How to ensure tax troubles don’t scupper your fashion business’s overseas run
- Written by Chris Calverley, Head of Sales and Partnerships – ANZ at Avalara
Having the right technology in your stack can prevent expensive errors early on.
Is selling overseas a key goal for your fashion business in 2025? If you’re a fledgling rag trader with something fresh to offer, it represents an opportunity to grow your revenue and profit and turn your label into a widely recognised brand.
Plenty of local designers have done so, parlaying their popularity at home into sales and success abroad.
They include the likes of Brisbane besties Heidi Middleton and Sarah-Jane Clarke who transformed their collections from an underground phenomenon into the internationally famous cult label Sass & Bide back in the noughties, and the Zimmermann sisters whose luxury fashion, sold under their eponymous label, has a firm following around the globe.
Meanwhile, at the value end of the market, Nigel Austin’s Cotton On Group has introduced the world to affordable quality, Aussie style, via 1500 own brand stores across 22 countries.
Selling direct to the customer
Gaining international exposure is easier now than it was for these inspirational trailblazers a couple of decades or more ago.
Gone are the days when gaining a foothold in the lucrative US, UK and European markets meant being supplicant to the fashion buyers who held sway over the racks and shelves in major outlets, or investing a sizeable sum to launch your own stores.
Instead, today’s fashion start-ups have the option to connect with potential customers digitally and ship their wares directly; cutting intermediaries out of the process.
Consumers the world over have become relaxed and comfortable with this model and have no hesitation in ordering apparel online from suppliers around the globe.
Starting out strong
But selling your range overseas involves more than merely maintaining an attractive web site and establishing a fulfillment function to process and dispatch orders.
Staying on the right side of the law offshore means registering your enterprise correctly for tax purposes, then collecting (and remitting) the right charges.
It’s anything but simple. In fact, there are more than 13,000 sales and use tax jurisdictions in the US alone, along with different laws for remote sellers.
Throw in the fact that many U.S. states require remote sellers to register for a sales tax permit before making sales into their jurisdiction, and some US states require sellers to apply a fee to orders containing items of personal property that are delivered by vehicle, and you’re looking at complexity – with a capital C.
Sell your threads to a customer or several in the UK or Europe and you’ll face a similar set of challenges, along with potential language and cultural barriers into the bargain.
Choose a tax-tech partner that supports your growth
Fashion start-ups in growth mode simply can’t afford to be hijacked, operationally or financially, by compliance complexity.
If you get the numbers wrong from the get-go – easily done, by designers who aren’t au fait with the minutiae of tax law in all the jurisdictions where they’re scoring sales – making good your mistakes can be an expensive, complex and time-consuming process.
It can distract your team from the main game, at home and abroad, and squeeze your cash flow and bottom line at a time when they’re likely already under pressure.
This is where automated tax compliance technology has a vital role to play. It’s designed to help growing businesses start selling overseas by simplifying and streamlining all the tasks associated with tax compliance. These include registration, licensing, calculation, document management, reporting, cross-border compliance (customs duties and import taxes) and e-invoicing.
Once it’s implemented, you’ll be able to calculate a wide range of indirect taxes in real time, including US sales tax and the value added tax (VAT) applied to purchases in the UK.
Getting it right on the global stage
If you’ve developed a fashion label that’s flying off the shelves here at home, taking it global is a great way to maintain the momentum and build revenue, profit and brand equity.
But international expansion can throw up pitfalls aplenty for the unwary. Having the right back office infrastructure in place will increase your chances of success.
With an automated tax compliance platform in your tech stack, you’ll be able to start shipping to overseas customers with confidence, safe in the knowledge that you’re not unwittingly breaching any rules and regulations in the process.
If you’re serious about transforming your fashion start-up from a homegrown hopeful into a big business, it’s getting some good, orderly direction in choosing the right foundational tax technology that will underpin your expansion – and let you sleep better at night.
