Arlen Ness Motorcycles leans into sales tax automation

Starting out of his garage in the 1960s with money he earned as a semi-professional bowler, Arlen Ness bought his first Harley-Davidson motorcycle. Armed with only a spray gun and a dream, he created his first chopper. That chopper launched a customizing career that, in turn, helped launch an entire industry. Today, Arlen Ness Motorcycles is an international brand sold in every continent of the world.

John Kallas, who has a passion for motorcycles himself, came out of retirement to become the chief financial officer for Arlen Ness Motorcycles. “At the time, the company was trying to do sales tax on its own,” he says. “We filed manually and managed all the different counties and cities, updating the tables in our ERP as the various jurisdictions would update their tax tables.”

John felt that the manual approach, aside from being inefficient, was just too risky. “Then came the South Dakota v. Wayfair decision, and that changed everything for us,” he recalls. Arlen Ness Motorcycles is based in California but was registered in South Dakota and Florida because “those are two large states that have large motorcycle rallies,” he explains. “That tax scenario got too overwhelming.”

Adding to the complexity, about 70% of the company’s business is sales tax exempt — and again, the process for managing exemption certificates was entirely manual. “We called it the binder approach,” John laughs. “Nobody had the time to go through binders that were three, four inches thick and went back years and years. A lot of times, we had to pick up the sales tax amount if we did the calculation wrong or the customer was no longer exempt. We were spending thousands of dollars of our own money to cover that sales tax exposure.”

Not long after the Supreme Court handed down the Wayfair decision in June 2018, John attended an Avalara webinar covering its impact. “That scared us enough to look for an automated solution,” he says.

“We looked for a product that would be compatible with Shopify and compatible with Sage 100,” John adds. “That’s one of the main reasons why we went with Avalara AvaTax. And then we started doing our due diligence on the product and learned about Avalara CertCapture for exemption certificates. We signed up for that too.”

After attending to some data hygiene issues, John reports that the integration with Shopify Plus and Sage 100 went smoothly. “We stayed late one evening with an implementation specialist who logged into our system and helped us with the initial settings in our ERP environment,” he explains. “After that, it felt seamless.”