According to Liz Armbruester, SVP of Global Compliance Operations at Avalara there are more than 12,000 tax associations, in the USA alone, which on its own makes managing ecommerce tax laws more than a fulltime job. Now compound that number with all the international tax laws, duties and customs fees and it becomes a rather substantial undertaking. One that most small business entrepreneurs would benefit from avoiding all together. Avoidance is not an option, but integrating with a solutions provider and automating the process would certainly provide an option worth serious consideration.
Anyone who follows this podcast or my show notes (aka blog) know I am all about using technology as an accelerator to growth.
In this podcast Liz Armbruester, refers to something a little different, “Utilizing technology as an enabler.” For me this means utilization of existing technologies to enable YOU to do what you DO BEST. In todays case its, using technology to take the headache of taxes, especially international taxes so you can focus on making your business more profitable.
Tax software can manage the heavy lifting and tax implications that if not managed correctly could cause for a significant setup back in operations, if not kill the business all together.
To me there are three components to consider with eCommerce tax laws and using technology as an enabler.
First, you need to determine who you will outsource this arm of the business too. You need to make sure that the tax company you hire, be it the old school tax account or tax lawyer sitting in his/her expensive leather chair managing your taxes at fees I hope you can afford, or a software solution that has teams of people hired to keep up to speed on all the latest tax implications on a global scale. Obviously based on the wording I so delicately chose, I am a fan of the later, however, it does depend on your business and your business needs. If you have a single product that only ships in your city, or state (*depending on zip codes taxes can vary) then a paid by the hour tax accountant may be what you need. That said, if you want to be poised for growth, and take advantage of the advantages of economies of scale and the capabilities which technology makes available to you, then you may want to look at tax solutions and people like those discussed in the cast.
Secondly, you need to be able to integrate with your existing eCommerce platform in such a way that things become automatic. You need to have a solution that will allow your platform to update tax details on the site both customer-facing and employee-facing in a seamless manner. This can be managed through API, extensions, plugins or even custom development, no matter how it is accomplished your systems needs to be seamlessly integrated.
As I alluded to in the integrations section, you need everything to be automated. This means your customer experience is kept to the highest of standards by viewing and paying the correct taxes without error, while decreasing the need for manual labor. Let those who are spending their efforts keeping up with the ever-changing tax laws focus on proactive cashflow positive endeavors as opposed to reactive cash negative procedures.
This is just a portion of the great discussion points we talked about on the podcast with Liz Armbruster, SVP of Global Compliance Operations at Avalara and encourage you to have a listen. She is not only a knowledgeable well spoken resource, but was a lot of fun to have on the show. She has a funny way of making taxes an enjoyable discussion, and one you don’t want to miss!
If you enjoyed this cast, or just need some tax tips check out this show:
Simple eCommerce Tax Tips YOU Need to Know