Hi there.. I disappe
[2022-10-12 10:48:13 AM] : Hi there.. I disappeared for a while but have been quietly working on building up my little side business. I spent last winter training to be a yoga teacher and have recently started offering some classes online. I have a question about sales tax compliance (if this is not the place let me know!).. from what I can tell it seems that basically the global sales tax situation is hopelessly complex and most people selling things online simply don't worry about it. Currently I use a platform to handle my class registrations and payments that does not collect or remit any sales tax on my behalf. I have students joining from all over the world (I am in Canada, and don't actually know where most students are except for a handful I happen to know personally who are in the US, Europe, Israel, or elsewhere). As far as I can tell, it seems this is mostly fine for now since live, instructor-led courses are exempt from sales tax in many places (could be very wrong about this though). I'm working on packaging up some courses classes 30x500 style though and starting to wonder about how to sell them. In theory I would like to comply with any existing sales tax laws, but the world just does not seem set up for solo-preneurs selling a little bit of stuff online. So I thought I'd ask here to see how/if other people handle collecting and remitting sales taxes. Not asking anyone to out themselves to knowingly ignoring laws or anything, but just curious. Any thoughts?
1 Reply
[2022-10-12 10:54:14 AM] : There are companies like FastSpring and Paddle that will handle credit card handling, (optionally) delivery of digital products, and taxes for you.
[2022-10-12 10:54:39 AM] : Paddle explicitly won't allow live events I think
[2022-10-12 10:55:13 AM] : so they'll do VAT/sales tax/etc. depending on country of buyer
[2022-10-12 11:48:16 AM] : I did come across Paddle.. I'm not running a sass though, so not too sure how well it would fit for me. but I'll check on fast spring.. the whole situation just feels hopelessly complicated, it would be ideal if there was some platform that could handle it all. would happily pay for that.
[2022-10-12 11:50:45 AM] : I'm also trying to avoid building my own platform for running the classes.. I'm 1000% the kind of person who gets bogged down in stuff like building bespoke platforms rather than actually doing anything.
[2022-10-12 11:52:11 AM] : I am surprised fast spring and paddle aren't more popular though, almost all the platforms I see use Stripe to process payments, which seems way inferior to those
[2022-10-12 11:53:01 AM] : this looks super cool.. https://fastspring.com/solutions/selling-digital-products/
[2022-10-12 11:59:36 AM] : paddle supports digital downloads too
[2022-10-12 11:59:45 AM] : I've used both
[2022-10-12 11:59:53 AM] : for ebooks/software download
[2022-10-12 12:46:11 PM] : Yes, Paddle supports non-subscription products as well. It's not limited to Saas at all. I use it for one-time product purchases. And it's a lot cheaper than FastSpring last time I checked at the beginning of the year.
There's also LemonSqueezy. They're newer and when I tried them in January, I ran into bugs in their own product that didn't inspire confidence. They also didn't have a sandbox environment for testing at the time, but I think they've added it now.
[2022-10-12 12:50:04 PM] : interesting.. looks cool. It's surprising that most of the video/online course hosting options don't handle all the tax stuff already. The main thing I'm trying to avoid is building some custom solution.. I've found a couple platforms I really like for managing registrations and video links etc., but they're not great for actually running a business
[2022-10-12 12:50:42 PM] : I think part of the reason why Stripe is so popular is that many people aren't aware of the tax implications or are ignoring them on purpose thinking no one will go after them.
There are also those that like the customizability of Stripe, and they use separate services or hire someone to handle the taxes. Stripe Tax makes this a bit easier now, but still involves work on your part to register in various localities once you meet the threshold, and then remit the tax.
[2022-10-12 12:52:59 PM] : Also, maybe I'm remembering this wrong, but I think Nathan Barry said on Twitter that they're working on handling tax when you sell through ConvertKit.
[2022-10-12 12:54:44 PM] : yeah my initial attempts to find an answer were overwhelmingly met with "you're small, don't worry about it".. I think it's probably true I'd get away with it for a long time, but if it's at all possible I'm still interested in meeting tax collection/remittance requirements. It's just feels impossible for a single entrepreneur.. I'd spend my entire time dealing with tax issues. There are hundreds of separate tax jurisdictions in the US alone! I just don't have the bandwidth to set up tax remittance accounts in hundreds of places and file hundreds of tax returns.. it's enough hassle dealing with two in my own country.
[2022-10-12 12:58:26 PM] : And there's just no way most small online entrepreneurs are doing that.. so was curious what they are doing, if anything. My ideal platform is one like any of the above mentioned ones that also supports video hosting, like uscreen
[2022-10-12 04:51:57 PM] : Quaderno seems to be exemplary in tax compliance for indie entrepreneurs https://www.quaderno.io/
[2022-10-12 06:13:49 PM] : Kira McLean having used both FastSpring and Paddle, I just ... don't think about taxes, other than income taxes. it's great
[2022-10-12 07:32:55 PM] : i’m in canada and i just pay sales tax in the EU and in Canada. i don’t know if that’s right, but i don’t specifically know that it’s wrong
[2022-10-12 07:33:39 PM] : so it’s just 1 extra tax return
[2022-10-12 07:39:51 PM] : South Africa also charges VAT on non-resident businesses, as do other countries besides EU. But beyond a certain point as a small business you're not likely to have people going after you from different countries
[2022-10-12 08:09:38 PM] : PayHip is another one that is a merchant of record, and I saw they can host courses now too
[2022-10-12 09:31:54 PM] : that doesn’t sound bad! and yeah honestly I’m not too worried about being tracked down or anything.. I just thought since I’m starting to make some money, and I know I have to collect sales tax in my own country (and know how to etc), I’d check how people handle it for other places where they have tax remittance obligations. Turns out the main answer is they just don’t.. which tbh seems fair. The ask is just way too much for a normal small business. To me it feels like I’m finally making a little bit of money but in the scheme of things it’s a rounding error on any normal person’s spreadsheet.
[2022-10-12 09:33:24 PM] : if nothing else this has given me huge insight into what I’m even looking for (“tax compliance”, “merchant of record”, “non-resident business taxes” etc), so thanks everyone :pray: what a world.
[2022-10-13 11:07:41 PM] : When I looked at Quaderno, it did indeed seem promising, but they don't take care of absolutely everything like a merchant of record. It's up to you to file and remit the tax, and register in the appropriate localities. So it's more comparable to Stripe Tax but more expensive. From the Quaderno site:
Quaderno provides all of your financial data in easy-to-read reports ready to share with your trusted tax advisor. So you can finish the quarter celebrating, not slaving over returns.Here's the price breakdown comparison using $40,800 per year over 1200 transactions based on my $3400/month and 100 orders per month average so far with Ruby on Mac over the past 8 months: • Paddle: (40800.05 + 1200.5) = $2640/year • Stripe Tax: (40800.029) + (1200.3) + (40800.005) = $1747/year • Quaderno + Stripe: (40800.029) + (1200*.3) + (49 * 12) = $2131/year Quaderno charges a monthly fee for a certain amount of transactions, but it's not very clear how they count transactions and how many would typically be generated for every sale. They say "Quaderno counts a transaction when a document is created. This includes invoices, receipts, credit notes, and expenses." I used the $49/month plan in the comparison above, but it could easily have to be bumped up to the $99/month plan, which would make it $2731/year. So, for only $509 more per year compared to Quaderno + Stripe, or possibly $90 less, I don't have to deal with any tax stuff at all with Paddle. That's a no-brainer for me. Even the $893 difference with Stripe Tax is worth it to me because I don't have to maintain any payment-related code. Not only that, Paddle also supports PayPal as a payment method, but Stripe doesn't. A lot of people don't realize that many people don't have access to a credit card, and so they don't realize how many customers they might be losing by not giving them a PayPal option. According to a quick search in my email, 266 customers paid with PayPal. That's a whopping 34%! With the average transaction this year being $36, that's 266 * 36 = $9576! It's possible that some of those might have chosen another payment method if PayPal wasn't available, but even if it was only 10% that would have gone away, that's still almost $1000! I'm going to turn this into an e-bomb.