Customer story

Arlen Ness Motorcycles leans into sales tax automation

Avalara allows iconic customizer to reduce compliance risks and costs

Results

Cost savings
Integrated systems
Improved processes
Tax expertise

Summary

Results

  • Cost savings
  • Integrated systems
  • Improved processes
  • Tax expertise
  • Increased compliance

Tax challenges

  • Tax complexity
  • Compliance risk
  • Company growth
  • Process inefficiency

Products used

Avalara AvaTax
Dynamically delivers sales and use tax calculations, based on the latest rules and rates in our tax engine, to a shopping cart or invoicing system at the time of purchase.

Avalara Returns
Automatically gathers data from AvaTax to prepare and file sales and use tax returns and remit payments across multiple jurisdictions every filing cycle.

Avalara CertCapture helps businesses collect, store, track, and utilize exemption certificates.

Avalara SST


Benefits

  • Cost savings
  • Integrated systems
  • Improved processes
  • Tax expertise
  • Increased compliance

Company overview


Customer
Arlen Ness

Industry
Manufacturing

Tax type
Sales and use

Integrations
Shopify Plus
Sage 100 

Starting out of his garage in the 1960s with money he earned as a semi-professional bowler, Arlen Ness bought his first Harley-Davidson motorcycle. Armed with only a spray gun and a dream, he created his first chopper. That chopper launched a customizing career that, in turn, helped launch an entire industry. Today, Arlen Ness Motorcycles is an international brand sold in every continent of the world.

Tax challenges


John Kallas, who has a passion for motorcycles himself, came out of retirement to become the chief financial officer for Arlen Ness Motorcycles. “At the time, the company was trying to do sales tax on its own,” he says. “We filed manually and managed all the different counties and cities, updating the tables in our ERP as the various jurisdictions would update their tax tables.”

John felt that the manual approach, aside from being inefficient, was just too risky. “Then came the South Dakota v. Wayfair decision, and that changed everything for us,” he recalls. Arlen Ness Motorcycles is based in California but was registered in South Dakota and Florida because “those are two large states that have large motorcycle rallies,” he explains. “That tax scenario got too overwhelming.”

Adding to the complexity, about 70% of the company’s business is sales tax exempt — and again, the process for managing exemption certificates was entirely manual. “We called it the binder approach,” John laughs. “Nobody had the time to go through binders that were three, four inches thick and went back years and years. A lot of times, we had to pick up the sales tax amount if we did the calculation wrong or the customer was no longer exempt. We were spending thousands of dollars of our own money to cover that sales tax exposure.”

Why Avalara?


Not long after the Supreme Court handed down the Wayfair decision in June 2018, John attended an Avalara webinar covering its impact. “That scared us enough to look for an automated solution,” he says.

“We looked for a product that would be compatible with Shopify and compatible with Sage 100,” John adds. “That’s one of the main reasons why we went with Avalara AvaTax. And then we started doing our due diligence on the product and learned about Avalara CertCapture for exemption certificates. We signed up for that too.”

Integration


After attending to some data hygiene issues, John reports that the integration with Shopify Plus and Sage 100 went smoothly. “We stayed late one evening with an implementation specialist who logged into our system and helped us with the initial settings in our ERP environment,” he explains. “After that, it felt seamless.”

Customer
Arlen Ness

Industry
Manufacturing

Tax type
Sales and use

Integration
Shopify Plus
Sage 100 

Tax challenges

  • Tax complexity
  • Compliance risk
  • Company growth
  • Process inefficiency

 


Products used

Avalara AvaTax
Dynamically delivers sales and use tax calculations, based on the latest rules and rates in our tax engine, to a shopping cart or invoicing system at the time of purchase.

Avalara Returns
Automatically gathers data from Avalara AvaTax to prepare and file sales and use tax returns and remit payments across multiple jurisdictions every filing cycle.

Avalara CertCapture helps businesses collect, store, track, and utilize exemption certificates.

Avalara SST


Benefits

  • Cost savings
  • Integrated systems
  • Improved processes
  • Tax expertise
  • Increased compliance

 


Industry type

Manufacturing
Meet customer needs and improve compliance when you’re collecting sales tax or exemption certificates.

“We’re reducing our compliance risk at very little cost. If we tried to do this all manually, it would be too overwhelming for us to understand all the nuances of every state.”

John Kalles
 CFO

“We’re reducing our compliance risk at very little cost. If we tried to do this all manually, it would be too overwhelming for us to understand all the nuances of every state.”

John Kalles
CFO

Results


While Arlen Ness Motorcycles is one of the most recognized brands in the world, its staff runs very lean. The old manual approach would not have scaled to the company’s current nexus footprint of 14 states and growing. “Even as we’ve grown, we’ve been able to reduce hundreds of hours that were devoted to sales tax processing,” says John.

John also credits sales tax automation with helping accelerate that growth while lowering registration costs. “Avalara is a SST-certified provider, and that made a big difference to us,” he says. “We’re in 15 states now, and 10 of them are SST states, so we’re reducing our compliance risk at very little cost. If we tried to do this manually, it would be too overwhelming for us to understand all the nuances of every state.”

Keeping risk exposure in check is another chief priority for John as the company grows. “Avalara’s ability to help us be proactive is a big plus,” he says. “I can go right to that dashboard and see whether a particular state’s color-code has a warning that we’re approaching a nexus threshold. Many of the states now have changed their laws and put the burden on individual staff members, not only on officers of the company, to file taxes correctly. It’s nice to be able to sleep at night and not have to worry about the risk profile for individuals or the company as a whole.”

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