Hello and welcome to another episode, the Winning with
Shopify Podcast and meet your host, Nick Truman.
Thanks so much for tuning in. If you haven't already, hit that
subscribe button. We are live at Sub Summit.
We've done a couple of episodes here so far and I'm delighted to
be joined by one of our sponsors, Ryan from Tax Club.
Ryan, welcome back to the show. How are you doing?
Yeah, great to be there. Great to get to connect in
person. It's been so good to meet you
and Ryan dragged us out on a run this morning that I was slightly
late for but I I caught them up on the just down at the bottom
of the hill. But Ryan we're going to jump
straight in. Tax Cloud has saved over
£15,000,000 in sales tax filing. Tell us what you guys do.
How do you save that much money for businesses?
Yeah. So that was actually money that
we saved just last year alone for businesses.
And that's really through our relationship with the SST, which
is a streamlined sales tax program.
It's it's a program of 24 states here in the US that if you're
filing through the SST program, you actually don't get charged
for those filings. And so that's kind of one of our
key differentiators. But we, you know, we save people
money all the time on on their filings.
We're generally, you know, we built our pricing to really
scale with businesses as they grow and generally they're
saving a lot of money and then in addition to getting Peace of
Mind with their sales tax compliance.
Nice. And I think we sales tax, like
we always joke about how much of like a dirty topic it is and we
don't want to talk about it. But when someone's got a big
scaling business and they're trying to create a successful
operation, things like tax, HR, insurance, all these things, the
quicker and easier you take take care of them, the less stress it
is to start building the business, isn't it?
It's it's so sad when a business is held back by something so
simple that could be so automated to the point where you
guys are the number one tax filing app in the Shopify App
Store as well. Tell us about that journey.
Like how do you become number one in the Shopify App Store?
Yeah. I mean, I think a lot of what
you just talked about around, like our whole philosophy is we
don't want sales tax to be more complex as you scale.
And we definitely don't want it to slow you down.
And so it is one of these things that nobody really wants to talk
about and come into a show like this.
It's sometimes it's not the thing people want to discuss.
But the truth is it's like you want to get ahead of it before
you have a problem and you want to work with a provider that
actually is going to take this off your plate.
And that's really what we try to focus to do on the Shopify side.
Like you mentioned, you know, Shopify is great at checkout.
They can handle kind of calculating your sales tax for
you. And a lot of that, what you
really need if you're growing Shopify brand is a partner to
kind of handle everything else, to handle your registrations and
actually working with the States and to fully automate all of
your filings with the states because that's where people have
issues. It's they get a notice in the
mail they didn't know they were supposed to be paying sales tax.
So we've talked to folks here who who said, you know, well, we
have products that are exempt, which means they're not taxed in
certain states. And so they're like, well, we
don't worry about sales tax. Well, actually you do need to
worry about sales tax because even though you're not
collecting sales tax on those products, you still have to file
in those states if you have, if you're over a certain threshold.
And so it's. Not something you want to get
wrong, is it Like the the pain and frustration and and loss of
money as well, getting something like sales tax filing wrong is,
is it's a horrible place to be and and it can be so damaging
for a business. Yeah, yeah.
And we might have spoke about the the last time I was on the
show, but, you know, sales tax is one of these things that can
get worse and worse and harder and harder as everything else in
your business is doing better and better and better because it
becomes a bigger problem as you scale and grow and have more
sales. And, you know, there, there is a
lot of like fear mongering out there related to sales tax that
are usually from providers like us that are like, oh, well, if
you don't do this, you'll be in huge trouble.
And I like to tell people like, yeah, you will have to.
It just becomes a bigger financial problem for you and a
bill you're going to have to pay here in the US like they're
going to get their sales tax one way or another.
It's. Not optional is it?
Like it has to happen, and as you say there, the bigger you
get, the more complicated it gets and the more of a problem
it becomes. Yeah, exactly.
And then as you like scale the different channels, even if
Shopify is your primary channel, but then you're doing
marketplace sales or wholesale, like it just becomes a much more
a bigger problem for you. And So what you really want to
do is to set this up in a way that it's getting taken care of
behind the scenes and you want to be thinking less and less
about it. And it is one of those things
that you should be able to automate and then, you know,
still check in with it occasionally, but have a
provider that really takes it off your plate.
Yeah, yeah. And I, I think just to give
context as well, if you guys have just started a business or
someone else in your organization looks after this,
we're talking about file like firstly registering in every
state, filing in every state, and then also making sure you
pay that tax in every state, which you guys automate that
process for people. How often do you need to pay the
sales tax in each state as well? Because that in itself is a
nightmare, isn't it? Yeah.
And it it, it'll vary and, and the important thing to keep in
mind too is like we cover every state and Canada, US and Canada,
but you know, it's really going to depend on your Nexus as you
grow and scale. And so Nexus, just a fancy word
of saying you hit a certain threshold that means you now
required to pay, collect and pay sales tax in that state.
And so you know, that's going to be something that you're going
to have to like really stay on top of on the frequency side.
The the thing that's challenging is that some states it's a
always monthly, some states it's quarterly, some states, there's
annual, some states it's a certain frequency one point.
But as you scale to enough sales, you then it's going to.
Point is that like every threshold.
Isn't it right? So there's all these different
thresholds in all these states. And again, like ideally you
shouldn't have to worry about that.
You know, I think when you're starting off and you're only in
a few, a few states that you can definitely do on your own or
work with an accountant to do it.
But when you start to run in these situations like we're
talking about, it just becomes too big of a problem to do
internally and keep up with all this stuff.
And I mean, the beauty of working with a tool is that it's
going to be taken care of. So you're not going to have to
worry about the frequencies, you know they'll do that for you and
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And I mean, I looked at some of the case studies in your website
as well and Cable Bullet, they said it would have cost $40,000
if it wasn't for you guys. What is that?
That there's a scary number to a lot of stores.
What does that $40,000 actually mean?
Yeah. So we, we hear this a lot.
This is like a really common thing that happens is, is
somebody works with, you know what we call one of the like the
legacy providers. So there's certain tools that
have been around forever in the sales tax space and the, you
know, they won't tell them about things like the SST program,
which I mentioned, right? Or maybe that provider isn't
eligible to be part of that program.
And, and that was certainly the case with cable Bullet where,
you know, they found out months later, years later where they
were paying in tax in a bunch of states that if they'd gotten
connected with one of these programs, they wouldn't have had
to, right? And so that's where that 40,000
starts to add up. That's. 40,000 in tax they
didn't need to pay but were paying so they were filing
wrong. Well, no, no, in that situation,
it's actually the the tax they'll still always have to
pay, but it's actually $40,000 that they paid their previous
provider that they wouldn't have had to, which is even worse
because you have to pay the sales tax of the States and and
the regions. Now you're paying a premium to
have someone. Fight.
You don't need to. Yeah.
And the last thing you want, I mean, you know, we don't want
people paying us any more than they need to.
And, and no provider should like, be charging for States and
things that they don't need to. And you can run into that if
you're not, you know, a lot of the provides you work with,
they're not going to the incentive to tell you about
these things. And so, yeah, and.
One of the interesting things I think about Shopify that makes
it so easy is it's integrated with Stripe.
So you if you guys are using Shopify check outs and in its
most basic form, Stripe is the payment gateway that's taking
the payment for you. Stripe has Stripe Tax.
So when I've discussed this with them, it's not something comes
up regularly, but I have discussed it with one or two
clients that have been like, do you know about this?
Like it's such a headache. Yeah.
How do, what does Stripe tax do? But what does it also not do?
Yeah, yeah. So I mean the on the tax side,
what you're going to find out is on Shopify for example, you
know, on Shopify you have the payments for Stripe, but then
they have Shopify tax. Shopify tax at checkout is
actually great. You should, if you're a
provider, you're in really good hands if you're using Shopify
tax at checkout. A lot of brands kind of get a
little worried about kind of the Shopify native products.
They think like, you know, maybe when I'm small I'll use those,
but as I scale, I, I shouldn't have to.
But Shopify Tax is actually great to use.
And we work with brands that are hundreds of millions of revenue
and they're using Shopify tax at checkout Stripe, Stripe Tax is a
similar set up where they have their own tax product and they
can help do calculation things like that as well.
But again, similar to Shopify, you still want to work with a
provider that's going to handle your filings, your registrations
and all kind of like the ugly work of of sales tax.
And so I always say like if you're working with a platform
that has a really strong tax engine and obviously Shopify
striped and these are building platforms and e-commerce
platforms that have a great track record at checkout.
And they offer really they've invested a lot at on the
calculation side, which is like they identify the buyer based
off where they are, they calculate the right rates, let
them do what they're good at and then work with a partner to
automate everything else. And that's, you know, that's
true on Stripe tax, that's true on Shopify tax.
That's kind of what we'd recommend for anyone.
It's amazing. And yeah, I think so many brands
when they start up as well, they're like great, Shopify does
the tax bit for me. And then they have this
heartbreak later of like, Oh no, we've not been paying it.
We've not been filing it. And now we need to.
It's like it's just money gone and we're trying to like get off
the ground here, which I think leads us to a really important
question, which is should small brands that are starting up be
thinking about this or is it just for the scaling companies?
Is it just when when you hit like 20 million turnover a year?
Like at what point should people have a plan for both kind of
registering it, filing it, paying it, and also factoring it
into the economics of their store?
Yeah. So there's a few things I would
think about when you're early on in the journey. 1 is you have
Nexus from day one based on your location.
So there's two types of Nexus. There's physical, which is you
have an employee or you have a warehouse or a physical
location. If you have somebody who works
for you in a state, you actually already have Nexus regardless of
your sales. So 1, you kind of do have to
think about it really early on and you're better off when you
start off just to have like a plan.
Like I like to tell people, think about what your business
is going to look like when you go beyond just one state or two
states or five states even, and make sure you have a solution in
place that's going to kind of scale with you.
And, you know, the biggest thing we try to avoid a, a tax cloud
is to set people up where they come in and they feel great
about their setup on day one, but in two years they're like,
jeez, my bill has gone out of control.
You know, we're trying to avoid that situation.
So we try to set people up with on where they are today,
obviously paying for where they are today, but having a, a
really consultative approach to say, listen, your business is
scaling. You know, we're going to let you
know when you have Nexus and all these states, but here's how to
set up today. Here's how, where you should
think about going in the future. But so it's not a thing you can
ignore. You know, again, if you're just
early on, it shouldn't be taking up all of your mindshare.
Like I said, if you're in one or two states, do it, do it
yourself. I think that's totally fine, but
just be ready that as you scale, you're going to need someone to
help you out and you know there's tools out there to help
you do that. Yeah, absolutely.
And there's loads of different types of businesses that use
Shopify as well, and there'll be nuances with each one.
But obviously we're sitting here at Sub Summit at the moment.
I should flag as well that someone's adopted a puppy from
your stand. These guys, I thought they were
joking about actually having puppies at the stand.
And I spent a good like 20 minutes every other hour just
cuddling puppies, which have been amazing.
But with subscriptions, obviously talking about
subscriptions here, if a business is using a subscription
model, do they also need to think about sales tax?
Is that something that you guys also work with?
Yeah, totally. I mean, it becomes even a bigger
problem in a lot of situations because like the number of
orders and transactions that subscription businesses are
doing generally are like compounding at a big rate
because every, you know, every month they have a sale from
every customer that's going to be taxed.
So you definitely want to think about that.
For sure. There are some intricacies.
And again, like certain states will think about, you know, if
you're a a subscription box company and you have different
products, but within that box, you might have taxable products,
non taxable products, right? And so we've worked with
subscription businesses that have had to navigate that.
Now some states, most states are going to make that pretty easy
and they'll say the entire box is taxable.
And so that's what you can worry about.
But there certainly are states where they don't make it as
easy. So you have to think about, you
know, some food products aren't taxable, but if you have, you
know, AT shirt in that box, then it could be right.
And so it's another reason to work with a provider.
Generally your providers are going to be able to kind of map,
you know, the taxability of different products that you sell
right into Shopify so that they'll just take care of that
for you. But it's it's another thing that
you definitely want to think about.
But if majority of that's being handled through Shopify, if you
have a great, one of the great subscription management tools
here to help you do that, all you really do need is a tool I
can kind of plug in and handle the tax side.
And generally it should be just as easy as any other kind of
business. But it's more kind of on the
volume perspective and then handling the taxability of the
products and and that's where things can get a little tricky.
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And they don't make it easy for us anymore, do they?
Like it's, I hadn't even thought of that subscription box
actually in the individual items having different taxable rates,
different taxable classifications.
But again, with Shopify and Someone Like You guys, it makes
it so easy, doesn't it? Because you guys can actually
just go into Shopify and go, oh, that's your inventory, right?
Well, this is the tax for all of them.
And when they get bought, bang, it's all automatic.
Yeah, yeah, for sure. And you know, I mean, coming
here before we came to this show, I was just thinking about
all the products that I use and how many of them are
subscription products. You know, it's kind of crazy.
And then looking at some of our customers, just how many are,
you know, maybe pureplay full subscription businesses or
subscriptions are just a component of what they do.
And you know, they're having to navigate not just like the
direct to consumer on Shopify, but also the subscription
component. And then they may be on these
marketplaces and they may have wholesale.
So it's like you have all these channels and all these different
sales methods that you're using and taxability can look a little
different on all of them. And and so, you know, it's
there's nothing easy about the tax I when it comes to these
kind of businesses, so. Yeah, and then as amazed when
when the show first started, Chris, Chris George from sub,
some of the CEO, he was sharing the statistics and how many I
think was 8 or 9 subscriptions the average person has now.
And therefore you're fighting for share of wallet.
And so things like tax, if you don't factor that in and you
start scaling this, you know, you've got this amazing
subscription box, it starts scaling and suddenly this big
tax bill comes through. It's like, and we need to file
it in multiple states again. I know I've mentioned it two or
three times, but I think that's such a good use case where
actually if you just get the tax and things automated sorted, you
can focus on scalability and you don't have to focus on the kind
of stuff that keeps us up at night as as business owners.
Totally. And, and like, one of my
favourite things in the world is when I see, you know, a
subscription that I have come into our business and become a
customer because I'm just like, all right, I know the.
Amount of clients we've got and I'm like, oh, just buy some of.
That yeah, I know. I just know that their life is
going to get a lot easier, not just because we're so great, but
just because, like now they've put a solution in place to
manage this kind of stuff. So yeah.
Yeah. Yeah.
And I think, I mean, the other case that I put out was Almond
Cow. And they said they now spend 70%
less time thinking about tax, which if you look at an economic
point of view, 70% more time and obviously not more time in
total, but 70% of the tax time they were spending dealing with
filing and everything that's now just reallocated to sales,
marketing to growing the business, that's so much more
effective. Yeah, yeah.
And that was a great example of a brand that that had kind of
like pieced together a few different tools They were using,
you know, 1 other third party tool at checkout instead of
using Shopify tax at the time, they had a different provider
doing their filing for them. And I remember talking with the
founder of the time just how much time he was spending.
And you know, when I, when I, when I caught back up with him,
you know, pretty soon after and we had a chance to do that case
study, you know, the big thing that came to mind was just like
how much he was like, oh, we hadn't really modernized our
sales tax stack. It was we, we were kind of out
of date with the times. We didn't realize all the
different solutions that were out there.
So us being able to do that for them.
And again, it was centralizing on one tool that could handle it
for them. It was also just kind of taking
stock of what they had been doing and 'cause this is
something that you should review occasionally.
Like if you have a provider in place and it's been around since
sales tax became a problem, which is really around like
2018, where in 2020 where it really became a problem for
people. Well, if you haven't reviewed
that in a few years, like the ecosystem has just changed.
There's a lot of new providers out there and there's a lot of
different solutions. And, you know, those guys are
another great example of they have, I don't know if folks in
the UK know almond cow, but they it's a it's a tool to make
almond milk at home. It's kind of cool.
Yeah. It's like one of our favorite,
favorite kitchen appliances. I was a customer of theirs as
well, long before they became a customer of ours.
And but I remember talking to the founder about like, he's
like, oh, but we also have this subscription component for the
nuts that we sell so that you can make the milk, you know?
So even then they dealt with a lot of the same complexity we're
talking about. And as a good example, does that
change the tax like classification if it was just
selling the nuts themselves versus selling it as milk versus
selling it as an appliance? There's like 3 different use
cases. Yeah, totally.
So like, yeah, that's, that's a perfect example of like how this
stuff gets really tricky. It's like if you're selling the
different ingredients, it's one tax thing.
It's if you're buying a finished product, it's another, I'm sure
milk on the shelves is taxed differently than the nuts to
make almond milk and certainly taxed different than the
appliances. And that's going to look
different across every state. I'm sure states like California
maybe have a lot of the almond farms.
Maybe they think about, you know, I don't know all these
hops up in my head, but it's just a great, you know, a lot of
it is that kind of stuff too. So so yeah, we see it all.
Amazing. And if people want to reach out
to you guys, check out the app, get in contact with you like
what's the best way to do that? And did they get a free puppy?
Is that? Yeah, yeah.
So, yeah, you know, the puppy thing, I appreciate bringing
that up. Yeah, we're, we're just trying
to listen. Sales tax is not the, yeah, it's
not the most exciting thing. We're trying to have fun with
it. We're trying to give people a
reason to engage. And, and, and it's kind of like
our culture is just like great to work with good people.
And, and that's kind of our approach.
If you're in a, a situation where you're trying to figure
out sales tax, taccloud.com, it's probably the best place to
reach out. If you're on Shopify, which I
know your audience is, you can go in the Shopify App Store,
read our reviews there, download the app through the App Store.
And we typically recommend because sales tax is a very
manual process to schedule time with our team whenever you're
ready, because it's helpful to have a talk with someone that
can talk you through your situation and where you're doing
great on sales tax, maybe where you have some liability you have
to take care of and we can help guide you through that process.
We try to take a really human approach to doing this stuff
and. Yeah, we're here when you need
us and I. Love that.
I mean, like in our agency, yeah, we just don't do any kind
of automated AI type communication with customers.
It's like just talk to a human. We can use AI to speed up
processes. But I think so many of the
Shopify apps, they're faceless. Like you just kind of install
them, you reach out to support and even that's just a ticketing
system because that's convenient to the app developer.
I love the fact you can talk to you guys and ask these
questions, especially with those nuances.
So yeah, massive thank you for for your time as well.
I know you guys are busy looking after the puppies over at the
stands. Yeah, massive thank you to to
Ryan and for those guys looking at home as well.
And make sure you hit subscribe button if you haven't let and
join us for another episode, probably in the next three or
four days, depending on what day this one goes out.
So thanks for tuning in. This episode of Winning with
Shopify is brought to you by tax Cloud.
It's the busiest time of year for e-commerce.
Your stores buzzing, orders flying in and growth is at an
all time high. But with all that momentum can
come new sales tax exposure that you might not even see coming.
That's why now is the perfect time to take a closer look at
how you're handling sales tax and make sure your business is
set up for the growth that you've earned.
Tax Cloud is our trusted partner for sales tax compliance.
Built for growing Shopify brands.
They handle regulations, filings, and ongoing compliance
working directly with the states on your behalf across the US so
you can stay focused on running your store.
They've got a five star rating in the Shopify App Store and
listeners winning the Shopify get free migration on boarding
when you make the switch. To apply for that and learn
more, you can go to taxcloud.com/winning.
That's tax cloud.com/winning.