The Ambitious Bookkeeper Podcast

187 ⎸ How to Handle Sales Tax with Brian Greer of TaxConnex

• Serena Shoup, CPA • Episode 187

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Hey there, welcome back to The Ambitious Bookkeeper Podcast! Today, I'm chatting with Brian Greer from TaxConnex about all things sales tax. Whether you're a sales tax newbie or just looking for a way to outsource, we've got you covered. So grab your favorite drink, get comfy, and let's dive into making sales tax a bit less daunting.

In this episode you’ll hear:

  • Meet Brian Greer
  • Discover what "nexus" really means in sales tax
  • Learn about the Wayfair decision
  • Learn about TaxConnex
  • If you've ever thought, "Ugh, sales tax is confusing," you're not alone! Brian breaks it down and makes it way less intimidating.

Resources mentioned in this episode:

Meet GUEST

A graduate of Purdue University, the majority of Brian’s career has been in the sales tax industry. First, joining Tax Partners in 2001 initially managing their alliance channel consisting mainly of Big 4 Accounting Firms. He later led the sales and use tax sales team after the The Thomson Corporation (now known as Thomson Reuters) acquisition in 2005, growing the revenues to multi-million dollar levels. Brian joined TaxConnex™ as a partner in 2010 and currently as the Chief Strategy Officer is focused on partner development, rolling out new products and services, and supporting the sales and marketing teams.

Connect with GUEST

💼 LinkedIn: https://www.linkedin.com/in/brian-greer-55b7364/

🗞️ Blog: https://www.taxconnex.com/Blog-

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Serena:

Welcome back to the Ambitious Bookkeeper podcast. Today, I have a guest on here to talk about sales tax, which I know a lot of our listeners might be involved in, and some of you may not be involved in and be curious about it. And I also know that a lot of our listeners want to know where they can outsource this. So this is why I brought on Brian Greer from TaxConnects. Hello, Brian, how are you?

Brian Greer:

I'm great. Hi, Serena. Nice to be here. I'm going to talk about this super exciting sales tax topic, right? That everybody loves so much.

Serena:

Yeah. I mean, I love it. I nerd out on it all the time. And I'm sure you do too. So, without further ado, go ahead and introduce yourself to the listener who you are, how you help people, and then we'll dive into the conversation from there.

Brian Greer:

Sure, would love to do that. So I'm Brian Greer and I'm one of the partners at TaxConnects. And we'll get into that a little bit more in terms of what we do, but we do focus specifically. In the sales tax industry, but just as you know, some, I guess, background information on myself and some perspective. I started my career really as a, a salesperson and I was selling software. And honestly, I was terrible at it. Serena. I was at a couple of different software companies and JD Edwards, which was purchased by Oracle. And I just. I didn't get it. I wasn't good at it and I was looking to do something different. And a person that I knew said, I know a guy that you should talk with. ended up having a conversation with David Clapp and the audience won't know who David Clapp is, but David Clapp was one of the original employees of a sales tax outsourcing firm called Tax Partners. So this was back in 2001. And I kind of struck up a relationship with David and he hired me at tax partners to focus on sales tax outsourcing services. I knew nothing about it at the time, but now roughly 25 years later I know enough about sales tax to be dangerous in a lot of scenarios, but what I will describe, and this, might resonate with some of the, uh, the audience. I started off saying I was terrible. When I was at JD Edwards and selling the software, what I learned over time is that once I landed in this sales tech space, I was able to learn about it and research it and really understand it and start to really sell and consult from a position of, of knowledge. So I could go a mile deep. Whereas when I was at. JD Edwards, we were selling a hundred different things that I knew this much about each one, and it just made me uncomfortable. So what I learned with that is, is to, you know, focus on what you do. Well, figure out what it is that you do well and focus on that. And I think that's what I've, I've done that quite frankly, inadvertently. But kind of looking back on my career, that's kind of the path that I went on

Serena:

Yeah, that's a really good point. And I know we weren't going to talk about sales, but that sure does make it a lot easier when you have enough knowledge about it to really offer help instead of feel like feeling like you're selling.

Brian Greer:

and I think even you know, if there's, if you're providing outsourced accounting, outsourced bookkeeping services, you know, maybe the, the message is maybe there's an industry that you're really good at, you know, you're good at, you know, Providing those services. But maybe you find an industry that, Hey, I can be really successful here because I know this industry. And it just provides that level of credibility. I think when you talk with, potential prospects and when you talk with your customers that, Hey, this, this person gets it and they know what, my industry is all about.

Serena:

Yeah. And it's, it doesn't have to be that hard. It's a matter of just adopting like industry, you know, terminology and, and helping the client know that you understand their business model and pain points that they have. So, So yeah, so you got into sales tax accidentally. Did you have a background in sales tax before you ended up there?

Brian Greer:

No, no, not at all. And this isn't even, More odd part of the story that I'm a graduate from Purdue university. So kind of a STEM school, I've got a degree in geology, so I'm like a science guy, more than an accounting guy, but I think that's why sales tax appealed to me is that I could take more of a deliberate kind of scientific approach to it and learn about it So it's, it was definitely an unplanned segue. But after getting into it, it's such a, it's such an unusual industry that there's just not a lot of people that, that know a lot about it. And it just kind of kept me engaged. And there's always something that's changing as well, which keeps it interesting and fresh also.

Serena:

Yeah. That's one of the things that I think scares a lot of people is how much it changes.

Brian Greer:

Absolutely.

Serena:

So tax partners from there, Give us the, the write down.

Brian Greer:

So TaxPartner, as I mentioned, was focused in the sales tax outsourcing industry as well. So it was started in the late 90s. I joined in 2001. And then in 2005, it was acquired by Thomson Reuters. So, I made the move with that acquisition. I ended up staying on board with, with TR doing the same thing, selling the sales tax compliance services for a period of about five years. And during that time period, the founder of now TaxConnects, where I am today Robert was one of the original guys, Robert Dumas. He was one of the original guys at TaxPartners. So after the acquisition by TR, Robert started TaxConnects in 2006. He had some non competes there for a little bit of time and couldn't do the compliance work and was focused on consulting activities, but eventually he brought myself on and a couple of other people from our previous business. So we kind of got the band back together at TaxConnects. And so I joined here in 2010 really heading up sales and marketing. And so we've grown the business since then. if you've paid much attention to sales tax in the last six years, you know, when, when we were running the business in 2010 this is another interesting story. It was, it was a tough slog. If for anyone that started their own business while I didn't start TaxConnects, it was still in its infancy when I joined. And. Another example of things were not going well. I was ready to something different. And all of a sudden somewhat out of the blue Thompson Reuters decided to, that they no longer wanted to be in the sales tax compliance outsourcing business, and they sold our old business to KPMG in 2012. And as soon as that happened, A lot of these clients that we had relationships with previously just started calling us and wanted us to do their sales tax work. And it was almost overnight we went from not having a business to having a very good business. And then what happened with Wayfair in 2018 really kind of amplified that again. You know, we were really growing the business kind of as a lifestyle business for, you know, that 2012 through 2018 time period. And then Wayfair happened and kind of all hell broke loose. And now there's all these questions and all these opportunities for us. So a lot of. Unusual events that happen that have kind of lined up to get us to where we are today.

Serena:

Yeah. It's always a right time and the right place coupled with just being ready. Right. Yeah. So

Brian Greer:

of those opportunities when they come your way.

Serena:

with Wayfair, obviously your business probably exploded again. Um, because now you have all these people who previously didn't have to worry about other States Nexus. Now they do. And It's a big compliance and administrative burden for a lot of small businesses. And I'm sure anyone listening, if you have e commerce clients or you know, I guess that's the main industry that it affects anyone selling online., I know I come across a lot of bookkeepers that are like, I really want to do, you know, I want to help this client, but I really don't want to deal with sales tax. So this is what you guys do, right? You can jump in and just take on that piece of a client's work.

Brian Greer:

Yeah, exactly. And, and I try to describe this and, and, you know, we've said that sales tax is very complex and maybe this is the science in me that tries to break it down into more manageable steps. And I kind of think about it I call it the three C's. So you've got consulting, calculation, and compliance. So the consulting is really just figuring out what the requirement is. You know, do I have Nexus and do I have to charge sales tax and what am I supposed to do? So we help clients with that aspect of really just identifying. What they need to do from a sales tax perspective and sometimes that also results in some prior exposure, you know, maybe they weren't doing things properly in the past that we help identify and help resolve those types of issues. once you Have a good idea of what you're supposed to do. Now you've got to put a process in place. Now you've got to figure out, well, how am I going to charge sales tax? And so that's the calculation piece of it. And we help companies there. We have software that can plug into an accounting system. There's a lot of options out there. There's Avalara, there's TaxJar. Shopify has a great. capability inside their system to charge the sales tax. And then kind of that third C is the compliance piece of it. So now we've charged the tax, how do we get it remitted to the right jurisdictions, preparing the returns, filing the returns, making sure that we're kind of following the rules on a go forward basis. So we help in all three phases. that process. Maybe some clients don't need all three phases. Maybe they need one or two of them, but, we can help with all, those different areas of sales tax.

Serena:

Do you guys help with the point of you're charging the sales tax, you're collecting it, you're remitting it. Do you go back and reconcile the books to what was remitted and all that as well? Or is that usually something that you partner with a bookkeeper on?

Brian Greer:

Yeah. Yeah. Good question. But we would usually partner with a bookkeeper on that piece of it. So, What I want to do is, is when I get the sales tax information from the client, so we're talking about the preparation and filing of the returns. So there are usually some types of sales tax reports that come out of Shopify or QuickBooks or whatever the platform that's being used. My job, I see it outside of just preparing and filing the returns and making the payments, is to reconcile that tax data to the payment that I'm making. And I provide the reports back to the bookkeeper that says, here are all the payments. that we made. We can even summarize those to maybe simplify the journal entry process on your side, but we don't ever go into the client's accounting system.

Serena:

Okay. Yeah. I find that's a piece that can be challenging for people if they don't have, you know, the, I guess the background or the training. But that's usually where we end up finding, Oh, we weren't, Collecting properly, or there's a broken system, like is not actually charging, but TaxJar is calculating it because they should be charging and, and there's mismatches. So, um,

Brian Greer:

Or maybe you've charged it and it's flowing into the GL and someone's not reconciling that sales tax account and we see all of this tax that was collected but never paid.

Serena:

yeah, absolutely. So let's rewind a little bit for anyone who Is like curious about this process or curious about helping e commerce and they don't want to get in over their heads. So what are some things that people should be knowledgeable and aware of when taking on a client like this? Mm hmm.

Brian Greer:

Yeah, I think from a sales tax perspective, the, the foundation and what you should be aware of. is nexus and might be a scary term. Hopefully we can kind of simplify it here. But nexus is really just the connection that you have with a taxing jurisdiction. Sufficient or a, a strong enough nexus means you're going to have to do something from a sales tax perspective. If you don't have nexus, You don't have to worry about sales tax. That's a good, situation. The two things to think about from a Nexus perspective, though it can be either a physical presence. Or the economic presence and the physical presence is usually boiled down to employees, especially if you're looking at an e commerce business, it's going to be any employees, most e commerce businesses, at least a lot of them that we work with, they don't have inventory, you know, maybe they're working with a drop shipper. But if you do have your own inventory sitting in a warehouse, even if it's not your warehouse. That's something to be aware of that can create the physical presence for you. That should kind of raise a question in your mind. Should we be doing something? But the one that really, I think affects the e commerce brands more than others is the economic presence. And that's based on the Wayfair decision that we referenced earlier in our conversation. Um, Where there was a court challenge between South Dakota and Wayfair and a few other large online retailers. And the basic premise was prior to Wayfair, if I can certainly remember buying items online and not having to pay sales tax, right? And it's like, cool, I can buy this TV or whatever, and I can save 8%. That's the issue that the States were wrestling with is that all of these businesses. We're starting to buy online and the states were losing revenue. Now, as a sidebar, I'm supposed to report use tax on those purchases, even though that vendor didn't charge me the proper sales tax. And we all have that obligation. Individually to report use tax. The issue is that individuals don't do that. States can't audit the individuals. So the state started to really look at and focus on the businesses and what the conclusion was, or what Wayfair basically said is that I don't care if you have a physical presence, you're selling enough into my state and you're taking advantage of accessing. My residents and using the roads to deliver products to people in my state. You should have the same sales tax requirements as an in house or an in state company would. So that's where this whole economic nexus thing came about. And the easiest way to think about it there are layers, but the easiest thing is if you've got a client that has a hundred thousand dollars of sales. Into any individual state. That's the red flag for you. That's where most of those Nexus thresholds are established are 100, 000. There's also 200 transactions. see a lot of those are going away because what we've seen, Serena, is that you've got maybe someone that has 200 transactions, but they're 5

Serena:

Yep.

Brian Greer:

and I got 1, 000 in revenue. This economic nexus and Wayfair was never meant to put the sales tax burden on that company that has 1, 000 of sales into a state. So, You're seeing a lot of those 200 transaction count thresholds go away and being more of a revenue threshold. So I always say, look periodically, absolutely, at least yearly. Do any of your clients have at least a hundred thousand dollars sourced into any individual state? If so, that's a red flag that you need to take a look at.

Serena:

Yeah. Yep. that's the story with my e commerce clients. They're not huge, but they have Nexus in 15 states because of the transaction thresholds. Um, so yeah, looking forward for that. To more of those going away. So the other thing that happens when you end up with that situation is some states, you now need to apportion that income for income tax. Is that something that you guys help with? Or do you recommend outsourcing that to a tax preparer who is knowledgeable about income

Brian Greer:

It is an area that we don't get into ourselves but we would partner with whomever would have that, you know, that income tax knowledge to see if that's a requirement as well. Because a lot of times when you do the registration for sales tax purposes, there's going to be some questions in there about income tax as well. So we want to make sure we've got the right answer there if we are doing a sales tax registration. So we would just partner with the CPA firm or whoever it is that's doing the income tax filings for that business.

Serena:

Yeah. I've found that it's usually only the larger firms, regional and larger local firms that have the staff and the knowledge for those types of situations. So if you're listening and you have a client that has sales tax nexus in a lot of different States and they're making millions in revenue, you should raise that question with their tax repair for sure.

Brian Greer:

Definitely. do think as, you know, as we're looking at this, this may be obvious, but there's always an element of risk versus cost. So, Suri, you referenced some clients of yours that maybe they're over the transaction threshold. And we see this often, where a client might have three or four hundred transactions, but maybe they only have ten thousand dollars or even twenty thousand dollars of sales. Well, how much is it going to cost to set up that process, to charge the tax, to report the tax, and now maybe you've got an income tax filing obligation? We don't want to be in a scenario where we're paying more to be compliant than we have from a risk perspective. So, you know, if my fees are a thousand dollars and there's a hundred dollars of risk, it doesn't make sense, right? You're better off just to carry that risk and monitor it. And then when it gets to a point where it starts to be more material, then do something, then act on it at that point.

Serena:

yeah, that's the stance that we tend to take when they barely hit the threshold. And that's also the stance that we tend to take with our clients because they end up with digital goods sales tax. A lot of states are implementing that. And. That is also a thing that's everywhere else in the world and some of those thresholds are like one transaction and That opens a whole different can of worms when you have to start filing VAT in other countries Is that something that you guys assist with?

Brian Greer:

We do a little bit outside the U. S., primarily in Canada. I can file some VAT returns, but I'm not a good advisor from a VAT perspective. What is interesting, though, is if you do happen to have an international business or company that is now selling into the U. S. and is using your services, Those foreign based businesses are way more conservative with U. S. tax law than a U. S. based business. They'll often take that approach of, don't want to play this game of having any risk. I just want to do what the law says. And if it costs me money, then I'm good with that. And it's a little bit of a different mindset and attitude than we see with a lot of us businesses where they're, you know, they're, they're fine carrying that risk, whereas the foreign businesses. And I think it's, I think it's the way the VAT system has worked that you have to be a registered VAT payer in order to take advantage of some of the input tax credits and to get. basically the credit for what you've paid when you've purchased goods, you don't have the resale exemption certificates like we have, they've got the input credits. And so to take advantage of that, you've got to be registered and that's not the case in the U. S.

Serena:

Yeah, they also have just a totally different Mindset around working with an accountant, like in other countries, that's the first thing that they do when they open a business. It's just a thing that happens over there. It's not a thing that happens here. Unfortunately, It's just not in the culture

Brian Greer:

let's start the business. Let's get some sales going. And then

Serena:

and then worry

Brian Greer:

up. Exactly.

Serena:

But yeah, out there, it's like, you have to have an accountant to help you establish all of these things. So that's the first thing that they do is set up, uh, an accounting system, hire an accountant, and they're involved from day one, whereas out here it's just unfortunately not how it works usually.

Brian Greer:

Exactly.

Serena:

in the interest of time what are some of the, I know when we talked before, I want to make sure we cover this in the interview because when we talked before we scheduled the interview, we were talking about the other aspect of tax connects and the opportunity for either contracting or being employed with

Brian Greer:

Part part during.

Serena:

a good, yeah, partnering and who's a good fit for that. So I definitely want to touch on that. Can you give us kind of the rundown of how your business is structured and who you have working on these various projects?

Brian Greer:

Sure, sure. So we, we have. In the business, a total of about 120 people. And I don't say employees because we have about 45, 50 employees and 60 or 65 contractors and those contractors, tend to be the individuals that engage on a recurring basis to prepare and file returns for our clients. Now we have some of those practitioners you know, some of those contractors have bookkeeping services as well. So there's an opportunity to Be a practitioner and prepare and file the sales tax returns, maybe as part of a larger overall service that you're offering. And we have other bookkeeping partners that resell our service. So essentially the bookkeeper contracts with the client to deliver the service and it gets subcontracted out to TaxConnects. We're known to the client. It's just an opportunity for the bookkeeper to maintain the relationship. You know, have some margin from a billing perspective, you know, my wholesale rate versus the retail rate that they might charge the end user. And referrals as well. We work with a lot of companies that they just want to make sure that their client's taken care of and they don't want to be in the middle of it. And so we have those programs as well, just from a referral perspective.

Serena:

That's awesome. If someone's listening and they want to become part of any three of those ways working with you, what's the best way to go about that?

Brian Greer:

The easiest way is just to reach out to me and I'll make sure you get to the right people. If it's a. Referral, reseller type of discussion. That's going to be me. if it's a practitioner discussion my partner, Jackie Brider would probably speak that individual.

Serena:

awesome. We will link your information in the show notes so that everyone can go there to link up with you and get to the right place. Yeah, I had, I originally found, I feel like I need to give this background. I probably should have done it at the top of the episode, but I originally found you guys because I was cramming for CPE at the end of last year and I have the earmark subscription. So CPE credits, there's a certain number of them that have to be in the accounting or tax category. And so when I get towards the end of the year, I want to make sure I've hit that number. And so I filter in earmark for accounting and tax and you guys had, I don't know, maybe five or six. Webinars that were recorded on there. and that's how I found you. And I was like, well, this is information that, you know, I, I love to nerd out on. It's interesting to me. I wanted to make sure that I'm catching everything that I need to know about sales tax and I had been looking for. A company that I could refer people to other than the big like Avalara, and TaxJar and stuff like that, because I work with TaxJar, but as far as like the consulting piece goes and all of that, I was like, I want to be able to give people. Other resources to bookkeepers and clients alike. So it worked out perfectly. I reached out to you and said, Hey,

Brian Greer:

And here we

Serena:

would you come on the podcast? Um, and also would be interested in partnering as well. So thank you so much for coming on the podcast today and sharing. If you are interested in listening to those other webinars, if you're a listener You can find them on the Earmark app. I will also link that in the show notes. Before we close out, do you have any other words of wisdom or pieces of advice for bookkeeping firm owners?

Brian Greer:

specific to sales tax. I, you know, I kind of touched on it initially, but my biggest advice is know where your client is selling. And if they have 100, 000 in any state, red flag goes off, reach out to me, we can look at it, see if there's an issue or not. That would be one piece of advice. And then also, again, kind of summary, talked about it, initially as well. I love the idea of finding a specialty and maybe having a specialty in an industry that you can really, Separate and differentiate yourself with your services from your competition.

Serena:

Yeah, absolutely. I'm always preaching that. Oh, wonderful. So what's the best place for people to connect with you if they're listening in the car and driving?

Brian Greer:

Sure so LinkedIn Brian Greer, I'm sure you're going to have my information somewhere, but LinkedIn got a lot of connections there, try to disseminate a lot of information, certainly when we're doing the CPE. Courses and webinars we'll post those and I'll, I'll reshare those as well. And also if you just want to subscribe to our, our blog at taxconnects. com, we really try to focus on providing content and education. It's a big, piece of, what we're here to do. So I think signing up for that, um, that newsletter, and that blog, would be a good place to start as well.

Serena:

absolutely. Well, thank you again so much for your time. And, if you enjoyed this episode, make sure you reach out to Brian on LinkedIn, connect with him and thank you so much.

Brian Greer:

Yeah. Thank you, Serena. Appreciate it. We'll talk soon.

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