The Watson Weekly is sponsored by Avalara — the agentic AI platform automating global tax and compliance for leading eCommerce brands with simple plans, transparent pricing, and complete coverage across Shopify, Stripe, WooCommerce, BigCommerce, and more.

Hairstory collected sales tax from its launch at the end of 2015 and registered in only a handful of states that first year. Avalara sponsored my conversation with cofounder Erica Halliwell and Katie Overdevest, who runs eCommerce, so weigh what follows with that in mind. Erica had no background in sales tax when it landed on her desk. Hairstory moved the collected money into a separate bank account, and the balance grew every month while the registrations stalled.

Keeping that money apart is the habit I'd copy first. States treat collected sales tax as held in trust for them from the moment a customer pays, and Washington and Tennessee both say they can pursue the individuals who controlled it if it goes unremitted, with Washington asking whether the failure was willful. The sales tax disasters I hear about usually begin with collected tax covering rent in a slow month, and Hairstory kept its balance set aside even as it grew. They were still late. Catching up took months of order-level data and a different form for each state, and Erica says she cried at least once along the way, partly because the work was so boring.

I also came away thinking differently about what international shipping costs are for. DHL cold-called Hairstory with its delivered duty paid service, which lets the seller cover duties and import taxes through DHL while the customer sees one final price. That meant no VAT or GST registration at that stage, with every order leaving the company's one US 3PL. Erica says the shipping was expensive even at DHL's discount. I'd book that premium as market research, because it showed Hairstory where demand was before it spent anything on infrastructure. Plenty of brands I advise do it the other way round and open the entity first. Canada and the UK became Hairstory's biggest single markets, and entities in Europe and Australia, with local bank accounts and 3PLs, came afterwards.

Where I disagree with Erica is on checking returns. She says Avalara's professional services team prepares and files the US and Canadian returns, and Hairstory approves them without review because the figures come straight from what was collected and you remit what you collect. Her rule handles overcharging, since any extra tax has to go to the state or back to the customer, but it leaves undercharging open. Many states will assess the tax that should have been charged and bill the seller for the difference, so a return that matches checkout to the cent can still leave money owing. Katie mentioned that some front-end vendors, subscription tools among them, don't always pull the right tax from Avalara, and her team tests for that. I'd put more weight on her testing than on the monthly sign-off.

Neither of them described a shortfall on a return, and I have no reason to think there's been one. Erica runs finance with one bookkeeper, and the team closes the books within ten business days, which is lean for a company with entities on three continents.

I still don't know what the DHL route cost per order compared with shipping from a local warehouse. For a brand with thinner margins than premium hair care, that figure decides whether any of this is worth copying, and I'd want it before recommending the route to a client.