Beautylish Grows From Managing 1 State’s Sales Tax, to 3 States, to 42 States

In its first four years, California-based Beautylish grew from a community of makeup enthusiasts to an online retailer of unique, international, and hard-to-find cosmetics and beauty products. But by 2014 it became clear that the company needed help with a tricky situation many ecommerce businesses encounter: calculating sales tax in their custom-built shopping cart and automating filing complicated sales tax returns.

Beautylish chose TaxJar as their sales tax software solution.

Six years later, Beautylish now has offices and inventory centers across the US, has reached economic nexus in 42 states, and has stayed compliant every step of the way with TaxJar.

The complexity of California sales tax

As soon as Beautylish started selling products online, Vu Nguyen, Co-founder and Chief Operating Officer of Beautylish, managed all-things sales tax. At first, he filed manually online where the business is based in California, but he quickly ran into obstacles.

“One of the things we had to deal with early on was California sales tax,” Vu said. “Honestly, relative to other states, it’s a bit more complicated.”

What specifically about California sales tax was so difficult? Nguyen shared what his monthly process looked like:

“You can’t upload a spreadsheet. There’s a web form with 200 text fields that you have to enter in the amount you sold to each county. Each one has a slightly different tax rate. And the tax rate is based off of where you’re shipping it to, not necessarily where you’re based. That complexity alone is what led me to look for a solution.”

Switching to a simple sales tax solution

Vu filed manually for at least two years but ultimately decided it was critical to the business to find an automated sales tax solution.

“The first solution we tried wasn’t well suited for us as an online retailer,” Vu said. “We just needed a simple solution. But there was a lot of heavy lifting to get that up and running. Plus, we didn’t get a lot of support, and we could never get it integrated into our website.”

So, in 2014, Vu switched to TaxJar and never looked back. The main difference between TaxJar and his previous provider was the simplicity of the API. In fact, the Beautylish development team implemented the TaxJar API into their custom-built eCommerce platform in just one sprint.

“TaxJar is a REST API, so it’s a very simple integration,” said Vu. “You put anything in, and it just gives you a tax rate, which is all we wanted. I could understand very quickly that the [platform/solution] was simple enough for us. And that simplicity is what I liked the most about TaxJar.”

Vu continued: “Having visibility into the integration from a technical perspective was high on our list of priorities. TaxJar has their API publicly documented, so any developer can go look at it. And it’s gotten better over time, especially the ability to sandbox and test certain parts out.”

As a result, Vu reported that there has been no downtime with the API in memory, even at their peak shopping times, when they process about 800 transactions a second.

Saving four hours per return with AutoFile in 42 states

Beautylish’s growth was exponential. They went from shipping within one state in 2014 to having economic nexus in 42 states just SIX years later! That means their sales tax requirements became exponentially more complex, too.

But it’s not the only thing that changed for Beautylish. The case South Dakota vs Wayfair changed a lot, too. “Everything was simple before Wayfair,” Vu said. “We did a nexus test in 2018, and at the time, we had nexus in 30 states. That’s 30 registrations. Some states do tax shipping, some states don’t tax shipping. There’s a lot of complexity state by state, especially tracking things like refunds. We didn’t have full teams to file sales tax, so we had to automate as much as we could.”

Autofile streamlined sales tax filing which saved Vu up to four hours per return when he had to do it manually. Now, in 2020, his team automates sales tax in 42 states.

“I don’t think there’s a way we can manually remit monthly or quarterly, and keep track of it all ourselves. Now, we do AutoFile for every state we can. We will do it manually if we have to, for the first month for example, but our goal is to get the state on AutoFile as soon as possible to save time.”

As Beautylish’s business continues to develop, they can count on TaxJar to grow with them.

“TaxJar continues to evolve its product so much, like adding the Economic Nexus Insights tool. Rather than us having to keep an eye on it, we can periodically run the nexus checker to see if we’ve passed certain thresholds in certain states. That’s been really helpful for us as a resource to audit how we’re doing.”

An extension of their team

Beautylish has been impressed with TaxJar’s evolution over the years. Not only has TaxJar grown its service line to address more of their business needs, we’ve also grown to be part of their team.

“The folks are knowledgeable and responsive. You actually have human contact, even with developer responses, and you don’t usually get that.”

As a result, Vu has been able to save on hiring a full-time sales tax accountant.

“Not having to file manually in 42 states, that’s where we save a lot of time. We save money by not having to hire a full-time sales tax person.”

Beautylish’s advice for other eCommerce companies

For Vu’s advice for other eCommerce companies is simple: When it comes to managing sales tax compliance, "Don't do it manually."

“Find a solution that is improving and responsive and adaptive to the sales tax laws as they're coming online. They're changing very rapidly, even quicker than some of the states and legislation can adapt. That's why it's important to find an honest solution that helps you keep abreast of those things, so you don’t even have to think about it.”