The BIG, commerce Podcast

Decoding International Taxation, with James Bright from Avalara

August 22, 2023 Calashock Commerce
The BIG, commerce Podcast
Decoding International Taxation, with James Bright from Avalara
Show Notes Transcript Chapter Markers
Do you ever feel like you're navigating a labyrinth when it comes to tax strategy, especially when expanding internationally? Fear not, because we've got James Bright from Avalara, a leading tax management solution company on our show, ready to guide you through the maze. He shares with us Avalara's three-pillared approach to tax management: tax registration, calculating tax at the transaction stage, and ensuring timely and accurate tax filing.

We tackle the nitty-gritty of cross-border commerce, diving into the challenges and solutions that come with it. From staying updated with the ever-changing tax legislation to understanding how tax profiles impact businesses of various sizes, James offers his expert insights. We also debunk some common misconceptions about cross-border sales tax, and how it influences the customer experience. The importance of transparency, especially when it comes to delivery duties and tax-inclusive pricing, is highlighted, along with ways to enhance efficiency in transactions.

Lastly, we pivot our conversation to the significance of compliance and market research in international expansion. James emphasizes the perils of cutting corners when it comes to tax calculations, and the potential long-term effects of non-compliance. We wrap up the episode by peeking into the future, exploring potential trends in the ecommerce space. So, join us on this enlightening journey, and equip yourself with the knowledge to make your business tax compliant and ready for international expansion.

Speaker 1:

Hi, welcome to the Big Commerce podcast. Hello, welcome to a brand new episode of the Big Commerce podcast. I'm your host, luigi, and in today's episode I'm joined by James Bright from Avalara. Avalara is a tax management solution and partners with many platforms, including Big Commerce, and in today's episode we talk about the importance of a tax strategy and some of the common pitfalls that merchants can come into when expanding internationally, and why a solution like Avalara can really help your business as it thrives and grows. Hope you enjoy the show. Hi, james, welcome to the podcast. Hi.

Speaker 2:

Luigi.

Speaker 1:

Thanks for having me. Are you enjoying our wet weather here?

Speaker 2:

Yeah, we were just saying that it's becoming a recurring cleaning out the story of the summer, so hopefully it's going to pick up soon.

Speaker 1:

Yeah, and now I remember the year of the Olympics. It was like a rainy year. So we do kind of. I don't know I'm not a meteorologist or anyone that takes interest in the weather, but I think we must have these ebb and flows where it's just going to be a washout.

Speaker 2:

Yeah, and to be honest, people will hate me for saying this, but I prefer this to the scorching heatwave that we had last year, because working from home some of the week it's uncomfortable, got a young family, my dog hates it, and so on. So yeah, I'm only about the weather outside, but it's actually okay yeah.

Speaker 1:

Well, I guess we have to pause for a second for our clients and partners in the south of Europe who are kind of like you, you haven't got a clue.

Speaker 2:

Yeah, exactly.

Speaker 1:

So look, james, thanks for taking time to come on to the podcast. You're from Avalara. Why don't you just introduce yourself and the company that you work for? Yeah, sure?

Speaker 2:

So my name is James Bright and I'm a Partnerships Manager at Avalara. I've been working for the company for around three and a half years now, started off on the sales side of things and didn't have a tax background, but learned a lot very quickly. And then, yeah, sort of found my way into a partnerships role after about 18 months, and that's primarily focused on e-commerce, which I enjoy very much. So, yeah, the company itself we've been going for near on 20 years now and was founded in the US, all with the goal of simplifying US sales, but now we've grown to become a global company and now focus on transactional taxes such as GAT, gst and customs duty and all that fun stuff. So, yeah, that's me at the company.

Speaker 1:

Which I guess kind of in the age of kind of cross-border trading and international commerce, is really important because kind of tax I guess is one of the few consonants that pretty much every country is going to ask you to comply with. And kind of going back to the original objective of simplifying US tax management. I mean, I've spoken with merchants numerous times in the US about tax management for different states. It's just incredible how complex it can become and the responsibilities that the merchants in the US have in terms of reporting and so on.

Speaker 2:

Yeah, it really is. The US is probably the most complex tax-raging in the world when it comes to the sheer amount of tax jurisdictions it has and the sheer amount of tax rates that it has, and that really makes it very difficult for a merchant to get the right tax treatment on an invoice. So, yeah, that's how the company was founded really. So I suppose we've got something to be thankful for. We've built a business to be able to solve that challenge. But yeah, once you've calculated the tax, then of course it's filing it and you know, in different states there's different ways to file the taxes. Some prefer it monthly, some prefer it quarterly.

Speaker 1:

So no two states are the same as what I'm getting at. Yeah, I mean, I guess it might put you out of business, but really, if they just got rid of tax altogether, the world would be a much simpler place.

Speaker 2:

Yeah, we wouldn't have much to talk about, to be honest. But yeah, and whilst tax is a very dry subject, it's obviously tied to, you know, a necessary part of the merchant strategy, because, you know, if you don't address it in the enemy stages then it can become a problem. But obviously it's going to make that as easy as possible.

Speaker 1:

Well, let's try and make tax management as sex as possible in the next half hour. So, fundamentally, you started off in the US with the objective of simplifying tax management for merchants. So what's the methodology behind that? You know how Avalara approaches tax management for recon merchants predominantly.

Speaker 2:

Yeah, sure. So I mean we break it down into sort of three key areas and I call them the three pillars of compliance. So we'll help a merchant understand where they need to register for tax and help them complete the process as required. We'll also help them calculate tax at the point of transaction. You know whatever channel that's happening on, if it's in their ERP or their e-commerce platform. And then the third pillar is filing the tax. You know wherever they have that tax obligation, we will help them submit the tax on time and correctly to be the relevant authorities. So I kind of just use that three pillar approach just to simplify what is, overall, quite a complex process.

Speaker 1:

So it's really kind of from an ATA's perspective. Somebody's saying, right, I want to expand either internationally or, if they're in US and I want to start selling kind of cross state and so on. They can really start that journey with you because you'll be able to kind of tell them this is what you need to be doing and then, once they've registered and done all the necessary paperwork, you can then make sure that they sell complying to tax laws. And then the reporting side of things on the various intervals you said, whether it's monthly or quarterly to different states. You help with that as well. So really, from a merchant's perspective, you really do support them in a tax management role.

Speaker 2:

Yeah, absolutely, and whilst we're first and foremost a tax technology company, I mean to work at Avalari and obviously you have to know about tax and our account management team and analysts are all experts in what they do. I mean they're on hand to be able to help merchants as and when they have questions and obviously we're there to make merchants aware of changes in legislation and put things on their radar so that they're proactive with tax and not having to react to a negative tax situation. So, yeah, it's a combination of services, human input and solutions in order to make complements manageable for the merchants.

Speaker 1:

I know kind of when I get asked questions by merchants around tax like, my answer is just like Avalara, I'm not even getting into it, just Avalara.

Speaker 1:

Because I mean we had that a few years back with the one stop shop where kind of, like you say, changes to legislation and stuff that I cannot become like a tax expert, or even not even expert, but just somebody that starts understanding tax changes in different jurisdictions and so on. So really also from our perspective it's great because it means that we've got an expert partner that can take that burden off us and say, right, we'll take you from here, we'll advise and we'll make sure that everything's kept up to date and comply. Because you must have seen in the last few years a big uptake in terms of merchants that increase the cross border. I mean, obviously with Brexit there was a people that took a step back, others that kind of took a step forward. So I don't know if it kind of netted itself out, but we get a lot more requests from merchants looking to do that cross border trade and understanding what are the tax implications for them.

Speaker 2:

Yeah, I mean that's a really good example of how closely we work with partners. I mean, avalara is a partner first organisation and all of our partners, whether they're a technology partner, like BitCommerce or Shopify, for example, or whether they're an agency partner, they're often better placed than we are to identify a risk to their merchants' business and by having that relationship means that agencies like yourself can consult with us firsthand and then engage with us and the merchant conversation as and when required. So working with partners is really important to us and, as you say, as those situations present themselves, such as Brexit, we're on hand to be able to deliver the content, to drive awareness, but also have a conversation with these merchants and figure out the best way for them to handle their compliance. And just to touch briefly in Brexit, I mean, that's one of those things where it creates a lot of additional interest for us, which was great but at the same time, led to a very busy period for us.

Speaker 2:

And yeah, you'd like to say some merchants took a step back. They didn't want to deal with it, no-transcript, had to get on with it and ultimately address it head on. So, yeah, as and when these legislative changes come in from governments and so on. You know it's at least one hand. It's good for us. At the same time, you know it's difficult for merchants and we understand that. So you know we want to work with merchants and partners to obviously be on hand as and when it's needed.

Speaker 1:

I don't know how many kind of webinars I've been done through that period with Avalar and various trade organizations to understand it, because it's just not possible to kind of stay, you know, stay up to date with all the various changes in.

Speaker 1:

you know, we're a global agency, so we work with merchants throughout Europe, throughout, well, north America, usa and Canada, and it's just not possible for us to kind of keep up to date with type legislations there. You obviously kind of sit further up the food channel, I guess, where we are. So we work with, obviously, our set of merchants and you work with platforms that have their agencies, that have their merchants, so you obviously have a wider net of merchants that you work with. Do you see some kind of commonality around the challenges that merchants face trying to kind of grow their cross-border international commerce business?

Speaker 2:

Yeah, I mean. The beauty about it is Avalar. You're presented with many different types of scenarios on a day-to-day basis. You know if we're dealing with a software company, their needs are very different to an e-commerce merchant. The legislation of different governments will affect them in different ways, but the commonality is at the time it's awareness.

Speaker 2:

You know we speak to companies who are of a size where you think they'll probably know better, but in fact they've gone into growth mode overnight and guess what? They're now only addressing the tax situation in the way that they want to. So I would say that you know awareness is something that we spend a lot of our time. You know, working with partners and merchants, helping them understand. You know what they should be doing from a compliance perspective. Like I said, we like to simplify it by focusing on registration, calculation and filing, but often you know the starting point. Very much is difficult to understand. You know, where should I register? Where should I tell that?

Speaker 1:

And you touched on their saying kind of you know you've got merchants that have had that kind of hyper growth or at least some decent growth, and so you work with both, both kind of you know, I guess, startups and SMBs, but also enterprise merchants, to help them with their tax, tax management. Do you find that? Does the process of tax management change as a business scale? Like, do you find that there are different complexities or different I mean, I guess even times my question when you start looking at merchants that have maybe stock in different parts of Europe and so on and what effect that has on tax calculation, depending where that stock goes?

Speaker 2:

Yes, now, often the size of a business does not match the complexity of their tax profile and vice versa.

Speaker 2:

So it will depend, and that's what I say kind of every scenario that you view on this side of the fence at Avalari is always quite interesting and, to answer your question, the complexity is driven by a number of key things and location stock is a really good example. You know that's going to, in most instances, trigger a tax obligation by holding stock in a warehouse in a country, and that might just translate into a very simple, straightforward conversation with us where we help them with the registration side of things and they're actually able to leverage the content, the tax content, within their e-compact, for example. But if their key market is the US or they're selling high value items that are exposed to customer duties, then that creates complexity and that's when the tax engine is needed and that's when they want to maybe talk to us about calculating tax and getting it accurate so that they're compliant, and that leads to a better customer experience if you're able to present customer duties for international investors. So the size of the company does not always match the complexity of their tax profile.

Speaker 1:

Not just, I guess, when a business grows and its complexity changes, but, like we also touched on, the jurisdictions change and so on. How do you because fundamentally you're a product company, so you have a SaaS product which allows for tax management calculation. But I guess, how does Avalara make sure that its customers are up to date with what's going on, making sure that they're not doing the same thing they've always done, just not aware that their obligations have maybe changed?

Speaker 2:

Yeah, sure, so we'll do that in a number of ways and obviously it starts with communicating with our customers.

Speaker 2:

So if you're leveraging an Avalara solution, then you are going to be in the care of an account manager who has regular check-ins with you and obviously discuss your setup countries in focus and will be able to put any legislative changes on your radar and help you with steps accordingly.

Speaker 2:

And from there we have publications such as monthly maintenance guides that inform our customers about tax rate changes and things like that. The good news is, most of the time they're too busy to look at that type of information. They're getting on with the day-to-day and obviously that content is automatically updated in our solution set. So I'm actually really have to worry about it. But should they get queering by customer or tax notice, then that information is available. So, yeah, we have to work with them in those ways to ensure that they know where the answers are if they need them. But at the same time, we don't have to think about them at all because, like I say, it's our ever-grown product content team. It's on them to ensure that our solutions have all the relevant tax rates and logic up to date, so that really our merchants don't have to worry about it.

Speaker 1:

So next time somebody gets an email from Avalara or a phone call, it's take note because there's something important there that might help you further down the line.

Speaker 2:

Yeah, usually, or maybe we're just inviting them to run bar events or something like that. But yeah, government legislation drives a lot of communication for us and I guess that's a good thing. It's always good to be able to be in touch with your customers on a regular basis. A lot of the time it's not really going to be relevant for them, unless it's a country of focus and, like I said, we make sure that everything's up to date in our solutions, so the merchants aren't really having to think about that on a day-to-day basis.

Speaker 1:

So, as we said earlier, we get a lot of requests when we speak to merchants that are looking at that cross-border opportunity, whether it's because they're leveraging like a multi-storefront solution that says, look, I can now translate my website into another language or push it into another region, or they're just looking at expanding as part of their strategy.

Speaker 1:

And we've seen that international cross-border trade change a lot, certainly from the UK after Brexit, where we actually had a lot of you saw merchants in the European Union not wanting to sell into the UK anymore because actually trying to get the stock back was going to be an issue and it's probably cheaper to destroy it than actually have it sent back, which obviously from a sustainability perspective is not good. So, as I said, we're seeing kind of a lot of those changes. How do you help predominantly, how do you help merchants who are looking to be able to have as smooth of an expansion internationally as possible without having to spend 80% of their time on 20% of their operation, which might just be around tax and legal complications from moving stock around?

Speaker 2:

Yeah, sure I think with any complex area of business, companies look to automate it, and the large degree of greatly offer is a form of automation for the compliance process. So, like anything, it takes a bit of work to get the set up implementing any sort of tech. There's the initial steps that have to be taken, but once the right process is in place it's going to offer something that's going to be scalable. So expanding into further regions is not really going to be too much of a burden and once you're engaged as a customer, for example, you'll have access to the right people at Avalara who can guide you on how to get registered in any country or how to add in tax collection using your own avatars as an example, and how to add in tax filing in a particular country or jurisdiction. So, yeah, we look to automate as much as we can. We are a tax technology company, product first company and yeah, it's like any complex area of business. It's just try and automate as much as you can so that you can focus elsewhere.

Speaker 1:

So there's a lot of investment needs to go in in terms of time at the beginning to make sure that the platforms set up to be able to manage the tax calculation side of things and then really, once that's done, customers can kind of continue growing their business, adding on products, selling to different markets, knowing that Avalara, having been integrated correctly and being updated by your tech platform anyway, just allows us to focus on the sales and the marketing and the product development rather than actually having to worry about the tax calculation in different.

Speaker 1:

You know, if they get an order from France, hypothetically, and it's maybe their first order, if they've got Avalara set up correctly and knowing they're going to expand into the EU, that country should in essence be set up and they should have the confidence to say that orders come in, that person's paid, you know we've collected the right amount of tax, depending on the setup, or they're going to pay the right amount of tax and really focus on that rather than, I guess, worrying that well, now we've got an order from Sweden. So, you know, do we need to check if the tax calculation is done correctly? Kind of really making that the effort at the beginning to make sure that Avalara is integrated correctly, they set up correctly to your, to your needs, then gives it a piece of mind to say, right, that we can put to bed because it's been looked after, it's ticking over and we can then focus on on growing business.

Speaker 2:

Yeah, ticking over is a good way to put it. To a degree, I'll say working with us is a good chance to learn and also a good good chance to ensure that tax is part of your strategy going forwards. So you know, take that scenario for selling to France. You know, working with us, you're going to be exposed to conversations around HS codes, for example. You know the importance of having your goods correctly classified so that they can move through customs, have the correct duty treatment applied and so on. So, whilst we're automating a lot of things, like I say, working with a personnel here at Avalara is going to give a merchant more confidence in how to approach tax and incorporate as part of their strategy, rather than potentially run away from it and see it as something that's incredibly complex.

Speaker 1:

So let's touch on that kind of the tax strategy. So from what is, I guess, trying to kind of you know? Trying to kind of you know, compartmentalize a tax strategy for a merchant, so maybe a UK based merchant who is looking to expand into the EU, so that includes Ireland, obviously, and mainland Europe. What would their, what would an ideal tax strategy for them, look like? Yeah, because chances are they're probably not doing it today. They're probably not thinking I've got a really good tax strategy for my international growth.

Speaker 2:

Yeah, look, that's a really good example because you know that merchant may or may not be aware of some of the back simplifications that came in June 21, which is the Fios being the import one-stop shop.

Speaker 2:

So previously you know you would have to register in all of the EU countries where you are the hit threshold or held stock, for example, but now under IOT, you can register in one country and collect that in all of them, in all of the countries, all of the states of the EU, and you can submit the tax collectors using that one form in that one country. So it's a simplification. Now it's a simpler process To file VAT in the EU, provided you're aware of the scheme and that you've got a partner to be able to take you through it. So that's a really good example of thinking all right. So Brexit made EU VAT really complex. However, of the back of that, the EU back simplifications, such as IOS, have actually created a process that merchants can leverage now. So you know again, that keeps our VAT team incredibly busy, as merchants who want to expand into the EU but don't want to have to have multiple registrations, for example. So you know a system like IOT is a good place to start.

Speaker 1:

I don't know how many people I've spoken to who I think, confidently believe they understand tax laws and they're not tax lawyers. I certainly, you know, don't claim to be an expert on international tax law, and so I've heard different sides of the same argument and so on and varying kind of conflicting opinions. What's one you've seen it from your perspective. So, with specifically cross-border sales tax, do you have like a misconception that maybe either you come across a lot or you know within Avalara, it's an only thing that merchants have misunderstood a particular process or law or whatever it is around cross-border sales when it comes to sales tax, yeah, I think you know a sales tax or a transaction tax in general.

Speaker 2:

maybe a misconception is a lack of awareness of how it can affect the customer experience. So a lot of merchants come to us who want to sell on a DDP basis, which means delivery duty paid. They want to move away from a model known as DAP, which is delivered at place and so to understand that one, it's basically who covers the tax on that shipment yeah exactly, exactly, and so what do you want?

Speaker 2:

to take back obligation into their process and make it a better experience for the merchant. That's an area that, if addressed, can actually lead to an increase in sales. If you're creating a better buyer experience for customers overseas, then there's going to be less friction and when the duties are paid up front, it's good to move through customs easier. There's less delays, an overall, the actual customer will be able to see the fully landed cost of the transaction. They'll be able to see fully transparent price, which is the tax calculation is part of that. So that's why it's important. So I'd say in my time at Abla, as a misconception, I say obviously, yeah, tax is important for compliance. You need to do it, but at the same time, think about how it could affect the customer experience.

Speaker 1:

It's a really good point because, like we said at the beginning as well, around returns, that sometimes it's cheaper to destroy the product than it is to collect it and bring it back home. If your customer knows, and we heard about those instances where people were ordering stuff from the EU, maybe in the 12 months after Brexit, and the courier was turning up with the parcel and the credit card machine to pay the £112 of duty that was owed and a product that was maybe worth the same and all those kind of sent out and I wanted to send it back and whatever.

Speaker 1:

And chances are that customer isn't going to buy that it was very unlikely to buy from that merchant again, knowing that actually they were under the impression it's going to cost them £100, but actually the courier turned up and requested another £100 of duty and the price has now doubled. So not only has the customer now got kind of a negative experience, but now the merchant is left with a product that's made its way around Europe and is going to be coming back to their warehouse.

Speaker 2:

Yeah, it's no different to a real-life scenario. Imagine if you walked into a shop on the high street and you picked up a shirt. You took it to the till thinking it was £10, and then you turned around and said that'll be £20, please, please, you wouldn't be too happy with you.

Speaker 1:

I mean, I remember when I first started flying to the US 30 years ago, but the prices that you kind of see on the shelves don't include the tax and North.

Speaker 1:

America is a regular maths because they did a calculation while they're queuing up to pay. But we're used to having everything with tax included, whereas in other markets it's tax-exclusive because obviously it's calculated at a point in time. But I agree and I think this is just on that around when you go into a shop and you pick something up and it's £10, and then the cashier asks you for another £10. On top of that there's been I think sometimes merchants don't make that distinction, especially in an age of where we've got this kind of cross-commerce where you can buy online, buy in store, buy on an app, buy on a marketplace, whatever. We're expecting this unified experience where the prices may be the same and the experience is the same and any taxes and so on. So I think that's a really good point you make around the customer experience, because with everything a merchant should be doing, I guess it's a bit like reading the book Will it Make the Boat Go Faster or Making the Boat Go Faster.

Speaker 1:

That was written. It was all about when the growing team was training for the Olympics. Every decision was Will it Make the Boat Go Faster? And merchants need to get into this mindset of saying Will it Improve the Customer Experience. There might be a cost attached to the merchant to implement an app or a code of feature or whatever it is, but if it constantly improves the experience, that will then lead to higher sales, high conversions, happier customers, advocates and so on. And it's amazing how many small tweaks you can make to a website with systems like Avalara that say look, we'll give you the accurate, we'll give your customers the accurate product price, including taxes, depending where it's going, and you haven't got to worry about calling them back and saying well, we're miscalculated, you need to pay us another £50, or then the customer will receive a product and then being asked to pay the duty for it.

Speaker 1:

So then that's a really, really important takeaway from this conversation.

Speaker 2:

Yeah, I'm glad it feeds into that and because I enjoy the e-commerce side of things, because obviously I'm a consumer and I buy things online and obviously I look at how taxes are taken into account. But generally speaking, I love all the cool little features that you see. When I was buying something online the other day and I was able to change the size when I was on the checkout page I didn't have to go back into my own change of size I noticed that. I picked up on it. So whoever designed that feature and implemented it, thank you. But yeah, I like all those little things. It certainly made the pro go faster and get me through checkout, so it's good to see in action.

Speaker 1:

I mean, I've had this conversation like shipping calculation cameras, like Shipraise Q and it's like all this unsexy, boring stuff that you kind of think, but actually they're so critical in getting that conversion over the line you can't underestimate it. On the topic of kind of cross-border, so for merchants that may be evaluating it and saying, right, let's you know, because we're seeing at the moment, you know, cost of living crisis, inflation, dispose willing, come down everything. So sales are being hit. I think we can all safely say that you know the economy isn't flourishing as it was maybe a couple of years ago. And, speaking to merchants, you know they're not necessarily struggling. You know they're seeing that it's there's a couple of clouds, aluminum overhead.

Speaker 1:

So you know, merchants, the hacker we could resales and obviously one of the quick ways is to start selling internationally. Have you got any advice or tips for merchants that are considering this avenue? Because it's not, it is not copy and paste. You know you there's many other nuances around selling internationally, but from a from a tax perspective, like we spoke about tax strategy. But what would you say to a merchant that's speaking to you and saying I'm thinking of doing cross-border, at the moment we're only selling the UK or any selling the US, but now we're in France and now we're looking at selling internationally to increase ourselves and our global reach.

Speaker 2:

Yeah, it's a really good question and spot on to say it's not copy and paste, because I think there's many moving parts of that conversation and, really, working closely with my partners, I pick up on things that you know they publish on LinkedIn and just, you know day-to-day conversations for yourself. You know I pick up on the things that they'll address with merchants. You know, should you expand internationally if you're not retaining the customers that you have in the UK, for example? So I'd say, look, it's not a perfect fit for everybody, it might not be the right time. However, if you've got a niche product that's in demand somewhere else, then yeah, it makes sense.

Speaker 2:

You know, we see a lot of heritage brands doing really well in the US. They come to us because obviously they need help with compliance, but they've gone away and worked with other partners to do their market research and understand. You know, is it going to be worth it? And ultimately that decision is generally made before they start talking to us. They might be doing a bit of background research and start talking to us, but I'd say, yeah, work with the right agents to be a partner who's got a track record for helping brands go internationally. I think you know you're going to learn more there, and then obviously it will help where we can.

Speaker 1:

I was reading one of the e-commerce groups on social media. One of the merchants kind of was asking around apps and tech partners that could help them with, in essence, answer the questions that kind of tax calculation offers that they didn't want to invest. I guess is the point I'm trying to make in working with an agency. A lot of them kind of try and cut that Cost and save that money, saying well, I'll do it myself, I just need to kind of maybe pick up on two or three little things and that magic dust will. Then, you know and Whatever.

Speaker 1:

I don't get too involved but sometimes think you know you are again we spoke about early You're not investing in the right places. Like you, you work with an agency sometimes to make some changes to your website and so on on the front end, which are, which are equally important, but at the same time, these things that kind of sit in the background and just you know Maybe don't shout from the rooftops. Equally important to get an expert in to make sure it's, and maybe even more so because we're talking money here, like if you're miscalculated tax on sales that you've done to a particular region and Someone picks up on that. You know it's not quick fix and well, we'll just, you know, implement some JavaScript Like you got paybacks of money and potentially a fine yeah.

Speaker 2:

I'd add it. You know we never had that conversation in different ways in the past. You'll say, yeah, look, there is a cost compliance, there is a Time investment up front, there's a cost investment, but at the same time you know what's the cost of non compliance. You know when will you feel that further downstream. So we don't want to take that approach and say, good, you know the government authorities will crack down on you. You know that's for the business to decide.

Speaker 2:

But ultimately, I think Compliance is one of those essential areas that you need to address it Sooner rather than later and be proactive. Because if you grow to a certain size then you know a small, small issue could have potentially got quite large and, like you say, takes quite a bit of work to rectify and cost and time. And I see that all too often really with projects that we were involved in. So I'd say to anybody Leslie, do have it For front of your mind and do talk to your agency partner about if you're working with one. But yeah, in sure that it's addressed up front. And, like I say, you know the size of your company does not correlate directly to the complexity of your tax profile. You could be Very small company but selling into somewhere like the US for the very complex tax regime. We could be a really big company just selling into the EU and Schemes like IOS. Then it might be a bit more straightforward.

Speaker 1:

I on that and just kind of a guess of words to our merchants Listening, it's quite easy to take for granted that you will improve.

Speaker 1:

The process is when you hit a particular milestone. I've got a merchant they do over five million online and they're still managing products off an Excel spreadsheet Five million and they haven't got like one or two products, like they've got a fair number of products and it's just they've grown and it's not been a priority for them to implement the PIM. And so again, like you've, you know you said it might be that with tax, that when they started, you know, setting on the website doing half a million a year, they did it a particular way and then they've had a couple of years of growth and now they're doing two and a half million and they're still managing tax the same way and actually they've kind of gone off on his tangent rather than maintaining that level of compliance that's needed. You know, had they Invested at the beginning and you know I'm familiar with, you know, budgets being tight, whatever but, like we said, you know what's the cost of not complying, because that's probably going to be a lot, lot more than the investment.

Speaker 2:

Yeah, and I actually, I think on a positive note, awareness has grown, you know, just with some of the content that we provide to our partners, which they Circulate with their customer base you know that could be true Accounting partners or e-commerce partners like yourselves, or technology partners. So I think the awareness is out there documentation and so on, and obviously a lot of best practices, shares within e-commerce particular. You know webinars and postcards like this. So I think I Hope I'm right in saying that you know the awareness is out there and everyone has a bit more of a grasp on it. And, yeah, you know there's.

Speaker 2:

There's many analogies you could spin for for tax. You know it's the, it's the crap on the rune stream let's me get bigger, and you can go on all day. But essentially, yeah, I know, I know you don't want to deal with it, but have a look at it, talk to your relevant partners about it and you know, but I like taking Well, as we kind of tie up today's Episode, one of the things that I think is really useful for our merchants is to get your perspective of any trends that you're seeing.

Speaker 1:

Again, like I said, you speak to a lot of agency partners, maybe other tech partners as well, other merchants. Are there any changes you're seeing? Are there any trends that you're seeing something around the corner that maybe isn't so mainstream yet and you'd be willing to share with our listeners, specifically around international sales, but if it's not necessarily around kind of, you know, international growth?

Speaker 2:

it's. Yeah, I think it's a point we touched on earlier. It's actually there's some some real extra thought going into which regions are going to be in focus. I mean, going international makes sense for some brands, given what they sell. You know, we work with a number of fashion retailers from Nordics and they have a very particular look and appeal for the garments that they sell To the rest of the world and because the Nordics is quite small, they have to go International at an early stage in their career and the development. So you know that makes sense for them. But yeah, I think the trend is, you know, there is more consideration with these companies to say well, you know, maybe we need to capitalise on On our home markets first. It really depends on what's being sold.

Speaker 1:

That's a really good point, I guess kind of is your, you know, go back to your total addressable market, like you're saying, in the Nordics specifically, or if your market's fairly small and that international growth is going to come at an earlier stage than maybe for a larger market like the UK or US, and then it's really harnessing the the Avalara solution earlier so that you're set up for that growth, even though maybe your business isn't, isn't as mature as Is. It would be for another, for another market. Very nice me to ask Our guest if kind of they'd mind sharing neither the latest book that they've read or any podcast that they listen to.

Speaker 2:

Yeah, you got anything you can. That's a good question. So in terms of looks, that would be relevant.

Speaker 1:

Probably what are your books that you enjoy.

Speaker 2:

You know it's mind-blowing, like Around war stories and things like that, so not relevant for the podcast, or about sports and so on, but I think that's relevant for this. I think my my LinkedIn feed is always really good. My my partners are always willing to Do real, real good gold in there. And then platform podcast. I mean James Guards, the platform podcast is really good, but yeah, I listen to James as I learn a lot. He's really knowledgeable. It helps me understand more about other tech and e-commerce.

Speaker 1:

So yeah, I listen to James as well. Oh good, yeah, so Really awkward moment as an event. It's one of those kind of rushed events. I was all over the place and then I just look at this guy and so I recognize even some I couldn't put in a minute, anyway, it's not so I'm gonna train home. And I was James. I was just I was kind of staring at this guy saying you look really familiar, but because I kind of really wasn't in the frame of mind for networking, just because I was going between places and it'd be really If you're listening to his voice on the podcast at the same time.

Speaker 1:

Well, it will link to to your LinkedIn and to Avalara as well. So, yeah, if anyone can always get in touch, presuming that LinkedIn is probably one of the best ways Avalaracom for the website.

Speaker 2:

Yeah, that's it. Yeah yeah, LinkedIn or my email is jamesbriteavalaracom. Feel free to get in touch and be happy to help.

Speaker 1:

Brilliant Well, James, thanks very much for your time. It's been really interesting learning about tax genuinely, and I think this is an episode that listeners should take note of because it's it's fundamentally important. It's not an optional, you know kind of thing. Tax management, tax compliant is, is very, very important, and the bigger you grow which we hope all our merchants continue to grow the bigger that problem could become if it's not, if it's not addressed and managed early on. So thank you very much for your time and insight.

Speaker 2:

Yeah, yeah, thanks for it, thanks.

Speaker 1:

Thank you very much. Thank you for listening to the BigCommerce podcast. If you've enjoyed today's episode, please leave us a review, and if you'd like to listen to other episodes that might be of interest, you can do so on your favorite podcast platform or at wwwthebigcommercepodcastcom. Thank you very much for listening and until next time. Bye, bye.

Tax Strategy in International Expansion
Challenges and Solutions for Cross-Border Commerce
Cross-Border Sales Tax Tips and Misconceptions
Compliance & International Growth Analysis