"

Sales Tax & Compliance brought to you by >> Avalara Logo new12

Estimated reading time: 5 minutes, 5 seconds

Helping Ecommerce Clients Achieve Global Aspirations

The past six months have delivered more challenges to clients than anyone could have anticipated. Business that were primarily brick-and-mortar at the outset of the COVID-19 pandemic have rushed to establish an online selling presence in order to survive. 

 

In doing so, they were also hastily introduced to state-by-state economic nexus laws resulting from the 2018 S. Dakota v Wayfair Supreme Court decision, requiring sales tax registration in each jurisdiction, and the collection, reporting and remittance of sales tax once sales or dollar amount thresholds were reached. Hence, the former mom and pop store entered a new world of compliance complexity that existing ecommerce merchants have been wrangling with for several years.

Wayfair also ushered in a wave of advisory work for accounting professionals, who’ve helped clients, often small businesses, untangle compliance scenarios previously reserved for larger companies. Clients who previously did business in just a small handful of states now have nexus wherever new customers buy their products online, and they need step-by-step guidance to get a handle on their new obligations.

Global aspirations meet cross-border compliance complexity

And what about those ambitious clients who look at the entire globe as their total addressable market? While many of us are hearing about trends related to ecommerce sellers going international, in lock step with more consumers shopping online around the world, and more sellers wanting to take advantage of a total addressable market, the data is still surprising.   According to IDC, by 2022, cross-border ecommerce is expected to account for more than 15% of the world’s online retail market. eMarketer estimates that the global online retail market will grow to $5.7 trillion by 2022.

While demand for cross-border ecommerce has risen, so has the complexity surrounding country-level tax and customs regulations. For would-be international sellers, mastering cross-border compliance – the value-added tax (VAT), goods and services tax (GST), customs duties (also called tariffs), import fees, and the variations of each from country to country -- can mean the difference between success and failure, in addition to staying competitive, in the up-for-grabs ecommerce world market.  

In addition to different tax systems, your clients will need to accurately assign Harmonized System (HS) codes to all their goods. The first six digits of the code are standardized across all participating countries; however, each country appends its own set of digits to classify a product based on specific parameters and regulations. Every country sets its own laws governing what can be sold by whom. For example, tax rates applied to imports from Canada to Brazil may be applied differently than those same products when coming from the United States.

Shipping and pricing transparency are key success factors

Your clients’ ultimate success in global sales will hinge on their ability to provide a good (or great) customer experience, regardless of where the customer is located. And shipping is an essential factor in the equation, in terms of how long it takes to reach the customer and how much it costs. The bar has already been raised high for shipping time, with ecommerce sellers racing to compete with tech giants who have defined and set customer expectations for delivery service. For international transactions, setting up an efficient fulfillment system and clearly communicating shipping times is mission critical to starting the experience on the right foot.

More complicated is setting expectations for price. Between assigning the correct HS code and properly applying the correct taxes, tariffs, shipping and import fees, transparency at the point of sale can be difficult. The customer in Ireland who purchased a sweater from your online seller client in Brooklyn expects a seamless drop-off delivery at their location. Some businesses are tempted to omit these fees at checkout, but surprising customers with costly fees upon delivery is never a good experience. Abandoned online shopping carts are one thing, but a rejected shipment at the destination doorstep results in an unhappy customer, and potential brand reputation damage via social media and other complaints, not to mention placing the cost of return on your client, if they decide it’s worth undertaking those costs.

Automation tames cross-border complexity

Automation solutions are a key ingredient for businesses entering the global retail space. For many international sellers, the task of manually assigning tariff codes and calculating customs duties and taxes is resource intensive, costly, prone to human error, and ultimately not a path to ongoing compliance. It’s only through modern technology that your clients can ensure that customs duties and import taxes are accurately calculated at the time of checkout to mitigate compliance risks and avoid negative customer experiences with surprise costs at the time of delivery. 

Depending on the number of countries, breadth of products, and staff available to handle rates and regulations, an automated tax solution may be the most efficient, cost-effective way to manage tax compliance. Software programs such as Avalara Cross-Border are readily available for item classification, rate calculations, reporting, and returns filing. Make sure your client’s cross-border compliance system integrates with their other business applications, such as accounting/ERP, enterprise content management (ECM), and online retail platforms. Absent fully integrated technology solutions, 21st Century commerce expectations won’t be realized, from multi-channel commerce to selling internationally.

Advising for your clients’ (and your firm’s) growth

Cross-border compliance falls squarely within the ongoing demand for enhanced business advisory services as we wend collectively through a global pandemic. And keep in mind that clients of all sizes, including emerging small businesses, will require technology automation and advisory in this area. Learn the basic terminology associated with cross-border selling and compliance in preparation for client conversations. Determine whether you want to develop expertise internally around this practice area, or partner with a firm that focuses on compliance international sellers. Then vet the available technology automation solutions that automate the most complex aspects of cross-border compliance at the moment of transaction. The numbers tell the story—this is an ideal opportunity to demonstrate added value for clients embarking on a new path to global growth.

 

Read 4727 times
Rate this item
(4 votes)
 Sona Akmakjian

Sona AkmakjianSona Akmakjian, CPA, is global head of strategic accounting partnerships at Avalara. With over 28 years of experience in transactional tax services and consulting, including state agency sales and use tax administration, and roles at a big four accounting firm, tax software company, and mid-market consulting firm, Sona brings significant expertise in areas such as strategic alliances and relationship management, executive collaboration, M & A due diligence, project management, professional services and product management.   

Sales Tax Assessment Tool

The Accounting Top 100

Sales Tax Calculator

Social Leader board

The Accounting Top 100 social media leaderboard ranks accounting professionals based on their overall presence, influence, and engagement on social media platforms. Each user’s rank is determined by that user’s Klout Score in addition to a list of custom metrics, and all updated rankings are displayed in new leaderboards generated every two weeks.

Did you make the list?

Congratulations! You can now track your progress on the leaderboard by clicking “Follow us” at the top of the list. Want to get the word out about your new celebrity status? Share this page with all of your friends and followers so they can view and join in on this fun social activity.

Think you’ve got what it takes to make the Top 100?

Join for free today!

Disclaimer

Avalara’s Accounting Top 100 leaderboard (the “Leaderboard”) is assembled using a list of accounting professional users that’s curated by manual entry as well as by Rise.Global's internal Twitter search functionality. We reserve the right to change scoring metrics used for ranking and to exclude anyone from the list, in our sole discretion. The Leaderboard is not an endorsement, recommendation or sponsorship of any of the accounting professionals on the Leaderboard, and we do not make any representation or guarantee of their ability or reliability. Assessments by different methods or based on different information may yield different results. The Leaderboard is only a starting point to gather information about accounting professionals, and you should not rely on it to decide whether to hire an accounting professional.

For feedback and/or questions please contact [email protected].

Visit other PMG Sites:

Template Settings

Color

For each color, the params below will give default values
Tomato Green Blue Cyan Dark_Red Dark_Blue

Body

Background Color
Text Color

Header

Background Color

Footer

Select menu
Google Font
Body Font-size
Body Font-family
Direction
PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.