Sales Tax In Texas: How Kintsugi Simplifies Complex Tax Regions

Who is Copenhagen Sleep Company?

Copenhagen Sleep Company is a Denmark-based luxury sleepwear brand, renowned for blending comfort with sustainability with their signature SleepCool™ technology, made from eco-friendly eucalyptus fibers that ensures temperature regulation for a superior sleep experience. Their company’s commitment to sustainability has been crucial to building a loyal customer base focused on quality and ethical production​ around the world. Though, international expansion can come at a cost when you factor in staying complaint with sales tax regulations in countries you don’t have a physical presence in.

As they expanded their international sales, managing sales tax compliance across countries became increasingly hard to keep up with. Each market they operated in had different tax regulations and filing requirements, only adding to the administrative challenges they faced. To streamline this process, they chose to work with Kintsugi, for its ability to automate tax calculations, monitor regional tax thresholds, and integrate seamlessly with Shopify. With their software, the Copenhagen Sleep Company could focus on scaling globally while ensuring compliance across the U.S. without the burden of manually tracking and managing their sales tax.

Navigating Sales Tax in Texas is a Pain

As Copenhagen Sleep Company expanded its U.S. operations, managing sales tax in Texas posed a significant challenge. Texas has a state sales tax rate of 6.25%, but local jurisdictions, such as cities and counties, can add up to 2%, bringing the total rate to up to 8.25%. This combination of state and local sale tax regulations made it difficult for them to manually track and apply the correct sales tax rates for each transaction, especially given their growth into new markets. On top of this, Texas imposes economic nexus laws, which require remote sellers that exceed $500,000 in revenue from sales into Texas to register, collect, and remit sales tax, even without a physical presence there.

These requirements presented a layer of complexity, as Copenhagen Sleep Company needed to ensure compliance with both state and local tax laws while monitoring their revenue across different jurisdictions. Handling these obligations manually increased the risk of compliance errors, which could result in liabilities such as fines or penalties for missed filings or incorrect tax calculations. For a fast-growing business like them, the administrative burden of handling sales tax throughout multiple jurisdictions, was becoming unmanageable​. This made finding a reliable, automated solution essential to continuing their business operations.

Kintsugi’s Automated Platform Provided the Solution

The Copenhagen Sleep Company implemented Kintsugi to address the challenges the faced while trying to manage their sales tax compliance in Texas and other states. Kintsugi’s software integrates seamlessly with Shopify, automatically calculating accurate sales tax based on the location of each customer. This is particularly vital for remote sellers like them, who are required to comply with Texas's destination-based tax system. By automating these calculations and tracking sales tax rates across jurisdictions, Kintsugi eliminates the need for manual calculations and reduces the chances of errors that could result in penalties​ (KintsugiAI).

In addition to managing sales tax rates, Kintsugi tracks the company’s economic nexus in every state the operate in, automatically alerting the business when their revenue exceeds sales thresholds that require tax registration. This feature allows them to stay compliant with local regulations as they expand into new markets. The platform also handles filing for both sales tax and use tax, ensuring that all thier tax obligations are met promptly and accurately. With its real-time updates and comprehensive tax management tools, Kintsugi has become a critical partner in maintaining their sales tax compliance as the they scale​ (KintsugiAI).

How Kintsugi Impacted Their Sales Tax Management

• Efficiency: Kintsugi’s automation reduced Copenhagen Sleep Company's sales tax filing process to about 10 minutes per quarter. Their platform handles complex sales tax calculations, which otherwise would take hours to handle manually. This efficiency allows their company to better focus on business development rather than spending time on sales tax compliance.
• Reduced Errors: By avoiding sales tax filing errors, Kintsugi has helped them prevent penalties, which can range from 5% to 25% for late filings or miscalculations in Texas. Additionally, their software’s proactive monitoring of economic nexus and exemptions minimizes the risk of unexpected costs due to non-compliance. This reduction in potential penalties contributed to the overall cost savings for the company​.

• Accuracy: Kintsugi ensures real-time accuracy in sales tax filings, calculating both state and local sales tax obligations down to the exact jurisdiction. This accuracy helped Copenhagen Sleep Company maintain full compliance, ensuring that all their possible liabilities were met and reduced the risk of audits. They now operate confidently, knowing their sales taxes are handled correctly and efficiently​.

Kintsugi is a Strategic Partner for Future Growth

As Copenhagen Sleep Company continues to grow, Kintsugi is expected to play an essential role in managing the company’s expanding sales ax obligations. By monitoring economic nexus thresholds and automating compliance, the software guarantees that they will always remain up to date with every state's requirements. This real-time tracking and filing of sales tax and use tax, in coordination with the comptroller's guidelines, allows them to confidently manage their tax liability and scale their operations, particularly in regions with complex sales tax rules like Texas. Kintsugi's seamless integration also makes it easier to manage tax-exempt sales in every jurisdiction and across various marketplace platforms without adding an extra layer of burden​.

This combination of compliance automation and accuracy has enabled Copenhagen Sleep Company to focus on growing their brand, rather than dealing with the intricacies of sales tax. As a strategic partner, Kintsugi will continue to support the company’s long-term expansion goals by eliminating their risk of penalties and ensuring that they can meet all regulatory requirements. With features like real-time updates and automatic remittance, their software provides a scalable solution that aligns with remote sellers, like Copenhagen Sleep Company, goals of efficiency and growth​.

About Kintsugi

Based in San Francisco and founded in 2022, Kintsugi is dedicated to taking the stress out of sales tax compliance. Our platform automates the entire process, delivering high performance, reliability, and flexibility as your business scales.

Kintsugi is secure, encrypted, GDPR-compliant, and SOC 2 Type II certified, adhering to the highest standards for security, availability, processing integrity, confidentiality, and privacy.

Learn more about Kintsugi’s platform and integrations here.