Ask HN: How does your SaaS company handle charging sales tax? | Hacker News Reader

Ask HN: How does your SaaS company handle charging sales tax?

9 pointsjilles5 comments

Hello,

For my SaaS company, I charge my customers via Stripe, PayPal and some other payment platforms. Sales tax is different in every country, and in the US it is even different per state.

How does your SaaS company handle sales tax? Do you use the country and secondary (zip code or state) of the saved credit card or have some sort additional form? I can imagine a scenario where company A is based in California but uses a credit card from NY. In that case they should pay CA sales tax but if I were to use their credit card information, it would be NY sales tax.

This feels like a problem that has been solved by any international (or just US) SaaS company. Any tips would be greatly appreciated!

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We've been looking at this recently as well and have been considering switching to Paddle. It seems to solve all of our sales tax issues (and other challenges like selling in India or the EU in general) in exchange for about double the fees, which in our case seems worth it. Would love to hear anyone's thoughts on Paddle specifically.

I've heard about Quaderno and Taxamo as well, they seem to go on top of Stripe and PayPal, but I haven't looked at them closely and have read that the additional cost ends up being similar.

> Would love to hear anyone's thoughts on Paddle specifically.

Let me know if you've got any specific questions. Out of the services providing sales tax help, I partly went with Paddle because Fastspring was more expensive + more complex and Gumroad didn't seem geared towards SaaS team based products.

When I make a sale, Paddle automatically deduct a percent of it for country specific sales tax and aside from that I don't have to give it another thought. They give you the option of adding the sales tax on top of the product price as well if you want.

For integration, generally you would add Paddle's JavaScript checkout UI to trigger when you click on buy buttons (which is what I do on https://www.checkbot.io/) and on completion a webhook from Paddle will pass on the details of the new subscription to your own endpoint to e.g. create a new user on your server and send an email.

> Sales tax is different in every country, and in the US it is even different per state.

I use Paddle for https://www.checkbot.io/ and they handle all country specific tax for you. They take 5% + $0.50 per transaction which is relatively high but you need to weigh up your priorities.

Similarly, Fastspring and Gumroad are worth looking at.

Anyone know why Stripe doesn't handle this?

They don't handle this by design, and this is called a payment gateway - a simple service that just charges cards. If they were to handle this they would become a merchant of record, and there is FastSpring and Paddle that do it. Because of the different problems they solve they charge more.

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