Zamp wants to give online sellers ‘freedom from sales tax’
State and local governments collected approximately $137.7 billion in sales tax during the first quarter of 2022, a 17% increase from the $117.7 billion collected in the same quarter of 2021, according to the U.S. Census Bureau.
As Rohit Bhadange, co-founder and CEO of Zamp, explains, every state, county and city has different tax jurisdictions whose laws businesses must comply with, making over 12,000 taxable districts.
They have to do this because of the South Dakota v. Wayfair Supreme Court decision made in 2018, which ruled that online sellers were required to register for a sales tax permit and then collect and remit sales tax to each jurisdiction.
Sellers do this when they meet two laws: physical nexus laws, in which the seller would have a physical presence in the state through employees and warehouses, and/or economic nexus laws, in which the seller exceeds revenue and/or transaction thresholds within the state.
Making it more difficult to comply is when districts frequently update their rates and rules. That’s why Bhadange, Edward Lando and Clete Werts started Zamp in 2022, to develop an end-to-end platform to manage the sales tax life cycle for e-commerce, enterprise resource planning and marketplace platforms, including nexus monitoring, product categorization, rooftop-level tax calculation, registration and filing.
Bhadange told TechCrunch that businesses using current software options can spend up to 500 hours a year to stay compliant. Online sellers can implement Zamp through integrations or an API and use it to calculate and aggregate sales tax across multiple sales channels, while Zamp monitors and communicates when a seller needs to make a filing.
Zamp co-founders, from left, Clete Werts, Edward Lando, and Rohit Bhadange. Image Credits: Zamp
Bhadange and Lando are both with pre-seed investment firm Pareto Holdings, while Werts and other team members were first employees of Stripe-acquired TaxJar and Vista-acquired Avalara, as well as former state auditors, sales tax experts and research specialists.
Zamp joins companies like Stripe, Vista, Anrok and Taxdoo in providing tax compliance solutions to businesses. In addition to giving customers back those hundreds of hours spent making filings all year, Bhadange says Zamp differs from competitors by providing its service through a single SaaS fee and doesn’t make customers have to learn or manage the software themselves.
“Customers are not even confident that they're doing this accurately, so we're the partner that's going to track, monitor and notify them to ensure that they're always compliant,” Bhadange said. “We execute against any changes so the customers are safe, and we even eliminated the pesky transaction overage fees, which are common pain points for customers. We're giving customers back freedom from sales tax.”
The company is doing this after closing on over $4 million in fresh venture capital earlier this year. The round included Valor Equity Partners, Soma Capital, Day One Ventures and a group of angel investors, including Truebill’s Yahya Mokhtarzada, OpenGov’s Zac Bookman, Shutterstock’s Jon Oringer and Ripple CEO Brad Garlinghouse.
Other than saying Zamp has paying customers and a roster that includes Obvi, Sanzo, YumWoof, Gravity Grabber and Little Hunter, Bhadange was pretty mum on the company’s traction over the past year. Zamp will use the new funding to develop and automate its solution, make new hires and prepare to support customers selling internationally.
“Our focus is largely on developing an automated solution and just delivering a better experience,” Bhadange said. “We are building a more formidable team and just saving as many customers as we can from the burden of sales tax compliance.”