Today on the Winning with Shopify podcast.
Take that burden off of you so you can have some Peace of Mind
and sleep better at night. Hey, we've made a fantastic
profit. And then some smart guy turns
around and says, like, ah, you've made a big loss, actually
didn't pay your taxes yet. Shopify tax is really strong at
checkout. I would say I don't mind paying
a bit more if it makes things easy and simple.
They end up paying sales tax to their supplier, they end up
maybe not charging it to their customer, and you can end up in
a lot of just a mess there. I think I've paid nearly $10.00
for a coffee and when I told an American friend of mine out
there they said $10. Where did you get that from?
That sounds really really cheap. I was like, are you crazy?
Hello and welcome to another episode of the winning Shopify
Podcast. If it's your first time tuning
in, welcome to the show. Hit the subscribe button, leave
us a review, and please be honest, but also be nice.
I think it's always something I should say back to that.
If you've been tuning in for a while, welcome back.
Today we have a very, very exciting topic.
We are going to be talking about tax and the financials, which in
my experience is one of the biggest reasons businesses start
to struggle is they haven't done their sums.
So we're going to be talking today about a piece of software
called Tax Cloud. And I have an amazing guest with
me, his name is Ryan from Tax Cloud.
So Ryan, without further ado, welcome to the show.
How are you? Hey, Nick.
Yeah, great to be here. Really excited to talk about the
exciting topic of sales tax. Well, I, I was joking with Ryan
before we hit record as well. And you, you joke about it being
the exciting topic. This is one of the, to add a bit
of fear factor as to why you guys should stay tuned to this.
This is one of the biggest reasons businesses go under.
They don't do their sums properly.
You get to the end of the year and you think, hey, we've made a
fantastic profit. And then some smart guy turns
around and says, like, ah, you've made a big loss actually,
because you don't pay your taxes.
Yeah, I had that nearly 20 years ago in business and I got my
first VAT, my first sales tax, as you guys in the US call it.
But for people who are like, right, Tax Cloud, are you a
bunch of accountants? And is this going to be the
worst episode ever? No, you're not.
But Ryan, tell us a little bit about what Tax Cloud is and why
you guys have decided to sponsor and partner with us here at
Winning the Shopify. Yeah, yeah.
So, so tax cloud, we're sales tax automation platform.
We work with like to say with growing e-commerce brands, a
large part of our customer base is on Shopify, although we do
support across all e-commerce platforms and we're really here
to make sales tax easy for for business owners and founders who
really don't want to be dealing with sales tax.
We take that burden off of you so you can have some Peace of
Mind and sleep better at night. My background, I've been working
in e-commerce for a while. Prior Prior to joining Tax
Collider, I was at a company called Privy, which I helped run
for about 5 years. And so I'm very well attuned to
the challenges and all that goes into running a Shopify business.
And yeah, excited to talk about my my new discovered passion
here on sales tax. Amazing.
And for anyone who's like Privy, what's that?
We had you guys on the show before as well.
So I don't think it's self was on Ryan.
I think it was somebody else from Privy, but apologies if
I've got that wrong. But we had Privy on the show
before, which is what obviously has led to your new appointment
and a couple of other people in the team as well at Text Clouds.
And I should say as well, guys, that Tax Cloud do have an offer
for you guys as one of our sponsors.
And if you head over Tax cloud.com/winning, if you like
what Ryan's got to share today and you think, you know what,
this is a nightmare and it can make it so much easier for me.
Just as Ryan said, yeah, head over to taxcloud.com on forward
slash winning. You get a free on boarding
session and probably a bit of VIP treatment as well as one of
our listeners. But obviously, I mean sales tax
as APC guy, I've spent so much time dealing with it.
Google Merchant Centre needs to know all the different taxes
trying to get it right. And then Google goes, no, when I
had this product to cart and I get into check out it's, you
know, like it's different and the tax isn't the same as what
you've told me. So I'm going to disapprove all
your ads. It's something that's always
affected the the work that we do, especially again, so it does
relate some of the fun stuff. What's the first thing Shopify
store owners should really be thinking about cleaning up in
their Shopify stores when it comes to sales tax, especially
across certainly across the US? Yeah, Yeah.
I think the the biggest thing I always tell people to start out
is just first understanding where you actually have what's
called in the US Nexus. So, so tax Cloud, we primarily
service businesses that are based in the US, So I'll give
that perspective. But I think this is applicable
to wherever you're selling today.
And in the US in particular, we actually have the challenge
where every state across the country has their own tax laws,
their own tax rules, and different requirements that tell
you whether or not you actually have tax obligation in that
state. And so this whole idea of
understanding where you actually have met the threshold in that
state is your first starting point.
There's an important consideration when it comes to
Nexus. There's this idea of physical
Nexus, and there's an idea of economic Nexus.
When you're talking about physical, as you may expect,
it's based on where you're actually physically located, but
it's not always that simple. If you happen to have employees
in different states or different areas, that can also trigger
physical Nexus in that state. Or if you have a warehouse where
you're storing product, depending on the state that
could also trigger physical Nexus as well.
So that's there's a lot to think about there.
And so you start with physical understanding that.
And typically if you're a small and you're just starting out,
you'll know the taxes in your state.
That's where you have physical Nexus.
So get registered and start collecting there.
The other is the economic. Typically it's based on number
of transactions or total revenue.
And that will give you a sense of where you're at today, not to
pitch tax cloud too early in the conversation here.
So whether you use Tax Cloud or any any other tool, generally
any sales tax solution is going to offer a free plan where you
can connect your Shopify store and get a very quick view of
your economic Nexus. So we always recommend starting
there. Again, tax law is great for it,
but there's other tools you can use as well.
Connector store, get your orders in there and we'll tell you
where you have Nexus today. I can also speak to the one
other thing I could talk to is the fact that some orders you
deal with some exemptions. The if, if you're selling
different products, a lot of people don't know that certain
products are taxable and certain aren't.
This is where it starts to get really tricky as well.
So that's another thing to think about as well.
But where you have Nexus also depending on the sort of
products you sell, do you actually have to collect taxes
on those products? And there's a lot of interesting
rules that you'll have to think about when it comes to certain
product lines. Yeah, yeah.
Now you've just bought back a tiny bit of PTSD in my head of
when I was in San Francisco and I went into a cafe and compared
to the coffee price in the US, compared to the UKI went in and
thought that's quite an expensive coffee price.
And they had a coffee called the Gibraltar Coffee.
I thought, oh great, this little English town in Spain, which is
English, UK British, sorry, in the UK from the UK.
So I went in and ordered that and I had a minor heart attack
going, oh, it's only like half a dollar or a dollar more
expensive than the UK. It's a bit pricey.
And then they added the state tax, the federal tax.
And then this little lady at the till was looking at me with a
big smile. And I looked down at the screen
on the till and it said like what tip would you like to give
and look? And it just a minor heart attack
of thinking I've paid nearly $10.00 for a coffee.
And when I told an American friend of mine out there, they
said $10. Where'd you get that from?
That sounds really, really cheap.
I was like, are you crazy? Like, like even with the pound
to dollar ratio as it was back then.
So I think my, my point being, which I think is a really good
reason that you should, you guys should definitely investigate
something like tax cloud rather than which is the next note on
my list Doing it manually is I think you've just described
really well, Ryan, and done it in a really very actually quite
simple kind of broken down way of like it's really flipping
complicated. Our partners at Saguna have
released a brand new app for Shopify and it's called Shopify
Connect 4 Canva. You can essentially look at all
of your product images from Shopify directly in Canva and
export them straight back. This can save you a lot of time.
If you want to find out a bit more about this or go and find
the app yourself, you can go to saguna.com/canva.
Enjoy and I think I, I joked earlier about my first VAT
return in my business. It, it really scared me because
it was like, I don't, I haven't even looked at VAT.
I've, I've been focused on how do I get enough revenue through
the door that I can survive at night and buy food and, you
know, have a roof over my head and this kind of thing which we
all go through and we set up a business.
So actually getting the tax wrong is like just seems like
one of the most awful byproducts that you could end up going,
right. We've just broken even, but
actually we've made a loss, like I say, because of the tax.
So it's so it's so important, isn't it, to get a system that
will make it easy and actually look into some of those things
that you've just explained to us about the Nexus Plus also like
some things are exempt, which if something is exempt and you're
selling it, guys, that's every reason you should know about
that thing for sure. Totally, totally, yeah.
And that's a big one like it, it, it's not always really
simple for for businesses either.
Like we know a lot of Shopify stores might fall into the broad
category of selling clothing, right?
A clothing and apparel, well, well within that.
In some states, if it's athletic clothing or shoe, athletic shoes
where kids might be using it, those could be exempt because
certain states have those or in other states they may not be,
right. Food is another great example.
You mentioned coffee, but there's some states where I
think in California there's a that you have to pay taxes on
candy, whereas in Texas you may not, you know, So it's, it's all
this very intricate stuff that you can think about.
You can kind of manually track that yourself.
But then there are tools like tax code where we use taxability
codes that we kind of have broad taxability codes that we kind of
help map products to. And typically, you know, we can
help handle a lot of that for you.
So basically we're just trying to make sure any of this sort of
stuff that you don't have to think about it, we can just help
on that as well. But as you're starting out,
definitely something to be thinking about.
Do I have exempt products? In addition to understanding
your Nexus for sure. Well, I think I mean, it's such
a valuable tip actually is that certainly as we both say like is
that is that exempt products and in somebody's Shopify store
journey though, if we go right from the start, what's the
point? Do you think people really need
to start factoring like an automation system in as opposed
to doing it like you know, there's no alternative to paying
the tax and registering the tax, but rather than doing it
manually, at what point do you think is a good point to start
getting an automated system in involved?
Yeah, yeah. This isn't an interesting
evolution we've been seeing right now that I actually think
regardless of where you are in your journey, if you're on
Shopify, which I know most of your audience is, you should use
Shopify tax for calculation if you're trying to do calculation
for in some kind of manual way. And by calculation, I mean at
checkout, how do you calculate the actual tax rate today if
you're a business on Shopify? I actually think whether you're
brand new or growing, you can use Shopify tax today.
And Shopify tax is really strong at checkout.
And a lot of businesses, particularly businesses that are
growing who maybe are used to in the Shopify ecosystem where, you
know, the native tools typically can only get you so far on some
functionality and then you'll move to a bigger one.
You know, that's a very common use case for brands.
Actually Shopify tax on the calculation side in particular
is actually really strong and we actually encourage businesses to
do that in the not so distant future.
Shopify tax hadn't hadn't really wasn't as developed and so
brands had to use kind of one of the legacies solutions that are
out there. You know, I won't necessarily
mention competitors by name, but you'd have to go and install
like a pretty pricey app that you would have to do calculation
and everything else. And that just added an
additional cost and really eats into your ROI.
So use Shopify Tax at checkout regardless of where you are in
your journey when it comes to where you need to think about
automation beyond Shopify tax is really when it starts coming to
getting registered and filing your tax in these different
states or regions. And I imagine it would be
applicable outside the US as well where you in the US if
you're have Nexus in maybe one or two states, you can probably
handle that pretty manually. But when you start to scale
beyond these different states, that's where you really want to
have a partner to help automate the filing side.
And So what we see today is the evolution is it used to be you'd
use these legacy, you pay for a legacy app to do all of your
sales tax needs. Today, it's actually much
simpler. You can use Shopify tax for your
calculation and then partner with a tool like Tax Cloud or
one of the more modern sales tax partner tools that will automate
the really nitty gritty work of working with the state to handle
your filings and be a partner on that sort of thing.
And there's a lot we do in the middle to help you track Nexus
and deal with the exemptions and all that as well.
But so that's kind of the evolution we see every business
going. So in Shopify in particular,
like skip the whole manual calculation step, use Shopify
tax. And then as you start to scale,
I think beyond your first one or two states, that's where you
should really look at a tool to help automate on the filing
side. It's pretty affordable and you
can help automate really quickly and give yourself back a lot of
time. I think it's really good advice
and I think the kind of, yeah, doing it first state or to
yourself manually. I, I always like the process,
whatever the tool is, if you've done it manually yourself, you
know what the tool's doing for you, which that means if
something's not going right or you've put the wrong setting in
which, you know, tax cloud's great, but I'm sure it's
breakable. Like, like most things, if you
give it the wrong information or put the wrong thing in the, the
other part of this, I would say, which massively comes back to,
to, to my world as well, is the, as you say, it's that
calculation. So using Shopify taxes to do the
calculations for you, it means that what you're actually
feeding into Google Merchant Centre for Google Ads and, and
which is the Google Shopping channel.
If you guys, if anyone's not used that before on Google
Shopping, you have to report back the tax that's going to be
added. So using Shopify taxes automates
that process. Again, it's totally breakable.
I've actually got a list of names, some of these.
Well, all of these are my clients and you guys know who
you are. Matthew, Susan and Janice, you
guys have all broken the tax in Shopify and you know who you
are. And I thought I finally got an
episode to to shout out your name about this, but that's why
we we ended up doing it manually because there was something
breaking within the automation of it.
So I think have doing it yourself for the first state or
two and then getting a tool to do it for you again.
I totally second that advice. What happens though, I'm going
to throw a few curveballs in. And just FYI, Ryan knew these
were coming beforehand guys, because actually we want to make
sure the information's right because we can't, we should have
said this, that we can't give financial information, but we we
can't provide the tech to help you do filing and stuff.
Some of the curveballs though. Digital products drop shipping
goods, and if you offer free shipping, all these things
suddenly complicated tax, don't they?
Yeah, for sure, for sure. And yeah, and again, you
mentioned, you know, a tax cloud.
We're always careful to say, you know, we'll give you our advice
and learnings from our experience of working with over
2000 e-commerce brands. But for your particular
situation, if you're really in a, you know, have to make a hard
decision about your tax for your business, we certainly always
recommend working with a tax professional, a tax lawyer and
those sort of things just to get that general disclaimer out of
the way. But the, but on some of the
situations you're you're talking about, I think drop shipping is
a really common one that that comes up and that's like one of
the bigger questions we get. Whereas you know, who's actually
responsible for the tax that you need to be, you know, you're,
you're kind of just handling the front end, but you're shipping,
you're working with a supplier in those situations.
Again, it's another, in most cases, it actually ends up being
pretty simple for you, which is if you're selling the product,
you need to handle the sales tax and you're going to have that
obligation. The, the thing that you need to
think about is making sure you're not dealing with sales
tax twice. And So what you need to get is
the exemption to say working with your supplier and get
registered and say, I'm a, a certified seller.
I'm exempt from tax when I'm buying it from from my supplier,
knowing that you're going to take care of the sales tax when
you're actually selling it to the end customer.
So that's like A1 where people get really mixed up.
They end up paying sales tax to their supplier, they end up then
maybe not charging it to their customer and you can end up in a
lot of just a mess there. So that's one to really watch
out for if you're kind of doing shop drop shipping today.
Digital goods is another one that can be pretty, I think
there's a lot of confusion around where it's like, well,
I'm not actually shipping a physical product, so am I
actually obligated to charge sales tax?
I can speak from the US perspective.
This is another great example of the answer is going to be it
depends based on the states that you're working in.
You know, I know certain states like California will have more
generous laws that will say you're actually be exempt in in
for a lot of a lot of these virtual or digital goods,
whereas there's other states where they're treated just the
same as any other, you know, retail transaction.
So that's just another yeah, go ahead.
Yeah. Just to jump in, what was an
example of a digital product? If someone's like, we have PDFs
on our website that cost a dollar, is that a digital
product like what's classified in that category?
Yeah. I mean that that that would be a
digital product. If you're selling ebooks, other
things like online courses are great example of that.
That's become a growing thing, people who are, you know,
running courses and trainings and and and paid subscriptions
that way if you're selling, one thing to think about we haven't
talked yet about is this whole idea of marketplaces.
So if you're selling digital products on a marketplace, a
marketplace is, think about it as you know, the Amazons or
Etsy's of the world, they're actually kind of handling the
front end and you're just kind of selling your product through
those. It's not like you're owning the
transaction in the way that you are with Shopify.
Actually, even the Shop app. If you're on Shopify and selling
through the Shop app and people are discovering you there,
that's also considered a marketplace.
And I bring up marketplaces because if you're selling
through there, generally the marketplace is actually handling
the sales tax calculation and filing on your behalf.
So those orders you actually don't have to worry about filing
for or collecting. So that's where it starts to get
a a little tricky as well. So if you're selling directly
through your store for those sort of things, generally you
will have to collect sales tax. If you're working through a
marketplace, generally they're going to handle that for you.
So it's all that kind of intricate stuff that you got to
be thinking about when it comes to those as well.
Now back to the show feedback. We get a lot from a lot of the
big Etsy and Amazon type marketplaces.
People often say like it's hard enough trying to make a profit
on my product I can't afford. To like sell it on there at the
price they want me to competitively it's but actually
when you start to factor in that they're handling the tax for
you, you know, not, not always. Again, speak to financial
professionals, find out exactly what's happening under the hood.
But if the if in that scenario they are looking after the tax
for you, well, you can factor that in and say, all right,
well, when I'm having to pay a sales tax over here, I'm not
having to pay on Amazon, for example.
Well, actually that means that Amazon's, whatever their fee is,
I can discount that because I have to pay it to the government
or state whatever, either way, whether I'm doing it directly or
they're doing it on my behalf, which actually means the
economics of it start to look a little bit more attractive.
So definitely something to consider with the financials.
Yeah, Yeah, that's a great, that's a great way of looking at
it. You know, I think there's all
the pros and cons of certain marketplaces.
We see, we see brands that are selling on like large
marketplaces like the Amazons of the world.
We also see ones that are, are selling through more like
vertical eyes, niche marketplaces where generally the
terms might be a little bit more, you know, beneficial to
them as well. But yeah, that's just a, it's a,
it's a big consideration. And the big thing about
marketplaces to know is you all the sales tax will be handled
through those. But generally there are still
some states if you're selling in the US where you at least want
to still have visibility of those marketplace orders because
those still can count towards that Nexus I was talking about
before. And so another example of if
you're just using, you know, through like a Shopify tax, for
example, well, Shopify is going to help you track all of your
Shopify orders, but how do you make sure you're also tracking
your orders through all your marketplaces?
This is another example where using a third party tool can be
beneficial to help you consolidate your orders, whether
it's through marketplaces and Shopify or if you're selling on,
if you're doing invoicing through a quick quote, books or
something like that. All of these can have tax
obligations and being able to centralized that through a tool
can be really important as well. Yeah.
I'm saying again, it's a really good point where having run a
Shopify business before and tried to like start selling
throughout Europe and and across into the US, suddenly then we
mentioned this earlier already like having those cross-border
things and we're we're going to talk about it a little bit more
in a moment. But even the cross borders like
it gets so complicated that's you just to go, this product is
£100 or €100 or $100. That's what I'm selling it at.
And then you have something that just says, and here's the
economics of how that works from.
So then you go, OK, off the 100 lbs dollars EUR that I'm going
to receive from the customer for this product.
Do I factor shipping in or not? What margin have I actually got
on this thing? I, I think it's, it's, it's
amazing. Just, I mean, even the, the
business we ran, which was bamboo sunglasses, looking at
the bamboo sunglass saying, right, it's what, between 1:00
and $2.00 to buy a pair of sunglasses.
By the time I'd paid the import duty, the shipping cost put them
in a warehouse like we used our office.
But it's, it's still physical space that's the business is
paying for at some point. All of those things going all
right, if I sell them at $20.00 or £20 per pair, the economics
are going from 2:00 to 20 means I should have a 90% margin.
But actually, when I start to factor everything in and we
often wanted to offer free shipping, I had actually like 2
or 3 lbs of dollars left at the end.
And it was like, the economics don't work here.
I need to rethink this and see, I, I think having something that
like tax cut that just gives you that report to say, these are
the economics from a tax perspective.
And you say, right, how you know, then you can start to just
play with the sums on a spreadsheet, can't you?
Or even within Shopify and say, if I sell it at this price,
those are my economics, but then now we can do the marketing bit.
How does that compare to the next person who sells a similar
product, what differentiates ours, etcetera, etcetera.
But so many businesses when they get these economics wrong, it's
a problem. And obviously, we're not going
to ask you to name names, but I know you've got a few examples
of actually where this has gone wrong, where brands have made
mistakes for this. Give us a few.
Give us a few examples of actually where, again, it's like
warning signs and nice learnings for the rest of us.
So no one follows in this wake. Yeah, yeah.
I mean, the most common situation we see for brands who
have grown really fast, you know, maybe we've had situations
where businesses, you know, maybe they got featured on, they
got some media coverage that they weren't expecting that
really helped blow things up. Or maybe they went into the
holidays, Black Friday, Cyber Monday last year and, and they
get big spike in sales or they're just a successful brand
that's really grown real really fast just because they're doing
well and they're they get some virality on their products and
they just don't think about the dealing with sales tax at all.
You know, that's a that's something that happens where it
becomes maybe an afterthought for them.
Or they're like, hey, we'll take care of the states where we have
physical Nexus, but we'll worry about everything else later.
And if you haven't that at some point you're gonna have to deal
with it. And so the biggest thing we say
is like deal with it now. Don't wait.
Even though it's not something any of us really want to have to
deal with in that situation, there's different paths you'll
be able to go. That's definitely a situation
where if you're in that, if you know you've reached next, if you
start come out of this episode and start searching and say,
wow, I, I have an obligation in a lot of states or different
regions and I haven't taken care of that.
Like that's definitely a situation you should work with a
professional. I would certainly recommend that
because they can help guide you. There's a lot that you'll want
to know there, but typically based on when you hit these
different thresholds, there is a path to getting compliant.
It doesn't mean that you'll, you know, be audited and your
business will completely fail or anything like that.
You just want to go through the proper steps to make sure you
get into a good spot. And generally the different
states you work with here in the US, they'll, they're happy to
work with you if you come to them in good faith and, and, and
handle that part of it. But that's certainly another
example of where having a tool that can help you get all the
reports you need, get all the view of your historicals and all
that is going to be really important.
So that, that's certainly the, the, the most common and we see
that from some large brands that you'd be surprised, you know,
you might be surprised that they're in that situation.
If you are in the situation, make sure that you're also
accounting, have some funds to take care of that at some point.
If you're like, we're not going to deal with it, OK, I, I
certainly wouldn't recommend that, but make sure you have
funds because that that bill will come to you eventually.
So that would be 1 big one. I can do stop there.
I don't know if you if you've run into that at all or seen
that, but. We have, yeah, I, it's one of my
catch phrases. I'm, I am writing a book, by the
way, guys, and I'm not plugging it because it's not going to be
ready for at least 10 years. But I'm writing memoirs and one
of the funniest memoirs I've got is we, there's a small shortlist
of brands. So I'm not going to name by name
in the book, but I am going to talk in my book, which is hence
why it reminded me this about my, my catch phrase scaling a
problem. And it's I think it's so
fundamental that so many businesses are like, wow, this
has really taken off. Customers are buying.
But actually, I think I've come to learn that over the years
that although in the early days, the customers buying is the
hardest problem to solve. Without that you do have
nothing. You know, that's money comes in
and then it starts trickling out into all these different streams
from staff to offices, to products, to tax to everything
else. If if you're not getting the
customers in, then you have an issue once you are getting them
in, if you've not done your, I call them the, you know, kind of
product economics. If you've not done those product
economic sums and work it all out, when you do scale when as
you say, like it's interesting you mentioned the press because
normally when someone blows up in the press, that article
they've got in the press hasn't actually cost them anything.
So from the very, very first point, you have the cheapest
like basically free point of marketing where the CEO got
invited on the news and suddenly sales have spiked.
And if you are making a loss and you haven't done the economics
properly, the loss is going to go from, you know, if it's, if
you're making a 5% loss and that's currently $5 and you
tenfold up, you've now made a $50 loss and there might be as
many other zeros on both of those two sums as you like.
So I think the scaling a problem is such an issue.
And we've had brands before go, it's all going really well.
ROI is great, like we're making really good orders and stuff,
but we basically we're on the verge of shutting down the whole
company like just stop everything.
We need to kind of take a step back.
I think when the free orders through, I say free is in
marketing, free through SEO, through e-mail, through PR, when
they're not making your money, it's like, okay, seriously guys,
we need to get a financial advisor in and obviously some
like tax clouds going to help. What are some of the other
problems on your list that that you guys have seen?
Yeah, I mean the other, so one that's like less high stakes, I
would say that happens a lot is some people when they get
started, they actually are just like, oh, I have a store, they
go into their Shopify settings, they see tax and they just like
turn tax collection on. Boring where?
Yeah, we'll turn it off. Yeah.
Yeah, yeah, yeah. Either either way, like turn it
off or if you just turn it on, just start collecting.
And if you're particularly for new like you, you don't need to
start collecting. And in fact, you shouldn't start
collecting until you are at a point where you really need to
register with the state. And so that's one thing I would,
I would think about as well. I think that's certainly the
case in the US that don't start just collecting now because
ultimately you're collecting tax that you don't actually have to
file with the state. And so wait till you have Nexus
or are approaching Nexus before you actually go and get
registered with the states. And that's something we see
businesses doing where they're like, I just want to get this
over with now and start doing it.
And that can put you in a weird situation where you're actually
collecting tax that you don't really need to be.
And then. It's just another thing, isn't
it? And it puts your prices up and
yeah. Yeah, yeah.
And in some situations like you're collecting money from
your customers that actually you really shouldn't be.
And so it kind of put can put put you in a bit of a weird
position as well. Other really common one just to
speak to is, you know, this one is a little bit more general,
but you know, at Tax Cloud we're dealing with a lot of businesses
who are switching from other providers.
And again, like, I really don't present this one as a way of
just like bashing other providers, but I think it is
good context to learn from where there's, it's a, it's a, a world
where if you've been you paying attention to sales tax for a
while, there's like one or two providers maybe five years ago
that like everyone's like, I'll just use them.
And and you get locked into these tools and you actually
don't realize that there's cheaper alternatives out there,
that there's alternatives like tax cloud where we really put a
priority on people and customer support and making sure we're
really responsive. And that's another big one that
like make sure if you have a tool in place today that you're
doing your work of looking all their alternatives that are out
there. That's a big one and tied to
that, if you're selling in the US today and you're using
provider, maybe just like a little inside tip I'd give
people is to work with a provider who's part of the
streamlined sales tax. It's called SST program.
This is actually a program where there's certified providers that
automatically will file on your behalf.
I think it's on 26 states, maybe 20.
The numbers has changed a little bit, but you don't get charged
when you work with a provider for those states.
So we actually pass that savings on to you.
There's only, I think 6 or 7 providers in the US.
So it's kind of free of free filing to, to, to deal with.
And so if you're working with someone today, ask about that
program, that's another mistake we see is people just maybe use
a provider who they could be getting that program or they
don't use a provider. That's part of it.
And that's just money you're leaving on the table that's
gonna that you could be taking advantage of.
So we certainly recommend that as well.
I mean, that's a really, really good tip.
I, I, I think it is, as you say, money on the table.
Why on earth would you want to overpay for this stuff?
I don't mind. I, I would say I don't mind
paying a bit more if it makes things easy and simple, but that
it feels like a bit of a box tick just to say to your
provider, are you doing this? No.
Well, could you start doing it for me?
I, I, I think in the UK as well, like just just something to flag
about my VAT return because this relates to selling products
here. And I know it's similar in the
US and it's similar across lots of other States and countries.
Is when I, when, when I first registered for VAT, the thing I
hadn't even realised because again, I was so focused on just
getting leads and, and clients in, back in, I'm trying to look
at the dates. It would have been 2000 and
eight 2009. I sort of started out in this,
but, but I remember back then I was so busy trying to get
clients in, I didn't realise that I could offset tax as well.
And again, we're not going to give financial advice, but I
would look into that where by collecting tax from my clients
or in your case everybody, your customers, you can offset some
of that tax where you're also spending money in some
situations. And certainly here in the UK,
every tax return, every business puts in for VAT, value added
tax. It's our version of sales tax.
We have an extra word in ours. No one knows why but the but,
but by doing that we can offset some of it.
So again, I think even I don't know, I don't know if you can
comment on whether that sort of situation in the US and tax
cloud having that perspective. Actually going back to one of my
earlier questions, doing that calculation of when should I go
from DIY and manual to a more automated filing system.
Actually that that was a real factor for me of saying, well,
I'm already spending this much per month on tools I'm using
services I'm buying products, I'm buying computers.
There's 20% VAT on all the computers I buy here in the UK.
And actually, if I'm buying a MacBook for 1000 lbs, 200 lbs is
on top is Vati could offset the 200 lbs versus VAT.
It's coming. So I've just saved £200.
I think it's, there's a real way to be tax savvy, I would say.
And, and it's important to have the right data and the right
tool like Tax Cloud to actually have that information to be able
to make some of those decisions. Yeah, Yeah, for sure.
I mean, I think in the in the US there's a little bit more of
kind of offsetting like your other business taxes outside of
kind of like general sales tax. I mean, for, for us, what we
really find on the sales tax side in terms of thinking about
kind of cost savings and, and those sort of things are a few
of the things we've talked about, right?
Understanding your exemption in those products.
That's certainly a big part of it.
And having a tool that can actually track that stuff, you
know, using a provider that is, you know, you, there's, we've
talked a lot about the additional cost of tax, but then
there's an additional cost of using a provider.
Now paying for a tool obviously is going to make your life
easier, but you know, definitely do some price comparison out
there of these tools and make sure you're not overpaying for
the solutions you're using as well.
That's why we recommend Shopify tax because to a certain
threshold if you're a new business, you actually won't
have to pay anything. And then I don't know if top my
head, but there is some threshold where you will start
to have to pay Shopify, but then they cap that expense, right.
And then so thinking about, you know, the provider and the and
the cost related to that. And then obviously the last part
of it is just making sure you stay compliant so that you're
not dealing with other penalties after the fact and getting into
a bad situation. Those are all kind of the cost
related items that generally we're thinking about on the
sales tax side, tax cloud and having a tool that can help
automate all of that for you. It's just going to make your
life a lot easier for sure. Yeah, yeah, absolutely amazing.
And one of the best bits of advice I ever had was, and this
is going to sound so simple to you, especially if you've been
the CEO, you would have looked at loads of these is AP and L
report, profit and loss. You would not believe how
important they are. Guys, whether you're running a
Shopify business, an agency business, a hair salon, whatever
it is, you need AP and L report and you need it regularly.
And you're not going to have accurate data if you don't use
the right tools for it. The profit and loss, literally,
I assume they're the same format all around the world.
I use 0 here. The top bit just says all of my
income and that falls in a few buckets.
Then there's a big long list, which is really depressing
because it's bigger than the income list and that's the
outgoings list tend to be they have to be smaller numbers or
you're not making a profit, but just having access to that like
like almost in real time guys. The, the difference on my side
is that we have a lot of expenses that are like physical
receipts and they all need to be logged by a bookkeeper.
But actually within Shopify, a lot of your receipts can be done
almost in real time through a system like tax cloud.
To actually say this is your, I don't know if it's the same
phrase in the US, but in the UK, we use the term run rate a lot
when we talk about financials. So your run rate right now is
how much cash are you making and how much are you burning?
And it's like, have you got enough coal to keep that fire
going without running out of coal?
And that's the, the profit and loss bit.
And so I think having access to that quickly, real time tax is
such a big part of it. I, I won't, I won't moan too
much about the tax rates in the UK.
But if I was running this business 20 years ago, I'd be
far more wealthy and probably have a lot more staff and a
bigger office than I have now and the same income.
So it's even more important, I think, in the current global
climate to yeah, to keep a really close eye on this and
yeah, yeah, yeah. But but Ryan, it's been so good
to have you on the show. I really appreciate your time.
And if anyone wants to reach out to Ryan and the team, go to
taxcloud.com. Again, if you put a forward
slash winning on the end free on boarding session for when you
when you guys decide to make this make the switch and but but
Ryan people can reach out to you guys have a conversation, ask
questions in advance, can't they if they if they want to know
what's going on and check out the free trial.
Yeah, that's right. We offer a free trial, the tool
30 day free trial. We also, as I mentioned before,
we put a real value on being people first.
You can talk to a real person here in the US.
As I said today, we service US based businesses and businesses
that are selling into North America.
We'll hopefully go global eventually, but we're here to
talk. If you're a business, whether
you're in a different country or here and just have questions and
want to evaluate the tool or just kind of understand a little
bit, learn a little bit more. We got a great team here that's
happy to, to talk anytime, go to tasklab.com as, as, as Nick
mentioned there and we'll be happy to connect.
So yeah, really hope this was valuable.
Hope we didn't scare people too much.
And yeah, you know, we're, we're here.
We're here to be a real partner to help with your sales tax when
you're when you're ready for it. I think sometimes a bit of
stress is a good thing. Stress equals action in in all
good situations, as long as it's imbalance.
But now massive thank you, Ryan. I think there's so many things
as well that you brought up there.
We, we've never, we never really talked about on the show.
We're so focused on the, the kind of really fun stuff, which
seems fun, but actually it's all pointless doing the meta ads and
the Google ads and the e-mail marketing and the, you know,
launching a Netflix series alongside your brand, like we
had somebody on recently as well.
And that's all fun. But actually if you don't get
the economics right, you're just heading towards bankruptcy.
So now massive thank you, really appreciate time.
Thanks for joining us. Hey, thanks a lot, Nick.
Thanks everyone. Cool and for everyone listening
at home, we are back again next week and tax cloud are going to
be on our website going to check them out.
There'll be links in the descriptions and if you have any
questions for them at all or actually if this has sparked a
topic of saying do you know what this drives me mad, Send us an
e-mail hello at winning with shopify.com or check out
wwspodcast.com. I always at this point say we
couldn't keep winning with shopify.com because our
website's on Shopify right now and our Shopify policies.
You can't have the word Shopify in your domain, which is really
annoying, but there we go. We are in the pendants like a
mode about Shopify as much alike.
Thanks for tuning in today guys. If you haven't already, please
leave us a review, hit subscribe button and we will see you again
next week. Take care.