Taxation. This is the toughest and most challenging aspect of SaaS business growth. Whether trying to expand locally or globally, you must stay on top of all taxation regulations. Given their ever-changing nature and lack of a unified international framework, handling this task is unbelievably complicated and time-consuming. Understanding the sales tax rate changes is not something simple. However dreaded it might be, collecting sales tax is mandatory for all SaaS companies.
While further digitalizing the taxation management system and awaiting possible SaaS taxability reforms, Saas developers are still required to face all tax-related tasks and, at the same time, keep those annual sales high. In other words, there is no escaping tax authorities. Whether you like it or not, now that SaaS and software are generally taxed goods, you must begin collecting sales tax.
It is high time we discussed the peculiar features of global regulations, from sales tax eligibility to sales tax compliance and returns.
The truth is that dealing with the sales tax nexus is no easy task. Establishing the correct tax rate can be time-consuming as several aspects must be considered. Taken by surprise, SaaS companies might not be prepared to handle these tasks, opening the door to severe repercussions.
Download our guide to learn how different your expectations concerning taxation when selling digital goods worldwide might be from the reality implied by this process. Understand how you can maintain your sales revenue and remove the tax burden from your shoulders.
What’s Inside It?
Let our comprehensive guide help you find your way out of the taxation maze. Get the scoop on:
The tax laws on filling and collection, as well as the local sales tax obligations merchants face when selling software as a service and digital goods in the US as well as the rest of the world.
SaaS tax compliance management and the work behind it.
The risk you are exposing your business to when using a DIY solution.
How doing taxes with a full-service partner becomes a cakewalk.
South Dakota. That’s where everything started. It no longer mattered whether it was software delivered electronically or tangible software. Software was now subject to sales tax, specifically state sales tax rules. Given the latest changes regarding the status of digital goods, becoming taxable software, and the need for governments worldwide to capitalize on those changes, a flood of new questions regarding sales tax came.
What will the applicable tax rates be? Do you need a sales tax permit? Is the US tax SaaS framework similar throughout all of its states? What about sales tax returns? What are the differences in taxation systems around the world? What tax thresholds do SaaS & software developers need to be aware of? The world needed answers, and the tax code needed to be understood.
Indeed, any change in the taxation status of a product triggers an avalanche effect on taxpayers, in this case, SaaS businesses, who are left confused as far as their obligations are concerned. SaaS transactions are now subject to sales taxes, and developers need to figure out a way to collect sales tax without cumbering their staff.
Sales Tax: Finding the correct answers
While asking a tax advisor about the latest changes in legislation is mandatory, our eBook aims and manages to answer your most pressing questions, removing the guesswork and confusion from the tax handling process.
Allow our guide to teach you how to relate to the existing taxation system within the markets you wish to expand in, so you can start collecting sales tax. You might find that each country has its own set of rules for collecting tax revenue, and staying on top of aspects like economic nexus is crucial when selling your software licenses worldwide.
It is essential to be aware of the general rules of taxation in various systems across the world, as this knowledge will assist you in grasping the necessary steps in achieving compliance. Tax deductions, receipts, data processing, your staff is now exposed to a series of tasks of the utmost urgency. So, how do you plan to take charge of SaaS taxable products?
Handling Compliance on Your Own
Once you understand the ins and outs of the system, you need to take the steps in the right direction, meaning achieving compliance for your cloud computing services. Failing to do so is considered tax fraud and could expose your cloud-based software to costly fines that may easily cripple the growth of your SaaS company.
And while there may be nothing holding you back from handling taxes all on your own, without the help or assistance of an independent team, the time, workload, and information required to pull it off might be a lot to take in. Because this process is labor-intensive and your team may not have the necessary knowledge to handle each tax agreement and framework around the globe, the penalty risk is even higher.
An Alternative Solution To Handling Sales Tax
You are now the owner of a taxable service. Your SaaS company may suffer if you are constantly troubled by how much tax you are required to collect and the tax receipts you need to send for each transaction. Instead of working on your product, your staff may be busy figuring out how to remit sales tax.
There is no reason to put an extraordinary amount of pressure on your team’s shoulders when there is a solid alternative that goes way beyond achieving tax compliance.
Our taxation guide comes to clarify how working with a merchant of record allows your business to successfully overcome the tax issue while giving you the freedom to invest more in the services offered to your audience.
We are your one-stop eCommerce solution, successfully unifying payment processing, complete subscription & billing administration, tax services, and fraud management, together with other innovative tools and robust systems designed to scale your SaaS product. We can help reduce tax liability while providing you with data processing services, ensuring compliance at all times.
Being part of the SaaS & software market for almost two decades, we have gained the knowledge, experience, and expertise to help guide companies on their way to success and take the guesswork out of tax reporting.
Rely on our insights and avoid making costly mistakes. Streamline your road to revenue growth with PayPro Global’s team of dedicated experts & specialists.
Ready to navigate the tax waters with our complete guide?