Legal, Tax, and Accounting March 10, 2020

SaaS tax is a nightmare

Anthony Lee @1979

My side project is getting enough MRR, where now I have to think about sales tax (Mainly in the USA). I couldn't find anything online (other than taxjar), where I can implement some kind of API with Stripe.

Anyone here has experience with handling taxes with your SaaS product?

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    Taxes are a rigged game. The system is designed to be complex so that the big guys who can afford the best lawyers can optimize to a great extent, while the little guy pays everything they can just in case something goes wrong and they get a fine they can't afford.

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      Exactly how I feel. The more I learn about it, the more ridiculous it is.

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    Main product I know of that solves this is Paddle. Spoke with a rep a few days ago, can share details if needed.

    For my SaaS its simple since not hitting the levels of reporting outside our native (ex)EU.

    But recent US Wayfair case now means any global business with 200 transactions per year or $100k in a single state adds a legal requirement to register and pay taxes.....can get complex.

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      @awcode I know, the deeper I learn about taxes for SaaS—it is so painful... I am looking into Paddle now.

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    I am US based. Its very easy. Figure out the sales tax of your state, declare your monthly revenue, multiply by the sales tax% and pay it online on your state Tax website.

    For example I am based In Atlanta,GA...I got to the Georgia Online Tax center ( ) Created an account, info about me and my business, and I pay my taxes every month before the 20th.

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      Do you understand implications of Wayfair case?
      200 transactions per year (just 17 customers paying monthly) in (many) states means you also have to register, file and pay taxes there. No longer limited to physical presence, economical activity also creates a nexus.

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        I think the economic activity threshold is at least $100,000 in nearly all states (except Kansas ... wtf Kansas) or 200 transactions. So if your revenues are small per state, you don't have to worry about it. (

        Also some states have notice and report laws with lower thresholds of $10,000 such as Oklahoma and Pennsylvania (

        Also, I believe the Wayfair case refers to all sales tax, not just saas. So while the vast majority of states now have economic nexus laws, only about 20 or so states tax saas products ( so if your product is saas you only have to worry about those states. For example, Pennsylvania taxes saas but Oklahoma does not.

        But yes @1979 state sales tax is a nightmare. I would recommend using TaxJar if you get to this point.

        I am not a lawyer or tax expert so if anyone has any corrections to the above, please let me know.

        More on Wayfair case:

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          I am trying to implement their API with Stripe. It is still a freaking pain.

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            Sorry to hear that. I feel your pain 🙁

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      @jkhaliph Does your SaaS only sell products on your state? I had to look into something like taxjar to only calculate sales that are from my state, not from other states.

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    "Businesses start with the accountants" - that's what my mentors always told me. I strongly advice to find a good one because all your profits can easily be lost because of some silly mistake in some stupidly complicated form...

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    You can try to contact Avalara, they are very focused on sales tax. I know that their product Ava Tax was able to connect/have an integration with Stripe. I am not sure what their pricing is with Stripe. It's based on # of transactions in a year.

    Hope it helps!

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    Here is a great webinar from Taxjar:

    Webinar: SaaS Sales Tax Bootcamp

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    Can't help you (I'm UK based), but tax is like the worst thing for me for growing an international business. It totally stresses me out and I've normally gotten someone to help me.

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      This comment was deleted 2 months ago.

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    Hey Anthony, we do SaaS tax automation and would like to see if I can help. DM me and we can discuss.

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    This comment was deleted 3 months ago.

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    This comment was deleted 2 months ago.

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      It seems like most people use Paddle. My apps are all heavily integrated with Stripe, I wonder how long the transition will take if I go that route. @Wessel

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        This comment was deleted 2 months ago.

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