Sales Tax Fundamentals
Get up to speed on the basics of sales tax
How three multichannel retailers automate sales tax compliance
byMay 19, 2022
The retail industry is undergoing a dramatic transformation. With a pandemic forcing customer habits to shift, retail owners have shifted as well, resulting in new channels for revenue growth. Nowadays, retail businesses can meet customers wherever they are; whether that’s an online store, social media platform, reopened brick and mortar location, or a virtual world like the metaverse.
However – with all these opportunities come compliance challenges. Retail companies today have so much to consider when it comes to managing sales tax obligations. Take shipping for example, a common logistics hurdle for retail companies. Should you always collect sales tax on shipping charges? Well, each state handles shipping taxability differently so you are likely charging certain customers sales tax on shipping while exempting it for others.
How does a growing retail company manage that level of complexity? Keep reading to see how three major retailers streamline their sales tax compliance, and read the full guide here.
Uncommon Goods, creator of unique gifts and crafts, was hit with a curveball in 2018 – the Supreme Court ruling South Dakota v. Wayfair. This ruling required online retailers with economic nexus to collect sales tax from buyers in that state, even if the retailer had no physical presence in the state. Suddenly, as Uncommon Goods grew and hit economic nexus in more states, the idea of manually filing returns regularly became a huge challenge. After determining that their current sales tax solution wasn’t cutting it, Uncommon Goods went out to find a solution that would allow them to grow with ease of mind. They found TaxJar and were able to streamline their sales tax compliance.
“AutoFile was the biggest help for our finance team,” Courtney Costello, the company’s Lead Product Manager, said. “It [manually filing] was a lot of work once we got up to 30-35 states. That was eating up a big chunk of their time.” TaxJar worked with Uncommon Goods on a custom API that fit their needs, and after the company gained more customers in more states, it began using the power of AutoFile to file and remit sales tax to 30+ states.
The edgy, Instagram-famous sunglass company, Pit Viper, found themselves in a similar situation after the Wayfair ruling in 2018. At first, they weren’t sure how the ruling would impact their business, but as the company grew, the need for a strategy to manage their sales tax compliance became unavoidable. They knew they needed something where automation was the key feature, along with a nexus tracking capability. Keeping these features in mind, their search led them to one particular solution that they believed fit the bill. But during the implementation process the team started to wonder if they had made the right choice.
The Pit Viper team began evaluating a new slate of candidates to step in as their sales tax solution, which is when they found TaxJar. It didn’t take long for them to see the difference: “Although [ending one partnership and needing to start another] added a lot of time and frustration, I think we ended up in the right place,” co-founder Chris Garcin said. “And now we’re extremely happy with TaxJar.” In addition to providing superior service quality, TaxJar was also the lowest cost option for Pit Viper.
When asked what advice they would give other e-commerce companies searching for a sales tax solution, the team was clear: “Do your homework and research first. This is a big partner that you’re bringing on, it controls a lot of the cash that you have to spend on taxes, and find the right partner that works for you. And for us, due to convenience, support, and cost structure it was TaxJar.”
Every Man Jack
Every Man Jack set out in 2007 with the mission to reinvent men’s grooming. Now their products can be found in most major retailers across the U.S. and Canada. They aren’t stopping there though, they have big plans to continue to grow. It’s this rapid growth strategy that led Every Man Jack to search for a better way to manage sales tax.
Back when they only had one warehouse located in their home state of California, Accounting Manager Amy Ocasio was fine manually filing sales tax. It was time consuming, but manageable. However, as their customer base grew, they set up warehouses across the country to meet demand. They also began selling their products on Amazon and increased traffic on their own e-commerce platform. Suddenly, the team had sales tax responsibilities in almost every state.They needed a better way to manage this increase in sales tax obligations, so they set out to find the right solution for their needs, which led them to TaxJar.
How is Every Man Jack feeling about their decision to go with TaxJar now? “If we didn’t have TaxJar, we’d have to have a team dedicated to doing sales tax,” Amy said. “We’d probably have an entire department dedicated to just doing these regular renewals and registrations. Stuff like that takes a lot of time. TaxJar reduces the work that we need to do. It saves us time. It has the feature to automate our sales tax filing. If you are a company that is looking for that, TaxJar has helped us a lot. I would definitely recommend TaxJar 100%.”
Sales tax compliance made easier for multichannel retailers
When you need full access to complete sales tax data, a knowledgeable team of sales tax experts, award winning support, and automated filings, TaxJar is here to help. Built to support retail businesses with complex sales tax needs, TaxJar’s cloud-based platform was created to simplify sales tax for e-commerce businesses so compliance is never an issue again.
Ready to ease the complex, stressful, manual process of being sales tax compliant? Give us 30 minutes to show you how we can help.