate a proactive tax compliance strategy. This need not be a daunting task. Here are some key recommendations:
- Stay Informed: Regularly monitor updates from tax authorities and industry news, to anticipate shifts.
- Invest in Technology: Implement solutions like Avalara ’s to automate compliance tasks and gain real-time insights.
- Training and Development: Ensure all employees understand compliance responsibilities. Continuous training can mitigate risks and enhance overall knowledge.
- Engage Experts: Consulting tax professionals can provide valuable insights, especially for complex issues.
Building a forward-looking strategy will allow businesses to turn compliance into a competitive advantage, rather than an obstacle. By marrying innovative technology with insightful analysis, Avalara not only changes how compliance is approached but also sets the stage for future success.
