Case Study: Small Merchant Sees Streamlined Accounting Costs

Nov 16, 2013 4:45 PM  By

Purveyor of All Things Creative, owned and operated by designer Charlene Anderson, offers a variety of online products including jewelry tools and supplies, beads, paper and fiber arts materials, baskets, accessories, and art glass supplies. Anderson started the arts and crafts niche business in Wyoming in 1999, and was an early adopter of both eBay and Amazon.

Purveyor of All Things Creative is a one-person business, and Anderson grew it to reach the mid six figures in sales all while overcoming the challenge of being legally blind. Last December, Anderson celebrated the return of her eyesight function after undergoing three cutting-edge eye surgeries.

Bookkeeping challenge
The Purveyor of All Things Creative eBay store and Amazon store receive orders from all fifty states, including those states that require sales taxes to be collected for internet orders. Prior to the Amazon nexus sales tax issues that began in 2011, Anderson did not need an outside solution to keep track of sales taxes. Given the very small population of Wyoming, she had a very low number of orders within the business’ own state, which were easily accounted for with manual recordkeeping.

Sellers such as Purveyor of All Things Creative using Fulfillment by Amazon (FBA) are confronted with complex sales tax rules because once they send inventory to Amazon’s warehouses, they have nexus and sales tax obligations in those states where they have physical products. The challenge of FBA combined with management of eBay orders prompted Purveyor of All Things Creative to look for a third-party tax management provider.

According to internal TaxJar research, 32% of Amazon sellers are filing taxes in six or more states due to their usage of FBA. And 60% of that group utilizes accountants to help them manage their tax filings.

The TaxJar Solution
When the Amazon nexus payment issues came into play it became exponentially more complicated for Anderson to personally manage sales tax order tracking. At this time she began working with a bookkeeper to help her properly account for sales tax. In the fall of 2012 Anderson implemented the beta version of TaxJar to help streamline her accounting workload.

“For sellers of goods that are only on one platform, they don’t really need to worry about collating all of their sales together,” said Anderson. “Since I’m using multiple platforms it becomes more complicated. This is where TaxJar really pays off, in the automatic compiling of orders.”

TaxJar allows clients such as Purveyor of All Things Creative to seamlessly download sales data from various channels including eBay, Amazon, Etsy, PayPal, and Shopify. The TaxJar platform is exceedingly simple to use, with integration into marketplaces requiring just a few clicks and no technical knowledge. It compiles tax obligations at the state and local levels, providing companies such as Purveyor of All Things Creative with the needed information for fast order filing. Tax preparation is also streamlined because sales can be sorted by reporting period. The system also keeps payment history, which can prove invaluable when a business is confronted with an audit.

Immediate Results and Savings
Purveyor of All Things Creative utilized TaxJar to better manage sales tax receipts from its eBay and Amazon storefronts. TaxJar pulled in reliable sales data from both channels which was reviewed by the bookkeeper to complete accurate quarterly taxes.

Use of TaxJar provided Purveyor of All Things Creative with direct cost savings by substantially reducing the time spent by the outsourced bookkeeper, who is paid $60 an hour. With TaxJar accurately tabulating and combining orders, a labor intensive task is eliminated from every month’s recordkeeping. The TaxJar interface is also easy to navigate, which further encourages time savings.

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    • Red Dog Mercantile

      This comment has nothing to do with the article. If you have a gripe with eBay, talk to eBay. Don’t hijack an article pertaining to how small business owners are adapting to changing tax collection requirements.