Boosting Your Revenue Strategy: Understanding Documentary Stamp Tax
For a business owner or head of marketing, it would be understandable if you had not dedicated much brain space to the phrase “documentary stamp tax” (“DST”). Understanding this term can actually help you to run your revenue operations better. Here are several ways in which you can use the insights from today’s featured legal article to make a meaningful impact with your marketing and sales teams.
What is the documentary stamp tax? The documentary stamp tax has been around in various forms across many states for more than a century but was codified in Florida in 1977 and can be traced back into other US territories and jurisdictions as early as 1804. While governments have continued to tinker with the rates and regulatory structure of this kind of transaction tax over the years, the fundamental concept is simple: when a person sells or trades a deed, securities or promissory notes (especially in the context of real estate and mortgages), they need to pay a tax – in the case of Florida, $0.35 per every $100 (or portion of $100) in value of the deed, certificate or other indicia of debt.
How can my business benefit from knowing more about the tax? Once you know how much you are paying in taxes, you can dig in deeper and ask whether it makes sense to combine and bundle certain transactions to pay the tax at a higher threshold and save on aggregate costs – for instance, paying $3.50 on a $1,000,000 dollar transaction rather than $0.35 for each $100 dollar amount. An understanding of the tax allows you to spot opportunities to negotiate and save costs on business and administrative expenses related to tax compliance with lawyers, accountants, consultants and even the government itself. For example, once you understand the tax, you may be able to save on a transaction by proving that there is an exemption available.
How else can this tax benefit our revenue operations? Let’s say you have a particularly aggressive sales team and, in your efforts to drive deals home at any cost, you have neglected to track your legal and accounting fees and spent well beyond your budget. Now your revenue operations staff must use all kinds of tactics to finalize all the requisite paperwork and compliance tasks for the deals you’ve already done. It’s less than ideal, and it could have been avoided if you knew in advance the true cost of the deals.
When you’re in a revenue engineer role, your task is to engineer and optimize your marketing automation, lead management systems and other revenue operations systems to maximize your ROI. If you can use an understanding of the tax to prevent your team from spending too much and pulling down your ROI, it pays dividends. Information is indeed power. But more than that, the information you have at your disposal influences the way you act. Do you want to know what your staff will be able to do and how well they will be able to perform their work? Give them more access to information. This may sound strange, but it’s true.
If you’ve worked as an attorney, you likely know that the identity of the partner for whom you work in the beginning of the year will have an outsized effect on your work all year long. Even if they don’t actively work on your level, their reputation will help and hinder you throughout the course of your career. Understanding your tax obligations will better enable your teams to collaborate with lawyers, accountants and other advisors to save money and time. Instead of problem solving in the situation room after the fact, your lawyers will be able to devise strategies to minimize taxes throughout the entire process.
Continuous learning and adaptation is essential to success. In order to be able to assume revenue engineer duties, you need to be willing to question everything you’ve ever learned and believed about best practices in order to refine the way your company approaches revenue generation, marketing automation, lead management and beyond.
For more information on taxation and its implications, you can visit the IRS website.
