Software Social

Michele's trying to figure out how to approach charging sales taxes, and Colleen finally pushes to prod despite a challenging week.

Show Notes

Michele's trying to figure out how to approach charging sales taxes, and Colleen finally pushes to prod.

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Creators & Guests

Host
Colleen Schnettler
Co-Founder of Refine, Founder of Simple File Upload
Host
Michele Hansen
Co-Founder of Geocodio & Author of Deploy Empathy
Editor
Cory Stine
Audio Editor
Writer
Meghan Coleman

What is Software Social?

Two indie SaaS founders—one just getting off the ground, and one with an established profitable business—invite you to join their weekly chats.

Colleen Schnettler 0:00
Hi, Colleen. Hey, good morning, Michelle.

Michele Hansen 0:02
How are ya?

Colleen Schnettler 0:03
I'm melting here in Southern California.

Michele Hansen 0:07
Yeah,

Colleen Schnettler 0:08
we are having a heatwave to the point where they have canceled school for heat days.

Michele Hansen 0:12
Yikes, that probably makes it tough to work from home.

Colleen Schnettler 0:16
Yeah, I mean, and that, you know, 90 degree house makes it Oh, we don't have air conditioning. So, I mean, it's all right. It is my first negative experience of living in Southern California. We have no air conditioning. The state of California has no power. There's no rain. We're just melting.

Michele Hansen 0:35
Yeah, I admitted earlier this week. Like, I was thinking about recording and just how I've been feeling a lot better this week. And I was like, maybe it's because the weather because it's finally fall. And it's like 60 every day and I can wear sweatshirts and like, I'm looking at it and it's raining and Mathias is making a fire. Like, and I was like, oh, but you're probably at the beach or whatever. And no, you were

Colleen Schnettler 1:01
I mean, we are gonna go to the beach for sure. Because it's a great way to cool down. Well, I do live let's, let's remember the positives. I do live in Southern California. So there are beaches everywhere. So we're gonna go the beach this afternoon for sure. But I just had a full day. I mean, you know, I planned my week, assuming the kids would be in school. So it's a little tricky when they're not. You know, just normal stuff.

Michele Hansen 1:23
Yeah, that's, that's, that's quite a wrench in your, in your schedule. Well, um, sounds like you're you're struggling to barely get stuff done. I actually have something I was hoping we could talk about. Yes, that I'm trying to figure out. So I feel like I'm in I'm in a little bit of a better headspace than I was a couple of weeks ago. I think just kind of I have been like saying no to things like people asking me to be on their podcasts and stuff. And I'm not saying no, I'm delaying them. You know, I'm saying sorry. Like, I'm booked until like, just like, I'm not doing anything until January. So I booked if you think good or but like seem smart, saying no to things, trying to find some time for myself, like the other day, you know, we got like a giant zucchini from the garden. And so I was like, You know what, it's Monday night, I'm gonna make some zucchini bread. I put on a like 90s Dance Party playlist. So I literally pumped up the jams and baked which is awesome. Good for you. But so as I've kind of gotten through my to do list a bit more kind of getting to some of those bigger hairier projects that kind of get pushed to the bottom of the list when you're in just like clear out the inbox get through the small tasks mode. So I mentioned we kind of have two big things going on right now. Right? So we're Yes, going through sock two, type two for the first time. Okay, so we're trying to, so it's like a couple of phases of it. But we're in the phase right now where we're doing all of the paperwork and policy documents, basically. So you have to prove that you've not only you have like, for example, a business continuity plan. So you know, for example, like, let's say that there is a giant heatwave in California, and all of your servers are in California, and there are rolling blackouts. And for some reason, you know, AWS West gets hit by one of those blackouts like, what do you do, like, so you have to simulate all those things. Anyway, so this is a billion documents. So so we're getting near the end of that. And then the next stage is you actually get audited by auditor to make sure that basically you're doing all of this data, the things you say you promised you do. But anyway, so we're hoping to do that. But so that is actually getting to a more like, like, we're almost done with the policies and documents and just all that kind of stuff. So that's in a good spot. The other thing we have to do is start charging sales taxes. And, you know, this is something I've had my eye on for a couple of years, but we just hit nexus in two states recently. And it's just kind of like a jumbled mess of yarn in my head. And it's like I can kind of I know, there's all of these pieces. And I have a sense for all the different pieces but like, kind of coming up with a plan for executing it is just a little jumbled in my head. And I think where I'm so pressed for time lately, if there, you know, if there is something that I'm like, I'm not sure about that. I can't just like execute on. I just kind of keep pushing it off, and I can't do so I kind of need some help like structuring my thinking about it.

Colleen Schnettler 4:36
Okay, I see. Okay, can you enlighten me on what you're talking about? What is next? I have no idea what that means. Okay,

Michele Hansen 4:44
so let's back up a little bit. So sales taxes, right, like you go to the grocery store or you buy clothes or whatever, you're charged a sales tax. So sales taxes in the US. They differ by states. They're also they're all charged at this State level there is no federal national level tax, which in most countries is called a VAT. VAT. Right? I've heard of that. Right. So Europe has VAT Canada has vat, the US does not have that the US has taxes that are that are sales taxes that are charged locally. So there might be a state sales tax, there could be a county sales tax, you know, of city sales, like like, there can be like 15 layers of taxes that are put on something, sales taxes, depending on where you are and what you're buying. So a cup of coffee would have a different sales tax, then a pair of jeans in California, versus in Massachusetts, right, like all of those are at the state level. So SAS for a long time was kind of in this gray zone, because it was assumed that software was distributed on physical CDs, and like mailed out to people. But then once, you know, the world transitioned to, by and large delivering software online, it took some time for policy to catch up to that. So I think when we started in 2013, I don't think there were any states charging sales taxes, or they may have but it was like, it really wasn't a thing we had to think about at that point. And so for the last couple of years, I've been monitoring it because more states have, you know, figured out this wonderful little business model that we all have, and want in on the action. So they have this thing is called nexus for charging sales taxes, for SAS and for other things. It depends on the state. But basically, it's some minimum threshold. So it might be 100 transactions in the state in a given year 200 transactions, or it might be $10,000, or $100,000, or $500,000. It might be 200 transactions, or $500,000. And that all depends on the state. And so actually, in previous years, I have downloaded a list of all of the payments that we received, and then made a bunch of pivot tables and compare that to lists, I can find what states charge first for SAS, and then checked whether we have access? And that answer was no. Now stripe will do that automatically for you. So if you have a Stripe account, and then you go there's like an other tab in the menu, and you click on tax, it will actually tell you whether you are liable in in various states, and then you can start charging for taxes. They don't actually remit the sales taxes, that is they don't make the payments for you to the State or or country. Okay, this is a lot of very dry information. I feel like I should pause here.

Colleen Schnettler 7:43
No, it makes sense. Okay, I'm following.

Michele Hansen 7:45
So I've been checking in on this. And we hit nexus in two states recently. So now this means not only do we have to remit the taxes that we actually didn't charge people for. So that's basically just we have to eat that. Okay, we also have to start charging that and I think this is kind of the step that I'm just I just like I need to like, have a plan in my head because, you know, going to the state sales tax commission website and registering an account like, that's that straightforward, right? Figuring out, okay, we should have started charging this as of June 25. So here's we'll file for the back returns, like you know, and you can get it set up with with texture, there's a couple different companies that you can work with texture Avalara others, but texture was just acquired by stripe. And for a variety of reasons, I think we're gonna go with them, because they just seem very developer oriented, very developer friendly. And so that I think it's more like in like the product, and like communicating it to customers that I need to wrap my head around it, right, because like, we can't just, you know, start charging people 5% More next month without telling them I mean, maybe we could, right? I mean Intuit does that all the time or, you know, like, I feel like I feel like QuickBooks goes up $100 Every year because they understand that they have a moat and that switching costs are high, and then it would be annoying anyway. Yep. I feel like I Okay, we could start charging people sales tax without telling them, but I feel like the polite thing to do or like the, you know, the, the reasonable, good thing to do would be to tell them about it. We also have to make changes in the product because we have to start collecting shipping addresses right now we only collect billing addresses and I kind of sort of wish we had thought about this earlier because a company could be located in for example, California, but if the person using the product or the like is actually located at their I don't know like Texas office, right like it actually matters where it's getting, quote unquote shipped to even though it's all still over the internet and nothing is actually changing hands. It's ridiculous. Yeah. It was like a little bit. I mean, it's a little bit weird. But we have to wait, we we've only been collecting billing addresses, we have not collected shipping addresses. So that's what so not only like, do we have to like to help it so and it's also only specific states, are we liable. So we only have to communicate with the customers in those states, but we actually need I think we need everybody to click to get put their shipping addresses in. And then we also need to start collecting sales tax exemption certificates. So like state governments, or charities, for example, might be exempt from paying sales taxes in specific cases, not all charities are exempt. But some are like they'll have a special certificate. And you need to get that uploaded, and then

Colleen Schnettler 10:48
say, oh, sorry, I fell asleep.

Michele Hansen 10:53
Like, this is why I'm like, I'm like, I'm just gonna write.

Colleen Schnettler 10:57
Okay, let's back up. Like,

Michele Hansen 11:00
it's just like, Yeah, man.

Colleen Schnettler 11:04
So let's back up a little bit. You said you, okay, so you have these two, like really meaty things you need to get into, and you kind of want see, you started going down like this really descriptive rabbit hole. And I do that too. Like, I totally understand where you're going. ball of yarn, like 10. Yeah, all of yarn. And, and it's all in your brain, and you need to untangle it. But you also have sock two as well. So before we get into your ball of yarn, what, what's the priority between these tasks? Are you trying to do both simultaneously? Does one need to come before the other?

Michele Hansen 11:35
Well, I mean, like, technically, we're not in compliance with sales tax laws in two states. So that's kind of a problem. Okay. But I guess the worst case scenario is a fine, right? Or you're just Yeah, interest on what you owed. I'm a sock two is really the priority, because it's our goal. And we've, you know, told several customers that we would have our audit done by the end of the year, it's a three month audit 90 days. So have you started it? No. Okay, so yeah, so we would like to get that started. ASAP. And there's literally like, I think there's just like two more things that we have to like, and like a couple of little miscellaneous things. But like, were you made like, we might be able to start the audit next week, hypothetically. Okay. Hypothetically, if we have a really productive down at tomorrow, okay. That's also a lot of that work to is on Matias. Because it's like, make sure our GitHub account is connected. And we have to like upload AWS is sock two certificates. And like, there's just yeah, there's like, there's more stuff on his side than there is on my side at this point. And there's some stuff we have to do together as well. But also sales tax stuff, we need to work on it together, because there's product changes. But he's kind of too busy with, I feel like the sock two stuff is a higher priority. He's too busy for that for me to be like, hey, so we need to do all this stuff. But the thing is, I feel like I have to have this decided, so that once the audit is kicked off, and his time is freed up from doing all of those tasks, then we can get into the sales tax stuff. But I just like don't have it clear in my head, like, I guess I know everything we have to do, but it Yeah, it just feels very jumbled. And sure it's not like it's not at the point where I can be like, make an issue and say, okay, here is like exactly what has to be done here is these things, here's what needs to change. Here's the copy for that. Here's the email we're gonna send out, here's who we have to send it to, like, write all of that kind of stuff.

Colleen Schnettler 13:32
So you need to take it from a ball of yarn to a task list is what it sounds like. Yeah, so have you tried getting it all out of your brain on a whiteboard or in a flowchart or something like that yet? No. That's it that might have I think.

Michele Hansen 13:48
Yeah, it's just written on my whiteboard as so sexes question mark.

Colleen Schnettler 13:54
That's funny, because it clearly has like 100 pieces that you need to sort out.

Michele Hansen 14:00
Like, if this was Cards Against Humanity Cards Against SAS manatee, it would be that that card would be BS. Yeah, I should, I should do that. Um, yeah,

Colleen Schnettler 14:15
I feel like you should mind map it on a whiteboard, because you just brain dumped, like all of these thoughts about all of the potential contingencies on me.

Michele Hansen 14:24
And it's not like super complicated. It's just like, there's a lot of all these little pieces. And they just, it's like, what order do they have to happen in and what do we need to actually execute on each one of those pieces, and there's like the product side, and then there's the admin side,

Colleen Schnettler 14:40
right? So you need to get all that out of your brain in a whimsical or on a whiteboard or something, I think would be a good first step to see how many pieces are you actually dealing with? And how can you rearrange the pieces to put them into a manageable task list?

Michele Hansen 14:55
Yeah, yeah, I should do that.

Colleen Schnettler 14:57
I mean, sometimes that's easier said than done. But if you Seems like a good first step. Like when I have these hairy kinds of problems, I just like to brain dump them out. And then you can try and find patterns and actionable items and things like that from your brain dump.

Michele Hansen 15:12
Yeah, I should do that tomorrow morning. Because I thought you just told

Colleen Schnettler 15:15
me tomorrow you have to focus on sock to.

Michele Hansen 15:18
Ah, yeah, that's the problem right now. Okay.

Colleen Schnettler 15:20
Literally just said that tomorrow. You have to. You have to finish stuff. So you can get your audit kicked off on time. So you can hit your end of the year deadline.

Michele Hansen 15:28
Oh, it's already 530. So I will find time for it tomorrow. Okay, yeah. Oh, yeah. But he has only like half an hour to make his espresso and whatever. I'll do it that.

Colleen Schnettler 15:41
It feels good, though, to get the stuff out of your head onto paper, I think. Yeah, no,

Michele Hansen 15:45
I mean, that's what I used to love about GTD. I don't know if you ever were ever a GTD person that getting things done just all like, what is it whenever you it's basically whenever you have a thought in your head or like a work related thought you should either do it, delegate it or delay it,

Colleen Schnettler 16:02
do it, delegate it, or delay it. But basically, the

Michele Hansen 16:05
underlying idea is that walking around with a ton of things in your head creates stress on its own, like just like the the mental weight of that. Oh, I totally see that. And so you should just get things out as much as possible.

Colleen Schnettler 16:20
Speaking of that, so my husband has finally started listening to our podcast two years later. We've had some funny conversations, but I think it was last week or the week before we talked about task management tools, because you were listening to out of beta and I was telling you how I like to write things down in a notebook. Yeah. So what he does is he write things he writes, he's kind of old school like you know him. And he writes everything on a post it and puts it on his computer screen. But he said it's great because when you're done you have the physical like action of taking the post it crumpling it up and throwing it in the trash can. Oh, sounds so satisfying. See, I

Michele Hansen 17:00
love the like the scratchiness of my pencil when I'm crossing stuff off on it. Right. Right. Like just like, yes, totally see how I know that's next level does. Does he have a little basketball hoop in his office to throw them in?

Colleen Schnettler 17:14
No, but I should get him one. Yeah, no, I agree with that like carrying around the the mental overhead in your head mental overhead in your head. You know what I mean? It's like background processing. I'm actually this week, I'm onboarding two people for refine, and I've been putting it off because a product is just not good. It's still, it's not what I would like it to be yet. But both of these people were like, hey, we want to be beta users. We want to do it. And I was like, we're just going to do it because this stress of like, how's it going to go? Are they going to be happy with it? Are they not going to be happy with it? It's almost like background noise. And I'm like, I just need to do it and see where we are. So kind of the same. Or you just got to write it down, get it out of your brain so you can move forward, figure out how to organize it and knock it out?

Michele Hansen 18:05
Well, I think I suppose a lot of things in life that like dreading something or like anticipating something, in general, is more extreme of a feeling than actually doing the thing, right? Like whether this is a thing you don't want to do. So like a task you're avoiding, like, actually, David, this happens to me all the time, where I'm like, dreading something for like a month, and then I actually get myself to do it. And it takes five minutes. And I'm like, brother, like, seriously, like I walked around all stressed out about this for that long. Like I'm like almost mad that it wasn't work more difficult. But then also like anticipating a vacation right like that anticipation can that is just as much part of the enjoyment as actually taking a trip. Yeah. I agree. So yeah, like getting out that anticipation I think is and I guess this Yeah, this just feels like such a hairy thing. And I'm just kind of like, and like, I kind of want to avoid it. And it's just like, This feels complicated.

Colleen Schnettler 19:07
I like your plan to take 30 minutes tomorrow and get started on it.

Michele Hansen 19:10
Yeah, I think just like if I do that, like first thing in the morning, go to the whiteboard, just like dump it all out. And then at least when I get back in on, it'll be Tuesday morning before I'm actually back in the office. I'll probably have my laptop with me on Monday. But yeah, I will distill things down into a task list then and, you know, I feel like Matias deserves a day to breathe after. Well, he has to you know, there'll be stuff to finalize with sock two anyway. So yeah, yeah. I think that's a plan. All right. I like it. It's a good plan. So while I've been walking around with all of this stress, or maybe actually part of it is making making this dress better. I don't know if you have noticed, but I have been entertaining myself on Twitter. I haven't what have you. Okay, um, I have started writing Limerick. Next. Yes software. Have you seen them?

Colleen Schnettler 20:03
I've seen a couple I've seen I don't know what's going on with my Twitter. But yeah, I've seen a few of them read us some. We'd like to hear your highlights. I'd like to hear your number of highlights.

Michele Hansen 20:14
Yeah, it's been kind of a fun. I don't know, just, I guess entertaining myself. Like they kind of came to me as I was picking raspberries. And I made some of the other day while I was driving to and from language school, and it was just like, it's, it's for my own enjoyment. And if other people like it, then that's a plus. But mostly it's for me. Okay. There once was a SAS with cash to burn, acquisition started good. But things took a frightful turn. Cried the PM, our bucket is leaky. The value prop is murky, and our UI is creaky. And they lost all of their customers to churn.

Colleen Schnettler 20:56
Oh my gosh, Michelle, that is fantastic. You might be the first person I have ever heard of to write a SAS Limerick. Like,

Michele Hansen 21:05
I want to hear them. Yeah, let's do. Okay, three, one, There once was a company that went remote, moved their HQ to a boat. But they had problems financial, that were really quite substantial. And couldn't stay afloat.

Colleen Schnettler 21:22
Like, wait, so these just come to you while you're

Michele Hansen 21:26
Yeah, and lest I be, you know, perceived as criticizing remote work, which I literally do. There once was a company that required everyone to come in to sit at home in pajamas, they said was a sin. But the people had skills to proffer to remote companies with jobs to offer. And so the employees quit with a grin. Yay. This is what you get for like listening to wait, wait, don't tell me. You know, every religiously of your entire life. Yeah, it turns out. Yeah, it turns out Limerick are okay, actually, this this one I was I was very happy about this is the last one everyone. Okay, there once was an orange website, where doves hung out day and night, about a new startup instead of behaving convincingly, they said won't make money and can be built quite trivially. And this dismissal is now a REIT. Yay. Which that one was a I guess you probably got the reference, right? I don't think I got the reference. Oh, the orange website is Hacker News. And the startup where people are like this one. This will never make money and can be built easily. That was what they said about Dropbox. It's the famous Yes, I remember that. Yes. And now it's like a rite of passage to be skewered on Hacker News, people to tell you that what you've built is, like, worthless. And it's really simple for somebody who knows how to use Linux. And then it's like, Oh, oops, million, billion dollar company, you know? Yeah, I don't know. I've been I've been having fun with that. I think it's just like, good. Even if my brain I think I don't think it's a sign that my brain is just like running constantly. But at least if I can put it on something funny, or like, I like I need to give it a task that is not being worried and stressed out. Because otherwise, I will just like continue to spiral with that stress. Right. I need to like feed it another topic. I like it to to keep it calm. Yeah. I mean, so like things are kind of chaotic for you. But you still found time to talk to two different customers this week. Oh, yeah.

Colleen Schnettler 23:35
I'm super excited about this. So I haven't yet so it is Thursday morning. So we're doing it in the mornings this week. And yeah, we're gonna get them on refined rails, which is something I've been dragging my feet on, because there's so many sticking points. But I think it's good to just, you know, you got to ship the product, right? Eventually, you have to ship the product. We all know that. And so I'm going to do that, like in an hour, actually. And we'll see how it

Michele Hansen 24:03
goes. Oh, wait, no, you're like actually shipping refined for Rails?

Colleen Schnettler 24:06
No, only two people. So I have five people who pre bought it. So they they remember I'm doing that founding customer thing. Yeah. But I've been pushing them off like, Oh, we're not ready. We're not ready. And oh, wait or bury the lead. Colleen.

Michele Hansen 24:21
I didn't realize that was happening.

Colleen Schnettler 24:26
Well, if it doesn't go, Well, we're gonna cut this whole part of the podcast. Just kidding.

Michele Hansen 24:31
If you are listening to this right now, it went well,

Colleen Schnettler 24:34
it went okay. So they pre purchased it, but they've all they're all Rails developers experience Rails developers, they've all been really, I mean, they want us to win, right? They bought a product before it was done. And you know, but they have been asking like, okay, you know, it's been a couple of months and I have a product like I can give it to them. It just some of the things don't quite work the way I want them to or You know, they need more glue on their application logic side that I would like them to have to have. But, you know, you got to ship it eventually, like I was going to ship it back in August. When was I in Wisconsin July, I was going to ship it back in July. And then we had to make some, some big front end changes. So it got pushed off again. And so I'm gonna do it like literally in an hour. I'm doing it this week, with two people who have pre purchased it. So I've been well, the kids had school Monday, Tuesday, Wednesday, so I was able to work really good days, Monday, Tuesday, Wednesday to get ready for it. And, you know, eventually just gotta do it. So I'm doing it. If it ship it, yeah, it's kind of where we are, and move on, right, and learn and figure out what they really need, etc, etc. So on and so forth. So we're doing that today. So that'll be fun, like a little nervous, which is kind of an interesting feeling. I don't tend to get nervous very often. So it's kind of a new new feeling for me.

Michele Hansen 25:58
I think I think it'll be great.

Colleen Schnettler 26:00
I think it'd be great. Like we have a lot going on, it's just feels like running a marathon between now unreal, SAS. So, you know, this month is going to be really busy. And then hopefully after that, it'll be a little less crazy.

Michele Hansen 26:13
Yeah. And hopefully, you'll get a lot of good, you know, motivation and ideas and encouragement and stuff out of Rails house as well.

Colleen Schnettler 26:20
Yeah, you know, the thing I really like about the Hammerstone product is it has really put me back in into the right. I mean, I'm in the Rails community, but like deeply ingrained in the Rails community. And man, we just have such a great community. So many people have offered to like have calls with me to look at the product, talk about the product to talk about how the product could be better. I mean, we just have a great community, and it's nice to lean into that community. And it's been really affirming, I guess, is a good word. Is the rails hugs still a thing? I don't know. No. Oh,

Michele Hansen 26:52
I went to a Rails training like, years ago, and like they told us how there was this, like, weekly group hug in rails like a Friday Hug or something. I'm maybe you're giving me this really weird look, but maybe I'm totally misremembering this, but it did seem like a very, very nice crowd.

Colleen Schnettler 27:08
Yeah, it's a great, it's a great crowd of people. And I think everyone is, you know, traveling again, not everyone, some people are traveling again, and coming out of COVID. And everything. There's been a real resurgence, I think in the community. And it's neat to be involved in that and a part of that.

Michele Hansen 27:24
Yeah, for sure. I think it's especially being remote. It's, it's vital to have community like that. Totally, totally. But speaking of community, should we give some shout outs?

Colleen Schnettler 27:38
Yeah, go for it. By the way. I

Michele Hansen 27:39
don't know if you saw, I think I sent this to you. Right. So part of our idea with this is that people can support us, but they also get, you know, some sweet, sweet backlinks for themselves, right? So you get SEO out of it and you get a podcast, but our good friend, the daringly handsome Kevin Griffin actually, like sent me a screenshot the other day of us showing up in a new backlink report. So it works people. Yeah, I

Colleen Schnettler 28:05
saw that you tweeted that from the account. And you? Yeah, I

Michele Hansen 28:08
think I like that. Yeah. So yeah, that was kind of a fun thing to see. Okay, so huge thanks to all of our listeners who become software socialites and support our show. You can become a supporter for $10 A month or $100 a year at software social dot dev slash supporters. And today I want to start out with the new people, the new software socialites.

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Matthew Wojtowicz of WorkCited 

Arvid Kahl
James Sowers from Castaway.fm
Jessica Malnik
Damian Moore of Audio Audit Podcast Checker
Eldon from NodleStudios

Mitchell Davis from RecruitKit

Colleen Schnettler 30:12
Awesome. Thank you for reading those names Michelle.

Michele Hansen 30:15
Thank you everyone, for keeping us on the air. All right, go. Go try not to melt. I hope it gets better.

Colleen Schnettler 30:23
I will. Bye bye

Transcribed by https://otter.ai