Sales Tax Services for E-commerce Clients – Part 1

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If you have e-commerce or retail clients in some capacity, you know how complex sales tax compliance has become.

As part of a three-part series, e-commerce expert Patti Scharf, CPA will address the growing concerns of accountants who have this client base, by offering tips on compliance and growth from start-ups to larger businesses. The first article in this series addresses the needs of start-up businesses.

The explosion of online sales means that the demand for expertise and up-to-date understanding of fast-changing compliance rules is in great demand by even the smallest client. Yet, many accounting firms do not offer one important piece related to e-commerce: sales tax compliance services.

For clients with full- or part-time online sales, choosing a professional to help clients with tax and accounting services, especially e-commerce reporting and compliance, is a matter of finding a professional with the technical skills and experience based on the  business’ stage. Businesses move through a predictable set of three evolutionary stages; your clients’ businesses require the right fit depending on their stage of development.

Here's the deal: Businesses that are just starting out aren't going to (and shouldn't!) spend hundreds or thousands of dollars every month on their accounting. It's unrealistic, and frankly, unnecessary.

The larger and more complex the e-commerce business, the more critical it is to have an accountant who is an industry specialist. Once the business starts making "real" money, it should invest in a solid, accurate, advisory accountant who can not only keep them in compliance, but can help show them how to make more money with less effort.

This article will focus on the startup or side business with up to $20,000 per month in sales. The next two articles will focus on the more established small business (stage two) and larger businesses (stage three).

Startup Challenges

Typically, startups don't have any money and don't know where to start. Chances are they are the ones doing the books, but that’s not in their skill set. It's likely they dislike the work and it distracts them from what they feel they should be doing, such as building business, sourcing products and marketing the company. As a result, they are either not doing the bookkeeping at all or doing it poorly.

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About Patti Scharf

Patti Scharf

Patti is CPA and chief controller at Catching Clouds, where she specializes in helping ecommerce businesses capture their data in a useful, meaningful, and pain-free way.

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