Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

news.ycombinator.com

Post reply on HN
Print view View original

41–50 of 89 posts

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#41

Post by pqvst »

bfstein wrote: post #8

We use Sphere ( https://www.getsphere.com ), and it’s the only good solution I know of for international VAT that handles everything end-to-end (registration, calculation, filing, and remittance). We use Stripe Billing, and we actually use Anrok for US sales tax compliance. They’re solid domestically, but they don’t do international registration, filing, and remittance; they only do calculation. There are also firms…

Sphere looks quite promising, and I haven't come across them before. Their coverage looks pretty good as well, and pricing sounds reasonable. It looks like they have a Stripe integration. Is that something you're using?

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#42

Post by andrewrea »

Lot of folks suggesting / commenting on solutions. Wanted to add some nuance on 1. MORs (Merchant of Records) vs global sales tax providers (StripeTax/TaxJar, Avalara, Anrok) and 2. the risk / reward of actually handling these taxes at different stages of your business.

1. Merchants of record can make sense for smaller B2C companies with lots of international revenue that don't want to handle taxes or chargebacks/fraud. But the fees are extremely high and often your company would only be remitting in a few jurisdictions if you were handling this independently. Respectfully, a lot of the MORs are selling fear more than something you actually need for a lot of sellers. If you're already on Stripe, I'd stay there vs going to a Paddle. Prob not worth the fees. StripeTax is good but very expensive and you'll need something else for filing, registration remittance. A bunch of new startups have hit the space in the last couple years (several of which have been mentioned here) that can help with US and/or international calcs, filings, remittance.

Just do your diligence and don't get sold something that's overkill for what your business needs.

2. On that point, not legal advice but from a risk management POV, below a certain amount of revenue ($500k-1M in ARR), it's probably fine to temporarily punt on these taxes or to just collect & remit in your home state / country. You probably won't have nexus in most jurisdictions early on anyway. Additionally, many VAT countries don't tax B2B software so if you primarily sell remotely to other businesses (sounds like you are mostly b2c so not relevant to you) you might not need to worry about VAT in most countries, just US sales tax. Additionally, if you're based in the US, you're probably at higher risk of enforcement here than you are abroad. Washington or New York is more likely to catch up with you than a country in the EU (or vice versa if you're based internationaly). tl;dr - get PMF. And then handle your home country / states first. Don't freak out about this at a lower volume of revenue.

Full disclosure I'm the co-founder of Taxwire.com and we're a startup in this space. We do registrations, filings, remittance, and calculations in Stripe, QBO, and other billing/payment platforms for the US and recently launched VAT as well. So obviously I have some bias on solutions but hopefully the above is helpful.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#43

Post by rglover »

nocoiner wrote: post #39
rglover wrote: post #34

Earlier quoted context omitted.

You're not on a tangent at all, you're 100% correct. It's shameful (in the most absolute sense of the term) that an entire class of people who contribute nothing to the world get to dictate—at the barrel of a gun or threat of imprisonment no less—that we owe them money that they then go and spend carelessly and without accountability (and this is independent of political beliefs—every single politician and bureaucrat…

Love how the person who did a “AI-powered code snippets manager and generator and … Mod CSS framework” just casually dismisses millions of people around the globe who ensure safe drinking water, distribution of vaccines, maintenance of nuclear warheads, provision of public health, etc., et fucking cetera, as a class of people who “contribute nothing to the world.” Very cool - good luck with Mod. Can’t wait until it c…

You're cherry picking what I've worked on. I've also built a full-stack JavaScript framework that's a far better solution than the current competition and can (if utilized) solve a lot of the issues with software we see today.

To your point, all of the problems you outline are either created/exacerbated by government or would be better handled by private industry.

That you reacted emotionally to my comment means I'm far closer to the truth than you might be willing to admit.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#44

Post by rnewme »

jwr wrote: post #20
dinkblam wrote: post #10

i think this matter is confused because it contains two distinct things: a.) accounting for the VAT owned to dozens different countries and b.) "remitting": actually paying the VAT to the tax agencies of dozens different countries many services help with part a.), but i haven't found a single one that helps with part b.) - you can only circumvent the issue by selling on a platform (like the different app stores or "F…

In case someone thinks this stuff is simple and you can go with country codes for VAT: have you heard about countries like AX (Åland Islands, part of Finland)? Do you remember that GB used to be within the EU VAT zone, but now isn't? How about handling XI (Northern Ireland) and the migration of customers from GB to XI? Or (one of my favorites) — do you realize that parts of ES are not within the EU VAT zone (for exam…

What makes B2B simpler? Let's say the product was at same price point

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#45

Post by rnewme »

andrewrea wrote: post #42

Lot of folks suggesting / commenting on solutions. Wanted to add some nuance on 1. MORs (Merchant of Records) vs global sales tax providers (StripeTax/TaxJar, Avalara, Anrok) and 2. the risk / reward of actually handling these taxes at different stages of your business. 1. Merchants of record can make sense for smaller B2C companies with lots of international revenue that don't want to handle taxes or chargebacks/fra…

Ta wire looks interesting. Let me pick your brain here for a moment, my wife is looking to start SaaS soon, she is based in EU but intends to open both EU and Wyoming llc. Wyoming llc would sell B2C, EU llc would then invoice Wyoming llc monthly so she and her future employees can get paid. Since the eu country doesn't have tax agreement with USA the anon llc would be practically invisible to EU, and additionally as foreign owned llc with no employees I believe there is no tax in USA either? What do you think about this approach? Does your advice still hold; start with stripe, do the minimum to have llc working?

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#46

Post by rnewme »

nocoiner wrote: post #39
rglover wrote: post #34

Earlier quoted context omitted.

You're not on a tangent at all, you're 100% correct. It's shameful (in the most absolute sense of the term) that an entire class of people who contribute nothing to the world get to dictate—at the barrel of a gun or threat of imprisonment no less—that we owe them money that they then go and spend carelessly and without accountability (and this is independent of political beliefs—every single politician and bureaucrat…

Love how the person who did a “AI-powered code snippets manager and generator and … Mod CSS framework” just casually dismisses millions of people around the globe who ensure safe drinking water, distribution of vaccines, maintenance of nuclear warheads, provision of public health, etc., et fucking cetera, as a class of people who “contribute nothing to the world.” Very cool - good luck with Mod. Can’t wait until it c…

Strawman nolifer.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#47

Post by jwr »

rnewme wrote: post #44
jwr wrote: post #20

Earlier quoted context omitted.

In case someone thinks this stuff is simple and you can go with country codes for VAT: have you heard about countries like AX (Åland Islands, part of Finland)? Do you remember that GB used to be within the EU VAT zone, but now isn't? How about handling XI (Northern Ireland) and the migration of customers from GB to XI? Or (one of my favorites) — do you realize that parts of ES are not within the EU VAT zone (for exam…

What makes B2B simpler? Let's say the product was at same price point

You basically don't deal with VAT at all: charge the net amount, mention reverse charge on the invoice and you're done.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#48

Post by fhd2 »

jwr wrote: post #47
rnewme wrote: post #44

Earlier quoted context omitted.

What makes B2B simpler? Let's say the product was at same price point

You basically don't deal with VAT at all: charge the net amount, mention reverse charge on the invoice and you're done.

Except when selling to your own country. But there, VAT is easy.

To expand a bit on the reverse charge procedure: It means the _buyer_ pays VAT. Which makes a lot of sense in B2B, since companies need to look into what local VAT they owe anyway. Adding the reverse charge invoices to that is easy. Not to mention that if they also sell goods or services, they'll end up paying little to no VAT anyway.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#49

Post by nik736 »

jwr wrote: post #17

EU SaaS solo owner here (about 10 years so far). I gave up on B2C entirely. It's just too much hassle. My accountant starts screaming in horror whenever I mention VAT MOSS. Whenever I looked into the rules, I saw a snake pit with moving snakes. Additionally, B2C has tight margins, so eating into those hurts a lot. Whenever I looked at companies like Quaderno, they looked great, but when I actually tried to use them,…

Can you explain why VAT MOSS is such an issue? It saved me a lot of time so it was actually quite useful.
Post reply on HN