4 ms·

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.
- jarek-foksa 5y ago
  > Meanwhile you act as a company with a single B2B client and one invoice a month There were some changes in this area recently. Paddle is now providing you two reverse invoices each month, one for sales in the USA done by Paddle.com Inc. and one for sales in the rest of the world done by Paddle.com Market Ltd. For the accounting purposes you have two B2B clients (belonging to the same group). You still receive a single wire transfer though.

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.
jarek-foksa 5y ago
> Meanwhile you act as a company with a single B2B client and one invoice a month There were some changes in this area recently. Paddle is now providing you two reverse invoices each month, one for sales in the USA done by Paddle.com Inc. and one for sales in the rest of the world done by Paddle.com Market Ltd. For the accounting purposes you have two B2B clients (belonging to the same group). You still receive a single wire transfer though.