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What's your approach with sales taxes?
For SaaS products, how do you handle sales taxes? Do you charge sales taxes?
Have you considered a "merchant of record" tool like Paddle?
Have you considered a "merchant of record" tool like Paddle?
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Theres quite a few tools out there.
Paddle likes to reject people - LemonSqueezy is an up and comer
But... MoRs will charge all the taxes from day 1
You (in 95% of cases) wont be liable for taxes in a region unless you hit a certain threshold of sales in that region (Some places $1k, others $10k+) - it could take a while before you MUST pay taxes in Random Country.
Using an MoR is great if you really dont want to care about it
But you're actually losing a lot more than the their "Fees".
You users will end up paying 20-25% more for your service because the MoR charges taxes from day 1.
Stripe has some tooling to track your tax obligations in regions, and partner tools to do the filing.
IMO (What I plan to do) - Stick with Stripe till you cross thresholds for big regions (EU, US etc) and then look for a solution.
@McPizza found your post as I've been stressing a lot about this recently (about to start accepting payments for a saas company targeted at consumers and businesses). Ultimately I would like to take this advice, but I found out recently that there is no tax threshold in the UK which is a huge market and where 20% of my website visits are coming from - i.e. from the first sale you need to register and pay for VAT taxes if the payment is from a consumer, or complicate your checkout process by asking for a business VAT number. Will the UK find out about me? Probably not if I'm a small seller - that said, it's a worry since it's technically illegal to not remit sales taxes when required to do so. Another annoyance is that in Stripe, you can't even mark the business VAT number as required with their self hosted checkout if the payment is on behalf of a business -- so people could inadvertently leave it out thereby forcing you to have to register in the UK and pay VAT or have to chase down customers to get the VAT number after the fact. Same case in India/other countries that have annoying tax laws.
Signed up for Paddle, but they seem to be extra picky and have already denied activating my store because they don't like that I don't have a ToS in place yet (to be fair, I will have this in place soon and before launch, but I have other tasks to focus on before getting the ToS done) - plus they charge an extra 10% for cart recovery which seems like robbery. Also signed up for LemonSqueezy - they seem to have a better product offering, better UI, and don't charge for cart recovery so I'm likely going with them.
tl;dr I've come to the conclusion that paying an extra few percentage points in fees per transaction to LemonSqueezy or Paddle is very much worth it to not deal with any of this tax law nonsense ever again. I'm frankly shocked Stripe hasn't bothered to improve their Tax product offering to remit taxes at this point, it's a huge problem that must be affecting most of their big sellers - or even smaller sellers that make a single sale in the UK for example.
Really depends on your tax jurisdiction and likely the type of customers (consumers or businesses with VAT ID) and pricing structure (whether it makes to complicate your checkout process verifying whether customer is tax exempt)