The Problem Nobody Talks About
Every SaaS founder knows the core metrics: MRR, churn, CAC. But there's a number buried in your financials that doesn't show up on dashboards.
Sales tax.
Not the amount you collect. The amount you lose—to misclassified transactions, missed filings, penalties on states you didn't know you owed, and audits that dig through years of exposure.
According to Anrok's benchmark report, digital businesses lose an average of 4.3% of total revenue to sales tax liabilities and penalties.
For a company at $10M ARR, that's $430,000 a year.
Not invested in product. Not spent on growth. Just... gone.
Why SaaS Gets Hit Hardest
Sales tax was built for physical goods. Boxes crossing state lines. A truck with a manifest.
SaaS doesn't work that way.
Your product is taxable in Pennsylvania but exempt in California. In Texas, taxability depends on whether you bundle support services. In Washington, it hinges on where your servers are located.
These rules change constantly. And here's the part that really hurts:
Your success makes it worse.
One good marketing campaign can create customers in 30 states overnight. Each state has different economic nexus thresholds. The moment you cross them, the clock starts. You now owe taxes you didn't know about, in states you've never visited, on transactions from months ago.
Most founders don't find out until an audit.
The Spreadsheet Trap
Early-stage companies manage this with spreadsheets. It works—until it doesn't.
As transaction volume grows, the manual system buckles. Rate lookups take longer. Classification errors creep in. Filings slip. The finance team spends more time on compliance than finance.
Anrok's data shows finance teams spend 25-30 hours per month on manual sales tax work:
- Researching rates by jurisdiction
- Validating product taxability
- Managing exemption certificates
- Preparing and submitting filings
That's over three full work weeks per year. Your highest-paid operational people, doing data entry.
At a loaded rate of $100/hour, that's another $36,000 annually in hidden cost.
The Audit You Don't See Coming
Some founders operate under the assumption that audits are rare. They're not.
State tax authorities now use third-party data analytics to identify non-compliant digital businesses. When an audit lands, it's rarely one quarter. It's a multi-year lookback—every invoice, every product classification, every exemption certificate.
A handful of errors compounds into six figures fast.
And here's what makes it worse: because these liabilities surface unpredictably, they distort your financials. You look profitable until you're not. You plan growth until there's a remediation bill.
The uncertainty alone slows decision-making. Finance teams hesitate to commit budget when unresolved tax exposure sits in the background like a ticking clock.
Two Paths Forward
Path 1: Build the Compliance Machine
Hire tax specialists. Subscribe to calculation software ($500-2,000/month). Contract with filing services ($200-500 per state, per month). Train your finance team on nexus monitoring. Hope your exemption certificates are in order.
Total cost: Hard to calculate, but it scales with your success. More customers, more states, more work.
Audit exposure: Still yours. Still uncapped.
Path 2: Make It Someone Else's Problem
A Merchant of Record sits between you and the complexity.
CREEM becomes the seller of record. We calculate taxes. We collect them. We remit them to every jurisdiction. We handle registrations, filings, and exemptions. If there's an audit, it's our audit.
You charge customers. You build product. The tax machine runs without you.
The Real Cost Isn't the $400K
It's what you could have done with it.
Every hour your finance lead spends on tax compliance is an hour not spent on forecasting, fundraising support, or building systems that scale.
Every dollar lost to penalties is a dollar not spent on product, marketing, or the next hire.
The work scales linearly with your growth. You can either staff for it, automate around it, or hand it off entirely.
There's no option where it goes away on its own.
Bottom Line
You didn't start a company to become a tax accountant.
Stop acting like one.
