In 2002, up-and-coming pro skier Matt Sterbenz was working as a parking attendant at the Squaw Valley ski resort and dreaming of ski equipment that supported the new freeskiing movement he and his friends were pioneering. Tired of modifying equipment that wasn't quite right, Sterbenz decided to create the skis he was searching for, and 4FRNT was born.
Now, 20 years later, 4FRNT has a cult following. It has driven innovation within the skiing industry, and it has expanded into multiple product lines, including skis, bindings, ski poles, ski gear, and clothing. 4FRNT's products stand apart from the competition because they are, and always have been, developed and tested on the slopes by passionate skiers, with company meetings taking place on chairlifts instead of in boardrooms.
Their products are designed by skiers, for skiers, so it's no surprise that 4FRNT has become increasingly popular not just in the United States, but also in Canada, and given that its talented team is made up of athletes, innovators, and designers, it's also not a surprise that sales tax compliance is not on the top of anyone's to-do-list.
Unfortunately, for a growing company that sells its products not only in multiple states but also across international borders, sales tax compliance is not optional. As operations expand, it can become an incredibly complex and time-consuming process with high stakes.
4FRNT's sales tax challenges in Canada
Because 4FRNT has no physical locations in Canada but sells its products to Canadian residents, the company is considered a non-resident vendor by the Canadian government. Non-resident vendors that sell products in Canada must register to collect GST/HST after they sell at least CA$30,000 in taxable goods each year.
Companies that cross this sales threshold and become required to register have to obtain a business number (BN) before registering with the Canada Revenue Agency. They also must begin to:
- Charge customers GST/HST on taxable products at the correct rates.
- Complete and file GST/HST tax returns at the required frequency, which depends on sales volume and could be as often as monthly.
- Remit collected taxes to the Canadian government after claiming any input tax credits.
Businesses must also comply with provincial sales tax (PST) rules and other regional tax requirements if they sell products in British Columbia, Manitoba, Saskatchewan, or Quebec — which 4FRNT was doing.
The threshold at which companies become obligated to register and collect taxes within these provinces varies by location — with no minimum threshold for sales in Saskatchewan. This means that 4FRNT immediately faced many new tax obligations as it shipped products to Canadian customers.
With varying tax rules and tax rates to keep track of, 4FRNT found that complying with Canadian sales tax rules quickly became overwhelming — especially on top of the company's U.S. sales tax obligations.
"We were doing our best, with limited resources, to research, compile data, and remit payments to applicable systems," said Noah Spaeth, Global Operations Manager at 4FRNT. However, the company's small team and limited expertise in cross-border sales tax rules made fulfilling Canada's requirements impossible.
"To make a long story short, we were not managing this portion of our business successfully," Spaeth explained.
Despite its best efforts, 4FRNT failed to correctly follow all of the provincial sales tax rules, leaving the company vulnerable to audits and penalties. Worse, the company's process of tracking taxable sales across Canada, as well as collecting and remitting taxes in Canada and the U.S., was inefficient and time-intensive, taking focus away from other business priorities without fully meeting the demands imposed by national or local governments.
Something had to change.
"As sales in this region grew, we knew we needed to look externally for international sales tax compliance expertise," Spaeth explained.
Searching for a partner
With an audit risk looming and having wasted hours of time, 4FRNT was eager to find the external support the team knew they needed in order to follow sales tax rules correctly everywhere that it had customers.
4FRNT was looking for something specific, though. The company wanted a white-glove solution — a partner that could manage global tax compliance, as the company not only had tax obligations in the U.S. and Canada, but also dreamed of expansion into new foreign markets, each with its own tax rules.
The company wanted that partner to:
- Provide a single point of contact to streamline reporting.
- Quickly provide timely support and clear guidance in time-sensitive situations.
- Reduce errors and ensure consistency in filings.
- Manage compliance oversight.
4FRNT also desperately needed help resolving tax issues in Canadian provinces from previous time periods when reporting was being done incorrectly.
The company wanted a partner that could jump in quickly, as the threat of a large tax bill was imminent due to the back taxes it owed.
Numeral offers a solution
When 4FRNT found Numeral, Spaeth knew immediately that he had found the partner 4FRNT needed, as Numeral offered all the features the company was looking for and more. Numeral was also able to provide immediate solutions to 4FRNT's growing sales tax concerns.
"The Canadian sales tax onboarding experience with Numeral was incredibly quick and easy," Spaeth said. "This process involved simply answering a few questions and ensuring that all necessary data and information was properly shared with the Numeral team."
Once Numeral had the details it needed, it sprang into action. Numeral:
- Worked with Canadian provincial authorities to bring 4FRNT into compliance, with minimal costs and fees.
- Consolidated U.S. and Canadian tax compliance under one easy-to-use interface.
- Assumed responsibility for managing sales tax registration in both the U.S. and Canada, ensuring that 4FRNT was registered everywhere it needed to be.
- Started collecting tax from 4FRNT customers at the correct rates depending on shipping location.
- Started filing all mandated forms with national and local taxing authorities in both the U.S. and Canada on the required schedule.
- Started remitting GST/HST and PST to the Canadian government and to local provinces, and remitting sales and use tax to state and local jurisdictions throughout the U.S.
- Put meticulous recordkeeping in place to ensure that 4FRNT would always be audit-ready.
- Offered comprehensive and understandable advice to 4FRNT on sales tax issues.
- Provided the single point of contact that 4FRNT was searching for.
Ultimately, Numeral alleviated the challenges and complexities associated with cross-border sales and gave 4FRNT confidence in its compliance processes, while substantially limiting the time the team has to spend on sales tax issues.
With Numeral's guarantee that sales tax forms are filed on time or penalties will be paid for you, 4FRNT also never needs to worry again about whether unfiled tax returns will create financial vulnerabilities.
For 4FRNT, the process was seamless, easy, and faster than expected, completely alleviating the burden that tax compliance had become.
"There have been a few instances where Numeral stepped in with timely support and clear guidance during particularly complex and time-sensitive situations," Spaeth said. "The level of service and communication I have received from the Numeral team is top-notch. Everyone at Numeral is incredibly responsive, knowledgeable, and respectful, and is willing to go the extra mile to make a positive impact for 4FRNT."
A long-term partnership is born
Today, Spaeth says that Numeral has given 4FRNT full confidence that the company's tax obligations are being met accurately and on time. And with the knowledge that sales tax compliance will no longer be a burden, 4FRNT is eager to expand operations even farther.
"4FRNT considers Numeral to be a long-term partner as we enter new markets, because of Numera's consistent reliability, deep understanding of tax regulations, and ability to adapt to our evolving needs. Numeral’s collaborative approach and commitment to 4FRNT’s compliance needs gives us confidence as we continue to enter new markets," Spaeth explains.
With Numeral's ability to offer tax compliance assistance in more than 50 countries, 4FRNT's team can now focus its attention where it belongs: on growing its line of revolutionary skis and related products, refining the niche design elements the company is known for, and building community out on the slopes — whether they’re in Lake Tahoe in the U.S., in Whistler in Canada, or one one of the many mountains across the globe.
