With a GDP nudging $US30 trillion and home to more than 335 million people, the United States is the ne plus ultra of commercial markets.
And it can be a tough one to crack, particularly for overseas upstarts with miniscule mind and market share across the Pacific. To paraphrase New York, New York, Frank Sinatra’s enduring anthem to the Big Apple, ‘if you can make it there, you can make it anywhere’.
Yet make it many Australian businesses can and have. From innovative IT vendors such as Canva and Atlassian to iconic clothing manufacturers like Ugg and Zimmermann, savvy local operations with a world class offering have survived and thrived in the US.
It’s up to you…to be well prepared
If you aspire to join them, it pays to get your ducks in a row first. Whether you plan to sell your products and services online, via bricks and mortar outlets or a combination of both, you’ll need much more than merely a quality offering.
Marketing, pricing, distribution and aftersales support all need to be sorted, and sorted well. Americans set the bar high when it comes to customer experience – after all, they pretty much invented the concept! – and Aussie upstarts will be given no quarter, by exacting consumers or commercial buyers.
Getting a handle on compliance complexity
It’s also expected you’ll register your enterprise correctly and start collecting the right government fees and charges from day one.
How hard can it be, you may ask? The answer to this question is ‘extremely’, particularly for Australian business folk whose experience of sales tax is confined to navigating our country’s extraordinarily simple 10 per cent GST.
Start gaining traction stateside and the term ‘economic nexus’ will quickly need to find its way into your working vocabulary. In the US, it’s used to refer to a seller’s liability to collect sales tax in a state once a set number of transactions, or a revenue threshold, is reached. It applies irrespective of whether you’re selling online from Australia or via an on-the-ground outlet.
Trouble is, there are more than 13,000 sales and use tax jurisdictions in the US alone, across 50 states, along with different laws for remote sellers in some states. Add to that the fact that many U.S. states require remote sellers to register for a sales tax permit before making sales into their jurisdiction, and there’s an additional fee that some states require sellers to apply to orders containing items of personal property that are delivered by vehicle – and you’ve got yourself a web of compliance complexity to untangle whilst growing your business.
She won’t be right, mate
Alas, there’s no leniency extended to out-of-towners by the state and local authorities charged with administering this extraordinarily complex array of taxes. Some tax administrations take a highly proactive approach to compliance, employing teams of auditors to investigate businesses that operate in, or advertise in, their state.
Get your figures wrong early on, or at any stage, and you might all-too-soon learn that making good on your mistakes can be time consuming, expensive and an unwanted distraction from your main game.
This is where automated tax compliance technology has a vital role to play. It’s designed to help growing businesses start selling in the US by simplifying and streamlining all the tasks associated with tax compliance. These include registration, licensing, calculation, document management, reporting, cross-border compliance and e-invoicing.
Once it’s implemented, you’ll be able to calculate indirect taxes in real time, including the applicable sales tax in all 13,000 of those aforementioned jurisdictions.
Establishing a solid foundation for US success
If you’ve developed a unique value proposition and an offering that’s the equal of anything your overseas competitors have created, launching in the US is a singular way to supercharge your growth.
Making a go of it takes determination, resilience and meticulous planning, and you’ll up your chances of success by putting the right back-office infrastructure in place before you commence.
Adding an automated tax compliance platform to your tech stack, integrated with your accounting or ERP software, will allow you to start selling to US customers with confidence, secure in the knowledge there’ll be no nasty surprises when it comes time to start lodging returns.
If making it over there is your end game, it’s an investment you can’t afford not to make.
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Run afoul of the country’s complex sales tax regime and your dream of cracking the American market could all too quickly turn into a nightmare Expert, Tax Dynamic Business
