Author Archive | RevereWareParts

We’ve blogged a number of times on the coming sales tax armageddon that is coming due to the South Dakota vs Wayfair Supreme Court decision, unless something is done.

A new law in Colorado is the first I’ve seen that attempts to address this issue.  This quote from a member of the Colorado Senate does a good job of describing the issue:

Colorado has 344 taxing jurisdictions that include cities, counties and special districts, and 638 unique tax rates, Meneghel said. It would be a huge operational burden on small businesses to file up to about 600 new tax returns each month without the grace period that the law provides, he said.

Colorado’s solution is:

The new law also provides that businesses that sell through a marketplace facilitator such as Amazon or similar online entities are exempt from collecting and remitting sales tax; that responsibility will fall to the marketplace entity beginning Oct. 1.

That’s exactly one of the solutions we were hoping for.  Amazon.com for one, doesn’t have a great system for helping their 3rd party Marketplace sellers handle sales tax.  It is incredibly difficult to just find out what sales occurred where.   They, on the other hand, would have no problem collecting sales tax, and submitting returns, for every jurisdiction in the US, which they probably already do.

In addition to requiring marketplace facilitators to collect sales tax on their sellers behalf, there are a couple of other solutions I can think of.

• Instead of just a threshold of sales into a state to trigger collection of sales tax in that state, have a federally mandated threshold, below which any seller is only required to collect sales tax in the jurisdiction where they are located.

Many, if not most business licensing schemes work with a gross receipts threshold; say, below $250,000 in gross receipts, you pay a flat business license fee; above it you pay a percentage of gross receipts as a business license fee.  Why not have such a threshold for engaging sales tax complexity?

But this is really just a partial solution.  There will be a huge burden placed on a business the minute they surpass the threshold.  But at least that would allow some small businesses to avoid the sales tax trap.

• Create a federal technical system for collecting sales tax and distributing it to the right jurisdictions

Imagine a Federally mandated tax calculation system / service you could plug into any e-commerce software that would calculate the exact sales tax due for where an order is shipped.  A merchant would then simply pay the federal tax collection agency the total sales tax collected and they would distribute it to the proper jurisdictions.

Okay, so governments don’t have a great track record when it comes to implementing technology systems.  If a Federal law existed that removed the requirement for businesses filing returns in every jurisdiction for which sales tax was collected, in lieu of using a private service that offered the above solution, that would enable private services to start offering such a collection and distribution service.  I would gladly pay a reasonable fee for a service like this.

The point is, something needs to be done to allow small businesses to simply exist in this new sales tax reality.  And imagine how much wasted time and money on sales tax compliance businesses of all sizes could recoup with a setup like this.

This post might be most interesting to those readers who run a small business.

As a (small) business owner for 18 years now, I’ve learned that it is important to keep an eye on costs.  Employees, even good ones, don’t always pay attention to costs as much as I might as a business owner.  I’ve worked in environments where paying attention to keeping costs down is frowned upon, like a tech startup.  The motto among many tech startups is move fast and break things, and I’m pretty sure this doesn’t include penny pinching.  I’ve also seen people come out of the big corporate environment to a small business and still act like they have all the money in the world to spend.

The bottom line for small businesses is, a dollar not spent is one more dollar earned, and, in a small business you typically work hard for every dollar earned.

Along those lines, when setting up my shipping early on for RevereWareParts.com, I bought used gear at a substantial discount.

• shipping scale used for $75 vs $400 new
• label printer used for $70 vs $300 new

Mind you, this was 10 years ago; with the explosion of online selling today, many cheaper options are available.  But also, when dealing with shipping software packages like UPS Worldship, they typically only support a few types of hardware, that tend to be on the more expensive side.

Used items often come with quirks.  The shipping software would occasionally lose connectivity with the scale and it would need to be added again.   And, most annoyingly, the label printer produced marginal quality labels.

I thought this was just a sign of age, and was an unfortunate trade-off for having gotten a well used label printer for much cheaper than a new one.

But a few weeks ago I decided to see if I could get a replacement head or something to fix the problem; 10 years was long enough to put up with it.

Much to my surprise, the website for the printer maker said that one of the causes for poor print quality was low power supply voltage.  Huh?  The Zebra LP2844 (the gold standard for shipping label printers) takes a 20 volt power brick.  Sure enough, mine said 16 volts.  Whomever sold it to me used just used one that fit the plug and seemed to work; it did print after all.  I found a replacement power brick at the proper 20 volts, and like magic, the print quality was perfect.

Perhaps someone will stumble upon this and fix their own Zebra LP 2844 print quality issues like I finally did; would be nice to help someone avoid the issue I had for so long.

I find that when I meet someone who also owns a small business, whatever it is, we often have a lot to talk about.  There are so many challenges to being a small business owner that most of us share, from bureaucratic  and regulatory issues, how to make the best of the tax code, economic cycles, employee issues, sales tax changes, dealing with Amazon.com, how to market your business … the list goes on and on.

Having to deal with technical issues when you don’t have an IT person to back you up, is just another one of the challenges many small businesses face.