How a Growing Fashion Brand Managed U.S. Sales Tax Compliance

A PMBA Case Study

sales tax implications for fashion industry

About the Company

The company is a Canadian based shoe brand that experienced rapid international growth through a single e-commerce channel. As a result, they ambitiously set goals to enter the US market with an aggressive combination of physical stores and an expanded online presence. Not unexpectedly, the company was exposed to several US tax requirements and needed assistance to mitigate business risks.

The Path to Success

The Goal

The client wanted to aggressively expand in the US with multiple retail locations and a broader e-commerce reach. In the prior year, US sales – via the e-commerce platform – reached approximately $500,000. It was their ambition to achieve over five million dollars in two years.

With their anticipated growth in mind, the client wanted to ensure compliance with all taxes, licenses, and fees for their retail locations. In the same way, it was necessary to properly configure their e-commerce platform to comply with US sales tax.

The Approach

After establishing the scope and project milestones, PMBA identified potential requirements for the client’s retail locations, including state and local tax and license requirements. 

Deadlines and timetables for project tasks were managed in a centralized tool to keep both parties on deadline for the scheduled open dates.

The project encountered challenges with local licensing as the company needed physical representation to complete specific requirements. As a result, PMBA leveraged its nationwide network of accounting professionals to assist in completing documentation at the local level. Although, the owners had to be present for certain transactions.

Additionally, PMBA worked alongside the company’s order processing, returns, and e-commerce teams to evaluate several tax technology solutions to address their e-commerce sales tax requirements. However, the company had several operational restrictions with handling returns. For this reason, PMBA considered and implemented additional, custom processes to resolve this matter.

The Result

In the end, the company successfully met the necessary guidelines to open its first retail store in the US. 

  • Hours of internal labor – and the need for additional salaries – saved
  • Compliance risks managed
  • Lost revenue to tax penalties avoided

Ongoing Support

PMBA established policies and procedures for the client to update relevant tax issues when introducing new products across all sales channels.

Likewise, the team established a monthly process to ensure the client filed future sales tax returns accurately and on time.

Why PMBA?

Industry Experience. PMBA has demonstrated success in assisting many growing businesses with complicated tax issues and is able to leverage that experience to avoid common pitfalls. 

Expansive Resources. PMBA has a network of national accounting and sales & use tax experts. By extension, clients have access to assistance in every region regarding state, county, and local tax issues.

Certification You Can Trust. The PMBA team is a certified implementer of tax technology solutions including Avalara’s suite of products. You can rely on PMBA to get it right the first time.

Have Questions About Your Specific Tax Challenges?

Contact us for a free consultation today at info@pmba.com.

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