Podcast Episode: How Startups Can Avoid Sales and Use Tax Missteps

As startups grow and expand, they must comply with state tax laws. That challenge can be a major stumbling block for companies, particularly in the SaaS space. If it is managed properly, taxation can be an advantage. However, if a company lacks proper expertise, tax laws can be a disadvantage or even a danger, which is why tax experts are so crucial for startups.

In this episode of the Extraordinary Pursuits podcast from BIP Ventures, Stephen Bradshaw joins Mike Vandiver to discuss key tax considerations for startups. They identify ways to identify when goods or services are taxable, how to analyze risk exposure to sales tax, mitigate or minimize the sales tax burden, and how to handle tax compliance if you are a scaling startup without a dedicated tax team. Stephen also shares expert guidance to software companies on sales and use tax matters.

Timestamps:

• [01:42] Stephen Bradshaw's insights on how to determine whether your services are taxable 
• [09:19] The process of understanding your level of risk exposure and compliance
• [14:50] Negotiating voluntary disclosure agreements, time and cost
• [18:43] Ways to minimize or mitigate sales tax exposure
• [25:04] Best practices for scaling startups who cannot afford to hire a sales tax team or staff
• [28:35] Instances where startups can put a hold on sales taxes

Points of Wisdom:

• ‍‍"If your product or services are simple, such as a Saas company, it is recommended to work with an advisor to help you figure out the right categorization of your products for taxation purposes."- Stephen Bradshaw [04:35]
• "Getting a tax exemption certificate is a great way to mitigate prior expenses."- Stephen Bradshaw [21:01]

About Stephen Bradshaw:‍

Stephen Bradshaw is a partner at Bennett Thrasher specializing in State and Local Tax, and a frequent speaker on the topic. His focus includes conducting nexus studies, advising on tax categorizations, negotiating voluntary disclosure agreements, preparing for diligence processes, and establishing best-practice procedures for automated sales tax software like Avalara. Stephen's insights have been featured in prestigious publications such as the Atlanta Business Chronicle, Accounting Today, Thompson Reuters, and the Georgia Society of CPAs. Before joining Bennett Thrasher, he spent five years at Deloitte Tax, LLP in the Multistate Tax Services division, providing state income/franchise tax consulting, compliance, and ASC 740 (provision) services to major corporate clients.