Fintech Zamp helps online sellers manage sales tax compliance
- Zamp is a startup that helps online sellers with sales tax compliance.
- Sales tax compliance laws are complex and constantly changing.
- “They just want to know it’s being done right,” Zamp’s CEO and co-founder told Insider.
Most people think of sales tax as a couple of dollars on the grocery receipt, but for the merchant, managing those dollars on each individual product is more complicated.
Zamp is aimed at helping online sellers of all sizes manage sales tax compliance. The fintech startup, which was founded by Edward Lando and Rohit Bhadange, launched on May 10.
Businesses must report and submit the sales tax they charge on their products to the state Department of Revenue, but the rules and regulations for doing so vary at the local level and are constantly changing.
“Customers don’t like sales tax,” Bhadange said, referring to the businesses Zamp works with. “They don’t want to learn VAT, but they want to be sure it’s being done right by a team that knows what they’re doing and has done it before.”
Zamp announced a $4 million seed round on May 10, with funding from Valor Equity Partners, Soma Capital, Day One Ventures and angel investors, among others. Bhadange declined to share the startup’s current valuation.
“Because this is such a wide-ranging problem, it’s not always the first two things companies always talk about, but it’s always the third or fourth thing,” Bhadange said. “It’s enough of a problem that investors are well aware of the gaps today because many of their portfolio companies are online sellers.”
Sales tax is a pain
Sales tax compliance is complicated by laws that require an outside seller to report and file sales tax when they meet a set level of sales or number of transactions in said state. These laws came about as a result of the 2018 Supreme Court case in South Dakota v. Wayfair, Inc.
So it means not only where a company’s employees work and where its inventory is stored, but also where it processes orders.
In addition, sales tax compliance is handled at the state, county, city and district levels, rather than at the federal level. There are over 12,000 different tax jurisdictions in the United States, according to Bhadange. Raising or lowering sales tax is often a political talking point, so rules and regulations are subject to change with changes in government leadership.
Zamp handles all aspects of sales tax compliance for the customer, from reporting and filing to handling notices from the government.
When a Zamp customer reaches the threshold in a state for reporting and filing sales tax, the business is notified by Zamp. They then authorize Zamp to register them for compliance in that state and maintain the account going forward. When the compliance law changes, the startup automatically makes those changes to the account as well.
Expand the team and expand to new customers
Bhadange considers market leaders Avalara, TaxJar (which was acquired by Stripe in April 2021) and Vertex as Zamp’s competition.
Unlike its competitors, Zamp is fully automated and charges an annual software-as-a-service fee based on the client’s complexity, which is determined by the number of transactions the business makes in a year and the number of states the business reaches. the turnover tax limit i.
The startup currently has around a dozen clients, including digital services companies, consumer package companies and food companies.
Zamp is a team of 15 people, including early employees of Avalara and TaxJar. Looking ahead, Bhadange wants to expand the team as well as support customers who sell internationally. Currently, Zamp only serves customers who sell in the US.
“At Zamp, we eliminate the concept of self-management and go to a third party,” Bhadange said. “Customers are looking for one provider for their end-to-end compliance, and frankly, the market hasn’t really given them that.”
“We provide them with the technology and automation with the tailored guidance and support that customers are looking for in a streamlined managed solution,” he added.