Zorch International

Zorch Fuels Growth and Reduces Risk with Sovos

Sovos Compliance’s Taxware Enterprise software and Managed Services were instrumental to the continued growth of Zorch International, Inc.

“Before implementing the Taxware system, two employees would typically spend 40 hours a month each handing our sales tax needs. They can now focus this time on growing the business.”

– Chris Hosler, Controller

Compliance is Complicated

Zorch International, Inc. (Zorch), a Chicago based company, provides brand promotional products and warehousing and distribution services. The company creates a streamlined model by setting up e-stores for managing the promotional products and branded merchandise used by major corporations for their employee, customer, and general outreach programs. This model allows the clients direct access to their suppliers and eliminates overhead caused by using a distributor.

Although it streamlined processes for their clients, the e-store model was a headache for Zorch employees when it came to tracking the frequently changing sales & use tax rules and rates. Zorch also found that they lacked the internal expertise to understand their tax obligations as they grew the geographic footprint of their clients and distributor network.

The Challenge

Sovos Compliance’s Taxware Enterprise software and Managed Services were instrumental to the continued growth of Zorch International, Inc.

Prior to their partnership with Sovos Compliance, Zorch did not have a tax automation system. Their method consisted of a zip table, which was created and updated manually in excel. Employees would have to enter a zip code and the corresponding sales tax rate assigned would be charged to that product. In addition to the manual process, the company was forced to use an outside CPA firm to process and file their data as they did not have the resources internally. Zorch Controller Chris Hosler acknowledged that this manual system was at times not accurate, resulting in tax calculation errors.

In 2011, Zorch took on one of their largest clients to date and soon found that their manual system was too labor intensive and error prone to handle the new volume. They began receiving notices from the client stating that they were having to short pay state tax rates for multiple transactions and it became challenging to continuously make all the necessary corrections. A lot of time, money, and resources were spent authorizing short pays, making corrections, re-invoicing, and issuing credits on their books for sales tax that should have been charged, which often resulted in frequent penalties. Corrections often averaged 1-2 hours for an employee and that was time that could have been spent elsewhere.

As a result of this new client, Zorch had to adjust all of their systems to handle the large influx of business. This left the company without the necessary resources to accept new business. For two years Zorch’s primary focus was finding a way to handle the new volume they were experiencing and this meant forgoing significant additional revenue until they were able to design a tax compliance process that could support their growth.

The Solution

Zorch realized they needed a tax compliance solution in order to:

  • Reduce penalties and corrections by accurately charging sales tax at the time an order is placed.
  • Avoid the time and expense of managing continual short pays, adjustments, and re-invoicing.
  • Eliminate the time and resource needed to manually compile and manipulate the needed data and the expense of an outside CPA to process the returns.
  • Save time and money by rolling sales tax filing and monthly returns into one process, where all the data could be collected and compiled automatically as transactions take place.

They were looking for a partner that could offer a cost-effective solution that was accurate and eliminated errors and re-invoicing. Zorch was impressed with the quality of the content and the overall value provided by Sovos’ Taxware solution. It was also a plus that the Taxware solution came recommended by their ERP provider (Microsoft) as well as an outside consultant.

In order to ensure the most accurate calculations, a robust implementation process was put in place. Zorch was pleased by the result; the detail in the configuration ensures that accurate sales tax is calculated for each transaction in each jurisdiction at the time of order in one of their e-stores. It was critical that all the individual rules governing the thousands of products Zorch sells, from golf tees to silver cufflinks, were set up ahead of time.

Although it took some time, the team at Zorch was pleased with the manner in which Sovos managed the process to make it as painless as possible for them. The Sovos team was available to help each step of implementation and consistently provided clear direction on the best and most expedient approaches.

Once the solution was successfully implemented, Zorch was also able to further streamline their process by the addition of Sovos’ Managed Services. By contracting with Sovos’ in-house professionals, Zorch eliminated the need to hire a CPA firm to file their sales tax returns and handle any notices received.

The Result

Zorch has reported that they are happy with the success of their Sovos products and services. Having a tool that accurately computes sales tax at the time of order and compiles the monthly sales tax filings has saved them a substantial amount of time, money, and resources.

In addition to the peace of mind having accurate tax determination on all of their transactions, the ease of use and hands off approach that the Zorch team now enjoys as a result of the monthly sales tax filing returns service has added to their happiness with Sovos. The solution has freed up Zorch’s accounting department, allowing them to focus on other business critical activities. Sovos’ capabilities have also greatly reduced the number of hours Zorch employees have to spend on their end when it comes to generating data, following up on notices from different jurisdictions, and filing returns. Instead, the Sovos team follows up with Zorch about what data is needed and determines what needs to be done. Chris Hosler, Zorch’s Controller, estimated that at least 80 hours a month are saved. Those additional hours are now being used to focus on expanding their business internationally.