What is a Seller of Record (SoR)?

The legal company that formally sells your software to clients via SaaS is known as the Seller of Record (SoR). When using a SoR model, the SoR—not your SaaS provider—is in charge of making sure the transaction complies with all applicable laws and regulations.

Stated differently, the SoR takes on the responsibilities of selling your goods in every market and becomes the party on the customer’s invoice.

Important SoR features include:

• collecting and sending in VAT or sales taxes.
• ensuring adherence to regional billing and invoicing regulations.
• showing up on the client’s invoice or receipt.
• addressing the transaction’s legal responsibilities.

Both models let you outsource compliance, but they differ in scope:

An SOR for SaaS businesses usually includes:

• Conformidade tributária: Managing international sales tax, VAT, and GST regulations.
• Verifying that invoices adhere to local regulations (such as EU invoice rules) is known as legal invoicing.
• Conformidade regulatória is the management of regulations pertaining to digital products, such as EU OSS, market legislation, or consumer protection regulations.
• Support for Revenue Recognition: Ensuring accurate tax separation for accounting purposes.
• Being the responsible party in the event that a tax authority contests compliance is known as audit protection.

With an SoR, customers experience certain effects.:

1. See the SoR entity on invoices/receipts, not your SaaS company.
2. May contact the SoR for tax- or billing-related issues (e.g., VAT invoice corrections).
3. Still receive product support directly from your team for technical issues, onboarding, or troubleshooting.

This model allows you to manage the customer experience, while the SoR manages compliance aspects.

Businesses can handle payment procedures and compliance by using a SoR service, but it’s crucial to consider the benefits and drawbacks. 

Benefícios

• International Tax Compliance: There is no requirement to register for imposto sobre vendas or VAT in every nation. 
• Sell in more areas:  You don’t need to construct the internal tax infrastructure for quicker market expansion. 
• Decreased Legal Risk: The SoR assumes responsibility for tax mistakes. 
• Put the Product First: This allows your staff to focus on developing and marketing SaaS rather than on tax documentation. 

Desvantagens 

• Costs: SoR services have costs, which are frequently a portion of revenues. 
• Restricted Scope: In contrast to MoR, SoR does not oversee processamento de pagamentos, fraud, or Chargebacks de SaaS. 
• Customer Perception: If the entity name on the invoice differs from your SaaS brand, customers can become confused.

An SoR relates to the scalability of SaaS businesses looking at international expansion, which can affect the building of tax and legal infrastructure in various countries..

Scalability depends on:

• The SoR provides coverage for local markets, though the extent of coverage varies by jurisdiction..
• Your SaaS company’s ability to manage payments and subscriptions directly.
• How well the SoR integrates with your billing systems.

For many SaaS startups and growth-stage companies, SoR is a practical way to expand globally while keeping control over the customer relationship and payment stack.