16 ms·

YES, considering the only best competitor in this space Paddle takes 5%. Taxes is the reason why in the past most EU/UK businesses go to Paddle. Stripe's Tax f

YES, considering the only best competitor in this space Paddle takes 5%. Taxes is the reason why in the past most EU/UK businesses go to Paddle. Stripe's Tax feature now saves people who were considering Paddle a lot of time now.

deleted 5y ago
[deleted]
outcoldman 5y ago
Do you know if Paddle files taxes for you? And just send you 1099? Or it is similar to Stripe Tax, they just collect and you have to file taxes?
- hijodelsol 5y ago
  Paddle and FastSpring (I found their support to be more helpful than Paddle's but they charge even higher fees), the two solutions commonly used in that space, act as Merchants of Record. Since you are not selling directly to your users you don't have to file the corresponding taxes, just the ones that correspond to the transactions between Paddle/FastSpring and you. But I'm not an accountant and they may change their operations in the future so don't rely on this comment alone.
- pimterry 5y ago
  I use Paddle, they do file 99% of your taxes for you. In effect, they sell the product to customers, and handle all the tax on that side, for every tax regime in the world. Meanwhile you act as a company with a single B2B client and one invoice a month (covering Paddle's net sales minus 5%) instead of N invoices. They send you an email every month with your 'reverse invoice'. As accountancy goes it's extremely easy, but you do need to do the basic tax filing in your local jurisdiction. That 5% includes all the processing fees, they also have a bunch of useful subscription infrastructure, and they handle customer support for billing issues, which tends to be a substantial percentage of issues as you get larger. So far they've been great, and doing nearly zero accountancy is worth a lot of money to me as an indie dev with a digital product (where you need to know a lot about local digital taxes nowadays). That said, would I do the same at the beginning if this existed a few years ago? Hard to know, but this doesn't look so compelling that I'm likely to switch now.
  - Silhouette 5y ago
    How do you find working with Paddle? They've been on our shortlist for a new project and we've heard only positive things from people who actually use them. However, their terms could make any lawyer or company officer who actually read them visibly wince, and so far that has prevented us from engaging with them despite their clear advantages over the traditional payment services.
    - pimterry 5y ago
      Are there some specific terms in their legal bits that you're concerned about? Personally, they've mostly been very good. The product works, it was very easy to set up and it does everything out of the box, and it's made sales tax & accountancy almost completely disappear. I have occasionally run into issues or bugs, and their API is a bit of a mess, but nothing show stopping and their team has been reasonably responsive and sorted everything out very reliably. That's noticeably got better & faster recently, I think they're beefed out their support team a lot in the last year or so. If you're selling a new product as a substantial business, I think they're good but there are other options to look at too and there are tradeoffs (5% is high, you could probably do your own customer accountancy etc in house). If you're a solo dev/small indie, or just getting started though I think it's a no-brainer. It's just so much quicker & easier than doing everything yourself.
      - Silhouette 5y ago
        Are there some specific terms in their legal bits that you're concerned about? Quite a few, but to give an example from high on the list, it appears that a SaaS company would warrant that software sold through Paddle is always bug-free, accept unlimited liability via the related indemnification requirements if it isn't, and yet have no right participate in or even know about any relevant process if something goes wrong. That's a toxic combination and hardly looks like a healthy basis for a mutually beneficial business relationship. Other concerns related to the considerable flexibility Paddle appear to give themselves in terms of how they represent, price and provide access to whatever is being sold, again apparently without necessarily requiring the consent or possibly even the knowledge of the underlying provider. We're unclear about how much this might be necessary because of merchant of record legal model, but it has little to do with what we'd actually want to use Paddle for or why we'd choose them over other services for collecting payments. For context, this is a new business but run by a team who have collectively founded multiple others before. Several of us are very much over wasting time and effort on the mechanics of taking money from our customers and complying with whatever rules accompany that. Obviously fees charged by a payment service do matter, but a moderate difference there is still insignificant to us if the service we use can offer enough flexibility for our needs and easy integration, and otherwise takes on as much of the mechanical implementation and regulatory burden as we can shift.
tonyedgecombe 5y ago
That's the reason I use 2Checkout (formerly Avangate). I can issue one invoice a month, in my own currency. That saves a lot of work and aggravation.
scubakid 5y ago
With this new Stripe solution, do you still have to register for licenses to collect tax everywhere and remit the sales tax to various US states and foreign governments? Unless I misunderstand, that still sounds prohibitively onerous for anyone working as a solo dev or very small team..
- dstick 5y ago
  Not sure how it works in the US but in the EU you don't have to register anything. Just keep tabs of what VAT you collected for what country, and then pay accordingly afterwards. No licenses needed.
  - chrismorgan 5y ago
    How do they keep track of who you are? I presume you need a VAT ID of some form? (From https://en.wikipedia.org/wiki/VAT_identification_number#VAT_numbers_of_non-EU_countries https://en.wikipedia.org/wiki/VAT_identification_number#VAT_..., it looks like they’ve crafted it so that many countries’ business numbers can be turned into VAT IDs painlessly, e.g. Canada’s work direct, Australia’s you prefix with a two-digit checksum. I note the conspicuous absence of the USA from the list. I have no idea about US tax.)
  - scubakid 5y ago
    Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any tax)... and naturally, each state has a different licensing process, and some charge fees to register. For small independent projects, it seemed like kind of a nightmare.
    - kevin_thibedeau 5y ago
      You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.
      - 5y ago
throwokay 5y ago
I thought Avalara was the leader in this space. What is their pricing, I can't find it on the site.
- Silhouette 5y ago
  What is their pricing, I can't find it on the site. Whatever it is, reading reviews of Avalara suggests it's beyond the level smaller businesses can afford and has also been increasing dramatically from one year to the next for some time. Avalara have a strong web presence because they've always been good at presenting key information like current tax rates and forthcoming changes. Their content marketing is excellent. But as soon as you look for more details about anything they offer, you seem to be straight into "enterprise contact-us sales process" mode.
- gamblor956 5y ago
  Avalara is expensive. It works out to being cheaper if you have sufficient scale, but it's generally pricier for small businesses. However, that is because you're paying for their customer support, and Avalara customer support is very good. Every issue we've had has been dealt with promptly, including issues where Avalara misfiled a return. (Long story short: they owned up to the mistake and corrected it with the state without any additional cost or penalties to us.)
- TempAccount234 5y ago
  Personal experience from using Avalara for six months: - Returns were processed via a queued batch job. It could take between 1-3 hours after submitting to process a return. Avalara had a countdown clock on their website showing the estimated hours/minutes remaining until the return would get processed. I have seen the countdown clock show 1-3 hours plenty of times (quite frustrating). This was the case 6-12 months ago. Perhaps Avalara has fixed this issue since. - The 1-3 hour wait made filing quite difficult when the original return had an error. Submitting a second return to cancel the first required another 1-3 hour wait. Then submitting the final (third) return required another 1-3 hour wait. Filing one state easily turned into a whole day ordeal if there was an error. - Support from level one/two staff for difficult tax questions did not help. Level one/two staff gave a vocal repeat from the online help guide. Level three support was acceptable however. - Tax returns filed with Avalara are done via a rather cumbersome spreadsheet. Don't expect someone to hold your hand. Rather, it requires many trial and error submissions to figure out how to make the Avalara engine work. Note: A basic "shipping product" business like Amazon/Walmart would do fairly well with Avalara. However, a company that does complex construction projects will have challenges. We ended up reverting to filing taxes manually.
Silhouette 5y ago
Here's some current Stripe UK pricing, confirmed on their site today. Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for European cards.) Add 2% for currency conversion. The exchange rate used is stated as "the daily mid-market rate provided by our service providers". Add 0.5% for Billing if you're using subscriptions. Add 0.5% more if you're using this new Stripe Tax functionality. That is significantly over 5% for a typical SaaS or merchant selling digital content online, making international sales in multiple currencies. Given that merchant of record services like Paddle are providing functionality far more comprehensive than Stripe Tax appears to be, they're still going to be attractive for smaller merchants compared to the more traditional PSPs like Stripe. It's probably worth pointing out that while the EU has a long track record of making VAT difficult for everyone, plenty of other countries around the world and even some smaller regions seem to be jumping on the bandwagon lately. If all of these governments start attempting to enforce their local laws extra-territorially (leaving aside any questions about the legality and/or morality of doing so for this discussion) without also introducing reasonable de minimis thresholds to avoid grossly disproportionate compliance costs for negligible extra tax revenues in low volume situations, the situation could get very messy. If that does happen and businesses are forced to comply with all rules globally regardless of actual sales volumes, I don't see how the model uses by traditional PSPs like Stripe has any chance of surviving. Every small business will have to sell via intermediaries like Paddle to shift the tax responsibilities to a larger business with the resources to deal with it, and pay whatever premium the market decides that justifies on all affected international sales.
- sudhirj 5y ago
  The tipping point is the 2% for currency conversion, but keep in mind that this is happening either way on Paddle as well, just not going to Paddle. Paddle takes 5%, then the entity that converts from USD to your currency (Payoneer / wire transfer bank) takes the 2% or more. Stripe calls it out clearly and gives you your money in your own currency.
  - Silhouette 5y ago
    If you're selling a B2C service (so the really horrible tax rules apply) for say £10/month, that extra £0.20 is another 2%. Stripe's total cut for an international sale with currency conversion is then nearly 8%, even if you don't use any of their other services with their own extra costs and you never have any refund or chargeback costs to amortize. Stripe is crazy expensive these days. (There are other parts in the fees charged by other services as well, but those also aren't like for like comparisons. I'm just saying that 5% as a baseline wouldn't necessarily be that high compared to services like Stripe.)
pier25 5y ago
What about invoicing to the customer? AFAIK Paddle solves that too but Stripe doesn't.
- lemming 5y ago
  Paddle does have a solution to this but it is what I would consider to be in eternal alpha - it's functional (barely) but it drives me insane every time I have to use it.

deleted 5y ago

[deleted]

outcoldman 5y ago

Do you know if Paddle files taxes for you? And just send you 1099? Or it is similar to Stripe Tax, they just collect and you have to file taxes?

hijodelsol 5y ago
Paddle and FastSpring (I found their support to be more helpful than Paddle's but they charge even higher fees), the two solutions commonly used in that space, act as Merchants of Record. Since you are not selling directly to your users you don't have to file the corresponding taxes, just the ones that correspond to the transactions between Paddle/FastSpring and you. But I'm not an accountant and they may change their operations in the future so don't rely on this comment alone.
pimterry 5y ago
I use Paddle, they do file 99% of your taxes for you. In effect, they sell the product to customers, and handle all the tax on that side, for every tax regime in the world. Meanwhile you act as a company with a single B2B client and one invoice a month (covering Paddle's net sales minus 5%) instead of N invoices. They send you an email every month with your 'reverse invoice'. As accountancy goes it's extremely easy, but you do need to do the basic tax filing in your local jurisdiction. That 5% includes all the processing fees, they also have a bunch of useful subscription infrastructure, and they handle customer support for billing issues, which tends to be a substantial percentage of issues as you get larger. So far they've been great, and doing nearly zero accountancy is worth a lot of money to me as an indie dev with a digital product (where you need to know a lot about local digital taxes nowadays). That said, would I do the same at the beginning if this existed a few years ago? Hard to know, but this doesn't look so compelling that I'm likely to switch now.
- Silhouette 5y ago
  How do you find working with Paddle? They've been on our shortlist for a new project and we've heard only positive things from people who actually use them. However, their terms could make any lawyer or company officer who actually read them visibly wince, and so far that has prevented us from engaging with them despite their clear advantages over the traditional payment services.
  - pimterry 5y ago
    Are there some specific terms in their legal bits that you're concerned about? Personally, they've mostly been very good. The product works, it was very easy to set up and it does everything out of the box, and it's made sales tax & accountancy almost completely disappear. I have occasionally run into issues or bugs, and their API is a bit of a mess, but nothing show stopping and their team has been reasonably responsive and sorted everything out very reliably. That's noticeably got better & faster recently, I think they're beefed out their support team a lot in the last year or so. If you're selling a new product as a substantial business, I think they're good but there are other options to look at too and there are tradeoffs (5% is high, you could probably do your own customer accountancy etc in house). If you're a solo dev/small indie, or just getting started though I think it's a no-brainer. It's just so much quicker & easier than doing everything yourself.
    - Silhouette 5y ago
      Are there some specific terms in their legal bits that you're concerned about? Quite a few, but to give an example from high on the list, it appears that a SaaS company would warrant that software sold through Paddle is always bug-free, accept unlimited liability via the related indemnification requirements if it isn't, and yet have no right participate in or even know about any relevant process if something goes wrong. That's a toxic combination and hardly looks like a healthy basis for a mutually beneficial business relationship. Other concerns related to the considerable flexibility Paddle appear to give themselves in terms of how they represent, price and provide access to whatever is being sold, again apparently without necessarily requiring the consent or possibly even the knowledge of the underlying provider. We're unclear about how much this might be necessary because of merchant of record legal model, but it has little to do with what we'd actually want to use Paddle for or why we'd choose them over other services for collecting payments. For context, this is a new business but run by a team who have collectively founded multiple others before. Several of us are very much over wasting time and effort on the mechanics of taking money from our customers and complying with whatever rules accompany that. Obviously fees charged by a payment service do matter, but a moderate difference there is still insignificant to us if the service we use can offer enough flexibility for our needs and easy integration, and otherwise takes on as much of the mechanical implementation and regulatory burden as we can shift.

tonyedgecombe 5y ago

That's the reason I use 2Checkout (formerly Avangate). I can issue one invoice a month, in my own currency. That saves a lot of work and aggravation.

scubakid 5y ago

With this new Stripe solution, do you still have to register for licenses to collect tax everywhere and remit the sales tax to various US states and foreign governments? Unless I misunderstand, that still sounds prohibitively onerous for anyone working as a solo dev or very small team..

dstick 5y ago
Not sure how it works in the US but in the EU you don't have to register anything. Just keep tabs of what VAT you collected for what country, and then pay accordingly afterwards. No licenses needed.
- chrismorgan 5y ago
  How do they keep track of who you are? I presume you need a VAT ID of some form? (From https://en.wikipedia.org/wiki/VAT_identification_number#VAT_numbers_of_non-EU_countries https://en.wikipedia.org/wiki/VAT_identification_number#VAT_..., it looks like they’ve crafted it so that many countries’ business numbers can be turned into VAT IDs painlessly, e.g. Canada’s work direct, Australia’s you prefix with a two-digit checksum. I note the conspicuous absence of the USA from the list. I have no idea about US tax.)
- scubakid 5y ago
  Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any tax)... and naturally, each state has a different licensing process, and some charge fees to register. For small independent projects, it seemed like kind of a nightmare.
  - kevin_thibedeau 5y ago
    You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.
    - 5y ago

throwokay 5y ago

I thought Avalara was the leader in this space. What is their pricing, I can't find it on the site.

Silhouette 5y ago
What is their pricing, I can't find it on the site. Whatever it is, reading reviews of Avalara suggests it's beyond the level smaller businesses can afford and has also been increasing dramatically from one year to the next for some time. Avalara have a strong web presence because they've always been good at presenting key information like current tax rates and forthcoming changes. Their content marketing is excellent. But as soon as you look for more details about anything they offer, you seem to be straight into "enterprise contact-us sales process" mode.
gamblor956 5y ago
Avalara is expensive. It works out to being cheaper if you have sufficient scale, but it's generally pricier for small businesses. However, that is because you're paying for their customer support, and Avalara customer support is very good. Every issue we've had has been dealt with promptly, including issues where Avalara misfiled a return. (Long story short: they owned up to the mistake and corrected it with the state without any additional cost or penalties to us.)
TempAccount234 5y ago
Personal experience from using Avalara for six months: - Returns were processed via a queued batch job. It could take between 1-3 hours after submitting to process a return. Avalara had a countdown clock on their website showing the estimated hours/minutes remaining until the return would get processed. I have seen the countdown clock show 1-3 hours plenty of times (quite frustrating). This was the case 6-12 months ago. Perhaps Avalara has fixed this issue since. - The 1-3 hour wait made filing quite difficult when the original return had an error. Submitting a second return to cancel the first required another 1-3 hour wait. Then submitting the final (third) return required another 1-3 hour wait. Filing one state easily turned into a whole day ordeal if there was an error. - Support from level one/two staff for difficult tax questions did not help. Level one/two staff gave a vocal repeat from the online help guide. Level three support was acceptable however. - Tax returns filed with Avalara are done via a rather cumbersome spreadsheet. Don't expect someone to hold your hand. Rather, it requires many trial and error submissions to figure out how to make the Avalara engine work. Note: A basic "shipping product" business like Amazon/Walmart would do fairly well with Avalara. However, a company that does complex construction projects will have challenges. We ended up reverting to filing taxes manually.

Silhouette 5y ago

Here's some current Stripe UK pricing, confirmed on their site today. Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for European cards.) Add 2% for currency conversion. The exchange rate used is stated as "the daily mid-market rate provided by our service providers". Add 0.5% for Billing if you're using subscriptions. Add 0.5% more if you're using this new Stripe Tax functionality. That is significantly over 5% for a typical SaaS or merchant selling digital content online, making international sales in multiple currencies. Given that merchant of record services like Paddle are providing functionality far more comprehensive than Stripe Tax appears to be, they're still going to be attractive for smaller merchants compared to the more traditional PSPs like Stripe. It's probably worth pointing out that while the EU has a long track record of making VAT difficult for everyone, plenty of other countries around the world and even some smaller regions seem to be jumping on the bandwagon lately. If all of these governments start attempting to enforce their local laws extra-territorially (leaving aside any questions about the legality and/or morality of doing so for this discussion) without also introducing reasonable de minimis thresholds to avoid grossly disproportionate compliance costs for negligible extra tax revenues in low volume situations, the situation could get very messy. If that does happen and businesses are forced to comply with all rules globally regardless of actual sales volumes, I don't see how the model uses by traditional PSPs like Stripe has any chance of surviving. Every small business will have to sell via intermediaries like Paddle to shift the tax responsibilities to a larger business with the resources to deal with it, and pay whatever premium the market decides that justifies on all affected international sales.

sudhirj 5y ago
The tipping point is the 2% for currency conversion, but keep in mind that this is happening either way on Paddle as well, just not going to Paddle. Paddle takes 5%, then the entity that converts from USD to your currency (Payoneer / wire transfer bank) takes the 2% or more. Stripe calls it out clearly and gives you your money in your own currency.
- Silhouette 5y ago
  If you're selling a B2C service (so the really horrible tax rules apply) for say £10/month, that extra £0.20 is another 2%. Stripe's total cut for an international sale with currency conversion is then nearly 8%, even if you don't use any of their other services with their own extra costs and you never have any refund or chargeback costs to amortize. Stripe is crazy expensive these days. (There are other parts in the fees charged by other services as well, but those also aren't like for like comparisons. I'm just saying that 5% as a baseline wouldn't necessarily be that high compared to services like Stripe.)

pier25 5y ago

What about invoicing to the customer? AFAIK Paddle solves that too but Stripe doesn't.

lemming 5y ago
Paddle does have a solution to this but it is what I would consider to be in eternal alpha - it's functional (barely) but it drives me insane every time I have to use it.