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Sales Tax Nexus: How States are Closing the eCommerce Loophole

Once upon a time, retailers didn’t have to collect or remit sales tax on merchandise sold to out-of-state customers. Period. But with the phenomenal growth of online shopping over the last couple of decades, states realized they were missing a huge revenue opportunity. And so sales tax nexus was born.

The nexus concept basically says that if you have significant business connections within a state, you are obligated to abide by its sales tax laws. Although they vary from state to state, here are some of the most common factors:

  • Your location — headquarters, branches, stores, warehouses, other real estates
  • Drop shipper or distributor location
  • Employee location — sales reps, delivery people, contractors
  • Advertising and referral services location — including click-through advertising
  • Economic nexus — exceeding a total sales dollar amount and/or number of transactions within the state
  • Regular event attendance — trade shows, consumer fairs

To make things even trickier, states continue to expand their remote seller nexus rules, necessitating that you check regularly for the latest requirements.

eCommerce giants like Amazon have found it easier to simply register in every state as a preemptive strike against future regulatory and compliance hassles. For smaller businesses, this may not be a cost-effective solution. So how can you bullet-proof your sales tax strategy?

Read the rules.

Check with the taxing authority in each state where you think you might have nexus, and register for a sales tax permit when/as required. Also, you will be collecting tax based not on your home state’s rules, but on those of each state. So you need to know percentage rates, whether or not shipping charges are taxable, what classifications of merchandise are exempt, remittance due dates, etc.

Make sure you’re collecting tax on all channels.

For example, you may already be set up to collect sales tax on your own site. But if you start selling through Amazon’s FBA program, you may need to set up for some new states where Amazon is storing your inventory.

Notify the state when you no longer have nexus there.

Maybe you’ve moved your headquarters, or terminated your relationship with a distributor. Call or write the state’s department of revenue so they can update their records before the next return is due. Also, be aware that some states have “trailing nexus” that lasts for up to a year after your nexus in the state ends; you may have to file another return even if it’s for zero dollars.

Automate the process.

Good software makes compliance a breeze. Sales tax registration, returns, remittance, due date notifications, regulation updates, reporting tools and records maintenance, all done in just a few clicks, are some of the ways it can save you much time and effort.

Over the next few years, we expect that states will continue to close loopholes and challenge old legislation. Staying current will be the key to minimizing the time you spend on sales tax collecting, reporting, and remitting. And having the right processes and tools in place will be more important than ever.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

7 Time Savers for Service Retailers

If you’re a retailer with a service offering, there might be nothing more valuable than your time. So whether you run a salon, gym, or dry cleaning business – If you feel like there just aren’t enough hours in the day, read on.

Here are seven time-saving tips so you can spend more of your valuable time with customers and grow your business.

1. Track it

The best way to know where you need to save the most time is by taking a brutally honest look at how you spend it. A few minutes checking email here, a few more looking up at the ceiling there – before you know it, precious hours have gone by. A simple notebook or free time tracking app can help you get a real handle on your time management before the day gets away from you.

2. Let go

As a business owner or manager, there are areas of your work you’re very proud of and probably can’t imaging handing off to someone else. But one of the most important aspects of leadership is delegating tasks to others. Not only will it free up your time to focus on the bigger picture, but it will give team members you see potential in the chance to develop and grow.

3. Outsource the non-essentials

Look hard at the areas of your business you struggle with or that take up more time than they should. If there isn’t a dedicated person on staff to handle them, outsource it. With Xendoo’s bookkeeping services, you can spend less time crunching numbers and use that data to make decisions to help you grow.

4. Get your head in the clouds

Do you have business files and data spread across offices and computers? By consolidating everything into one place and using cloud storage like Google or Dropbox, you save time wasted searching for info and can access it from anywhere. You can even manage permissions so different team members have access to only what they need.

5. Join us in the 21st century

After you get all your data loaded in the cloud, look at updating your company’s software and technology. If you’re using outdated POS software or equipment that is slow or fails, you could be wasting valuable time. Fortunately, there are dozens of free and affordable options that make this easy to do.

6. Make your space work for you

Whether in your back office or at cash out, having everything needed to get a single job done in one place helps the task go smoother and faster. That might mean an initial investment in more equipment, but your newfound efficiency will pay off in the long run.

7. Don’t be afraid to automate

From communications to billing and invoicing, is there an aspect of your business you can automate to save time? We’re not talking robots to offer your services, but administrative tasks that can be automated without sacrificing any part of your customers’ experience. Xendoo’s…. (not sure what services Xendoo offers in this area?)

Don’t delay when it comes to making your business more efficient…the clock is ticking!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

4 Ways for Retailers to Stay Out of the Cash Flow Black Hole

A potential pitfall for any retailer is the time gap between paying the manufacturer for the merchandise you sell and getting paid for it by the customers you sell it to. When that interval lasts too long, cash on hand becomes all too scarce. Here are four smart strategies for staying out of the hole.

Streamline your inventory.

If you have merchandise that sits on the shelf for more than 30 days, you have too much inventory. That means too much of your money is tied up on those shelves. A couple of streamlining tips:

  • Track your sell-through for each SKU, so you know which ones need to be reordered more quickly and which should be discontinued.
  • Don’t be tempted by bulk discount offers from your suppliers unless you have proof positive that those items will sell quickly.

Increase customer spending.

When your revenue per customer goes up, so does your available cash. There are many ways to encourage customers to buy more than they originally planned, including:

  • PWPs and BOGOs. “Buy this camera and get 20% off a camera bag” or “Buy 1 pair of sneakers, get another pair at 50% off.”
  • Upsell and cross-sell suggestions. “This TV has even better resolution than the one you’re looking at” or “Would you like the conditioner to go with the shampoo?”
  • Coupons for the next purchase. Include one in the shopping bag or mail/email it to customers who haven’t been in the store for a while.
  • Loyalty rewards for repeat customers. Accumulate shopping points to earn a discount.

Strategize your payables.

Shorten that gap between money going out and money coming in by waiting as long as possible to pay your supplier: 60 days, 90 days, or whatever it says in your contract.

Take advantage of early payment discounts. If you don’t know whether your supplier offers them, ask.

Consider an inventory loan.

If you’re short on cash but need to restock inventory, an inventory loan may be easier to get than a standard bank loan. That’s because lenders will look at your sales history, not just your credit score.

Paper profits may look nice, but good cash flow is the real indicator of a successful business. Being able to maintain it will improve your credibility … and your ability to take your business wherever you want it to go.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Tonight’s Special Is: Sales Tax A How-To Guide for Restaurant Owners

Before we get started, keep in mind that sales tax laws vary by state and municipality. While this guide serves as a general rule of thumb, be sure to check on the specific laws governing your area before making any changes to your restaurant’s operations or accounting.

Restaurant owners face many complicated rules and regulations when it comes to running their business, and sales tax is no exception. This simple guide is designed to help you understand how sales tax works and what you need to do to be prepared and stay compliant.

What is a sales tax?

Sales tax is a consumption tax imposed by Uncle Sam on the sale of goods and services. In other words, it’s a fee the government requires you to pay in order to sell your delicious food.

Sales tax is paid by your customers to you so that you can, in turn, pay this amount to the government every month or quarter. Unlike a federal tax, sales tax is a sort of “pass-through” from your customers to the government.

Does my restaurant have to pay sales tax?

You’re required to pay sales tax if your restaurant has what is known as a “nexus” in a given jurisdiction. So if your restaurant has a physical presence, like a brick-and-mortar location or a food truck, you will definitely be required to pay. If you have a food business that is strictly online, you may not have to but should double-check with your local jurisdiction. Having an employee, an affiliate, or some other type of presence may make you liable to pay.

So when do I pay sales tax exactly?

Think of it this way: your customer is the end-user of the food you sell – after it hits their stomach, it isn’t going anywhere else (sort of). But before it got there, you purchased ingredients from suppliers. The tax was not due at that time, because that was not the end of the food’s journey.

It may seem for a moment like you’re getting a break, but there’s no such thing as a free lunch. You don’t pay taxes on the purchase of food supplies because you will be collecting taxes on the final product. It is your responsibility to correctly calculate the amount of sales tax due by your customers (more on that later) – you’ll be required to pay it whether you remembered to collect it at the time of sale or not.

So it sounds like I’m probably required to pay sales tax…how do I do that?

  1. If you haven’t done so yet, you’ll want to file for a sales tax permit with your local agency. A quick search online should help you find those forms.
  2. Determine your sales tax rate – they vary by state and municipality.
  3. Distinguish between taxable and non-table items in your restaurant – certain carryout items may not be taxable. Be sure to check on the particular laws of your area.
  4. Set up sales tax in your POS – charging customers correctly means you won’t be liable for sales tax payments out of your own pocket

I’m already charging customers sales tax and have collected the funds. What do I do with them?

First, make sure you’ve collected the correct amount of sales tax – because if you don’t, the government sure will!

Tally up the sum total of all taxable items sold in your restaurant during the month.

Multiply that number by your sales tax rate.

For example, your tax rate is 5% and you sold $1,000 in total taxable meals and beverages, the sales taxes due that month is $50. 

The final step is to complete the sales tax forms for your state, due monthly, or quarterly at a minimum. Xendoo’s sales tax experts prepare and file your sales tax accurately and on time so you don’t have to (you probably have a lot on your plate as it is). They also give you plenty of advance notice to ensure you have the funds available for payment.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

5 Ways to Reduce eCommerce Shipping Costs

“Free shipping” — it’s what customers today expect to see when they shop online. So how can an eCommerce seller absorb those shipping costs without wreaking havoc on its profits? You could just raise your prices, but customers won’t like that either. Fortunately, you can change things about the way you ship to minimize the financial impact.

Decide how much you can absorb

You just may not be in a position to pay 100% of the shipping on every single order. But you could still favorably impress customers by offering it on orders over a certain dollar amount. Figure out what that amount is, taking into account average order value, surcharges for weight or size, and so on.

Downsize your packaging

Lose the habit of using the same size box for many different sizes of the product. Smaller boxes cost less to buy. Plus, many carriers calculate their shipping prices based on a combination of size and weight called “dimensional weight,” so a smaller box will cost less to ship even if it weighs the same as a bigger one. To make box selection easy, there is software that will do it for you based on each SKU’s measurements and weight.

Also, are you automatically using bubble wrap for every item, whether it needs it or not? Invest the time to analyze each SKU’s real protection needs, especially those that are already boxed by the manufacturer. Conversely, giving some products more protection can prevent damage in transit and reduce the number of returns.

Choose hybrid shipping options

In hybrid shipping, your carrier (such as FedEx) gets the package from you to its destination city, then hands it over to the U.S. Post Office for local delivery. This enables significant cost savings while keeping the customer happy with your speed and service.

Compare carriers

Look beyond UPS and FedEx. There are many other shipping services out there who can provide better prices and equal if not better service.

Automate shipping processes

Let shipping software save you time, manpower, and money in every step of the fulfillment process, from verifying address accuracy to printing labels to tracking deliveries.

These days, no eCommerce seller can afford to leave its shipping process on autopilot. Look for new solutions and strategies to minimize costs, and keep your net profits right where you want them.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

How Small Retailers Can Win Big Over Mega Stores

Cutthroat prices, huge inventory, massive advertising bucks — a small retailer is bound to feel like David going up against Goliath when competing with the big chains. But, like David, you can win the battle. The trick is to fight it on your ground, not theirs.

Leverage localness

We are located in South Florida and every winter we see our chain store branches offering cold-weather gear, even though it’s rarely needed in our climate. Large national chains are by their nature generic; it’s virtually impossible for them to offer any local flavor. You, on the other hand, can tailor your merchandise mix to the specific tastes and needs of the people in your area.

Stress quality and value

There’s no way you can beat the prices of your big-box competition. So go the opposite route and offer products that are made well and will serve a customer’s needs for years. They cost more but give greater value than an item that fails within a few months of purchase.

Promote uniqueness

Seek out products from smaller manufacturers that won’t be found in big box stores because they can’t meet such large orders. Customers love having alternatives to the mass-produced merchandise that’s the same from one chain to the next.

Help customers find you in local online searches

There’s no way you can top the search engine results page for nationwide searches. But you can use local SEO strategies successfully. They are actually weighted in your favor because Google will penalize any business that sets up multiple website pages for every one of its locations.

  • Create a Google Business page (or check the one you already have for completeness and accuracy)
  • Make sure your location appears on every page of your website
  • Direct inbound traffic from search engines to a location-centric landing page on your website (your address, phone number, store hours, location map)
  • Display links to other local businesses and organizations on your website

Connect with the community

Build customer awareness and loyalty by getting involved with them.

  • Host or participate in community events
  • Contribute to local charities
  • Sponsor a local sports team
  • Form strategic partnerships with complimentary local businesses
  • Invite local social media influencers to visit your store and sample your merchandise

Deliver superior customer service

You have the advantage of one-on-one relationships with your customers, which no big box store can equal. Provide a memorable experience by making them feel recognized, comfortable, and cared for where they shop.

Big stores will always be big players in the retail scene. But small retailers can reach local customers on a level above and beyond what national chains can do. Those are the ones that will survive and thrive.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

7 Steps for Retailers to Reduce Inventory Shrinkage

Inevitably, somewhere between the manufacturer and the cash register, some of your merchandise disappears. Every retailer has this problem; in fact, it adds up to more than $42 billion in annual losses nationwide. The three biggest causes of shrinkage are administrative errors, employee theft, and customer theft. Here’s how to counteract them.

1. Use a good inventory management system.

Wherever human beings are doing the counting, organizing, and recording, errors are sure to happen. Choose software that:

  • Organizes product and vendor information
  • Integrates with your POS system so that inventory data is automatically updated after every transaction
  • Generates accurate purchase orders

2. Tighten up your inventory receiving process.

To minimize mistakes:

  • Cross-check against the PO at the time of delivery
  • Call the vendor within 24 hours to resolve inconsistencies
  • Tag and label merchandise immediately

3. Record sales consistently.

Any currently available POS system will do this automatically.

4. Take physical inventory.

It’s the only way to reveal discrepancies between what your inventory software says you have and what you have. Cross-reference the manual counts against software records to see where shortages are occurring, for example with a particular cash register or employee, or during the same shift and day every week.

5. Train employees in loss prevention.

Letting everyone know that you have a strong plan to stop theft can deter both employees and customers.

6. Improve pre-employment screening.

The reality of retail is that employee turnover is high and company loyalty usually low. Besides, employees have less supervision and easy access to your valuables. Do your due diligence in hiring people with no history of dishonesty, including nationwide criminal background checks and verification that resumes are complete and truthful.

7. Install a security system.

Large, visible cameras act as warnings to thieves to pick an easier target. They also help catch and convict criminals after thefts occur.

Inventory shrinkage is a challenge that will never go away. And that means your efforts towards loss prevention can never stop either. Success lies in ongoing processes and continuous attention to keep your merchandise right where it belongs.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

3 Great Cash Flow Ideas for Retailers

What do a used book store, garden nursery, and boutique clothing shop all have in common?

No, this isn’t the set up to a joke. Unfortunately, all three types of businesses are at risk of failing if their cash flow isn’t in good shape. According to the Small Business Administration, “inadequate cash reserves” is a top reason small businesses close their doors for good.

So whether you sell novels, shovels, or dresses with ruffles — if you’re a retailer, cash flow is king.

What exactly is cash flow?

Think of it like a checking account. Cash flow looks at all the money coming in and out of your business each month. If there’s more coming in than going out, you’re in the green! If you’re spending more than comes in, read on. That means your cash flow is negative and your business could be in trouble

Here are three simple ways to get your cash flowing in the right direction.

1. Bundle products

If you sell several accessories apart from your core offering, try packaging them together with a small discount. This can also be an effective way of clearing out dead stock while creating goodwill with your customers, who feel like they’re walking away with a great deal.

2. Understand the risks of discounting

If you do decide to bundle products or offer another type of sale, make sure you know exactly how that will impact your bottom line. You should know the profit margins on every product you sell and your overall cost basis – it’s the only way to determine if you’ll break even with the sale or take a loss.

3. Encourage repeat business

Offering perks or freebies to returning customers helps create loyalty and makes it easier for them to choose you over other options. Go old school with a punch card, get creative with a contest, or print an offer on receipts that are good for a future purchase.

If you’re struggling to determine the state of your cash flow, it could be time to call in for some backup. With Xendoo’s suite of affordable bookkeeping and consulting services, you’ll be able to spend more time at the “cash-out” bringing the cash.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Getting Back to Basics: 5 customer engagement strategies for health and wellness business owners

Editor’s Note: This post was originally published in January 2017 and has been revamped and updated for accuracy and comprehensiveness. 

In the fitness world, it’s important to tackle the basics before you take on more challenging, complicated exercises. It’s the same in business. Building a strong foundation for your customer engagement strategies will provide you with the tools necessary to take on bigger, more ambitious efforts later on.

What is Customer Engagement?

Customer engagement is every touchpoint your business has with a customer, whether online or off. You can utilize both proactive and reactive customer engagement strategies to engage with your target market. The possibilities here are nearly endless and limited only by your creativity and the resources you have available.

As a franchise owner in the health and fitness space, how you engage with customers can make or break your business. Here are five simple ideas for customer engagement strategies that could help grow your business.

#1 – Keep everything simple

On the customer side, make it easy for them to contact you in a variety of ways. Some people will like to pick up the phone, while others will prefer to send an email. Don’t hide phone numbers or email addresses unless you have a very clear communication strategy pointing them in another direction. Also, make sure your contact info is consistent across all platforms.

Behind the scenes, keeping your business as simple as possible to run will help you save time and put more effort into the things that make you money. If you choose to outsource bookkeeping, for example, you can take that task off your plate and reallocate that time to core duties that will grow your business. These days, there are plenty of affordable bookkeeping services for small businesses, so delegating this piece of the puzzle is quick and easy. 

Three women gym staff members pose with medicine balls.

#2 – Let your staff exercise their voice

Empower your staff to truly serve your customers. When front-line staff, whether in-person or virtual, have the ability to address concerns and make good on mistakes, you decrease the chances of problems escalating and resulting in a bad review online.

It’s important to remember that people like to do business with other people, not cold corporations. If you can help your staff engage with each customer and get to know them personally, that connection will do wonders. Not only is that customer more likely to come back, but they are also more likely to tell friends and family about the great experience they had in your store.

#3 – Get results…and rewards!

One of our best customer loyalty tips is to reward loyal customers with perks and offers that make it easier for them to choose you over other competitors. Think about implementing a rewards program that keeps them coming back time and time again.

The power of offering rewards can be seen over the long run when your past customers continue to stick with your products and services. If they consider making a switch to another business, the loss of potential rewards may be all it takes to keep them in place. There is a momentum associated with accumulating rewards over time, and many customers won’t want to miss out once they’ve gotten started. 

A gym owner deals with a customer issue on the telephone.

#4 – Don’t be afraid of a bit of resistance

No matter how small an issue or how wrong you believe your customer to be, respond to every concern as quickly as possible. Whether the comment came in person, over the phone, via email, or through a scathing review—tackle the issue head-on fast. You’ll save a customer and likely gain more in the process.

To avoid having these responses take up too much of your time, consider establishing a schedule to deal with each concern. For instance, you could set aside a couple of hours each morning to start the day by responding to any complaints that have come in over the last 24 hours. This will ensure that no issue waits too long without a reply, and it will keep the rest of your day open to work on other projects. 

#5 – Keep up your (social) reps

There is no debate about the power and importance of social media in the modern business landscape. Carefully managing your online communities is no longer optional. Make sure you have staff dedicated to monitoring your social media channels and responding to positive and negative feedback. Responsiveness shows onlookers that you care about your customers and will go the extra mile.

To actually drive engagement on social media, it’s important to be as original and creative as possible. If you are simply looking around at other brands in your space and copying their ideas, you’ll never make much of an impact. Think about what it is that makes your brand unique and target those points with your social campaigns. In an extremely crowded digital landscape, you need something different to stand out from the crowd. 

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Selling on Amazon: To FBA or Not to FBA?

Unless you’re living under a rock on the moon, you’re well aware that Amazon is the eCommerce success story of the century — not only for Amazon itself but for thousands of independent sellers who take advantage of its marketing reach and customer confidence. Amazon’s FBA (Fulfillment By Amazon) program goes a step further: it gives smaller eCommerce businesses the clout and convenience of its warehousing, shipping, and customer service facilities.

So if you use FBA, you do less than half the work of the transaction: listing your product on Amazon and getting your merchandise shipped to an Amazon fulfillment center. They take care of the rest: merchandise storage, order processing, picking, packing, shipping, and shipment tracking.

A fundamental decision any third-party seller on Amazon must make is whether to use FBA or its fulfillment facility. Here are some things to consider:

Comparative costs.

Which will be more profitable: paying for your warehousing, packaging materials, and staff to do the picking, packing, and delivery to the shipper; or paying the FBA fee to have Amazon do all that for you?

Amazon makes it easy for you to compare the numbers with this Fulfillment by Amazon Revenue Calculator. Fill in the item price and your costs, then click “Calculate” to see the FBA costs for the same item, and which is your best option in terms of net profit and net margin.

Time investment.

The more you sell, the more time fulfillment takes out of your day. The time that should be spent on management and development, not putting items inboxes. This is often a major roadblock to scaling your business.

Sales tax obligations.

When some or all of your inventory is stored in and shipped from Amazon warehouses, you may be required to collect and remit sales tax in the states where those warehouses are located.

Amazon Prime eligibility.

Only third-party sellers who use FBA are Prime eligible, and many say that this is their number one reason for doing so. When customers see “Fulfilled by Amazon” on the product page, they have confidence that:

  • Their purchase will be delivered in just 2 days
  • They are getting a better deal because shipping is free
  • They will receive excellent shipment tracking and customer service

Even Amazon shoppers who are not Prime members often choose to buy from a seller who is Prime eligible rather than one who isn’t. This gives FBA sellers a huge advantage over those who do their fulfillment.

Each business must weigh the pros and cons of Amazon FBA concerning its needs and goals. But we think that in 99 cases out of 100, the advantages far outweigh the costs. It’s certainly worth a try.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.