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[00:00:00.240 --> 00:00:03.440] This podcast is hosted by Transistor.fm.
[00:00:17.760 --> 00:00:18.640] Hey, everyone.
[00:00:18.640 --> 00:00:20.240] Welcome to Build Your SAS.
[00:00:20.240 --> 00:00:24.160] This is the behind-the-scenes story of building a web app in 2023.
[00:00:24.160 --> 00:00:26.560] I'm John Buddha, a software engineer.
[00:00:26.560 --> 00:00:28.000] And I'm Justin Jackson.
[00:00:28.000 --> 00:00:31.840] I do sales tax compliance for SaaS companies.
[00:00:32.400 --> 00:00:35.840] Follow along as we figure this shit out.
[00:00:35.840 --> 00:00:37.120] Did you get a promotion?
[00:00:38.480 --> 00:00:40.640] I don't know if that's a promotion.
[00:00:40.640 --> 00:00:54.480] Although, judging from the number of unsolicited DMs and emails from sales tax compliance professionals since our last episode that I've received, it seems lucrative.
[00:00:55.120 --> 00:00:57.600] Are you going to switch to becoming a sales tax lobbyist?
[00:00:58.480 --> 00:01:00.880] I mean, I may do that.
[00:01:00.880 --> 00:01:02.800] I may just become a lobbyist.
[00:01:03.280 --> 00:01:06.560] Can you become an international lobbyist?
[00:01:06.800 --> 00:01:07.760] That sounds exhausting.
[00:01:08.080 --> 00:01:09.040] I don't think so.
[00:01:09.680 --> 00:01:12.000] That would almost be worse than sales tax compliance.
[00:01:12.000 --> 00:01:16.080] I would have to register as a lobbyist in every jurisdiction in the world.
[00:01:16.320 --> 00:01:17.280] You would.
[00:01:18.560 --> 00:01:23.360] Well, folks, that last episode hit a nerve.
[00:01:23.680 --> 00:01:34.240] We talked about sales tax compliance and we got a lot of responses from all sorts of folks.
[00:01:34.240 --> 00:01:38.320] And there's a few different camps I think we've noticed.
[00:01:38.880 --> 00:01:55.120] Broadly, I would say folks in North America who are using Stripe and already have customers and subscriptions, and for whom digital sales tax compliance is new, are like, Agree with us.
[00:01:55.120 --> 00:01:56.560] This is difficult.
[00:01:56.560 --> 00:01:57.840] This is ridiculous.
[00:01:57.840 --> 00:01:59.680] This is why, why is it built?
[00:01:59.680 --> 00:02:00.680] Why is it this way?
[00:02:00.920 --> 00:02:03.560] I didn't even realize we needed to do this.
[00:02:04.200 --> 00:02:09.720] And then a lot of folks in the EU were not as empathetic.
[00:02:09.720 --> 00:02:12.680] They're just saying, well, this is just a normal part of business.
[00:02:13.000 --> 00:02:18.760] And that was, I think that's pretty indicative of the response we got.
[00:02:18.760 --> 00:02:19.400] What do you think, John?
[00:02:19.480 --> 00:02:26.600] I think that, I mean, yeah, it is a normal part of running a business, but I think in the US, people are just less aware of it.
[00:02:26.600 --> 00:02:37.720] I mean, it's maybe harder to do as well, but it's just like, I don't know, people are unaware or think it's something they just need to do later.
[00:02:38.520 --> 00:02:46.120] I'm actually having a discussion right at the same point with Adam Wavin.
[00:02:47.400 --> 00:02:50.120] Let's just talk about some of the responses we got here.
[00:02:51.640 --> 00:03:01.560] So one anonymous European, whom I won't credit, said, once again, I noticed that the indie hacking community has a somewhat naive approach to what running a business actually entails.
[00:03:01.560 --> 00:03:06.840] As a European, not having a plan for sales tax is mind-boggling.
[00:03:07.800 --> 00:03:17.000] To which Cooper replied, who is also from the EU, I think it might be a European perspective as we have been dealing with that from day one.
[00:03:17.000 --> 00:03:20.520] So it's just one of the parts of running a business from the start.
[00:03:20.520 --> 00:03:23.640] It can't really be neglected in the EU.
[00:03:23.640 --> 00:03:44.760] Although, I just want to take a quick aside here and say, you know, I tested some of these EU companies' checkout pages, and they are using some of these merchant of record services, and they incorrectly assigned the tax for British Columbia and Canada, where I live.
[00:03:46.000 --> 00:03:53.680] So this idea I think is ridiculous, and I'm gonna make an argument for it right now.
[00:03:53.680 --> 00:04:08.160] This idea that every small software company should be in perfect compliance with every government jurisdiction in the world that decides to come up with a tax.
[00:04:08.160 --> 00:04:15.680] And by the way, this could mean countries, provinces, states, and in the case of Chicago, even cities.
[00:04:16.000 --> 00:04:17.680] We may even get to neighborhoods.
[00:04:19.040 --> 00:04:25.200] If you're in this neighborhood, you have to charge your customers 20% tax.
[00:04:25.200 --> 00:04:33.040] I think Daniel Vassilo articulated this well when he said: it is going to become impossible to be compliant everywhere.
[00:04:33.040 --> 00:04:44.880] The kingdom of Tonga could tomorrow come up with an internet tax and require you to remit 25% of your sales to the tax office in person in their local currency, and they won't tell you about it.
[00:04:44.880 --> 00:04:49.440] It's just a cost-benefit analysis.
[00:04:49.680 --> 00:04:52.640] I think there's two kinds of things here, right?
[00:04:52.640 --> 00:05:21.200] One, even if you're in the EU, I think you have to recognize that for governments to expect companies to collect a tax on customers, this isn't a tax on businesses, a tax on customers on their behalf in every region in the world, including country, state, province, and city.
[00:05:21.200 --> 00:05:40.200] So soon we it is possible we are going to go from a hundred tax regions to a hundred thousand tax regions and expecting small businesses to be responsible for all of this compliance on our side is ridiculous and it's going to get more ridiculous.
[00:05:40.200 --> 00:05:46.120] On top of that, I mean in the U.S., if you if you if you buy something, I think this is how it works.
[00:05:46.120 --> 00:05:56.360] If you buy something and you don't pay sales tax, you're supposed to actually file that in your tax return and pay a used tax just so that someone gets the tax.
[00:05:56.360 --> 00:05:59.720] But I don't know that people do that.
[00:05:59.720 --> 00:06:00.360] Yeah.
[00:06:00.360 --> 00:06:07.960] It's just putting the onus on these small businesses and individuals to take care of the stuff that should be automated.
[00:06:07.960 --> 00:06:15.240] I mean, it's kind of related to like actually filing your taxes in the U.S., which should be like basically a one-click thing.
[00:06:15.240 --> 00:06:24.440] But then we have this tax, this whole tax industry that took it over and lobbies on behalf of their companies to basically not make it easy to file taxes in the U.S.
[00:06:24.760 --> 00:06:25.320] Yep.
[00:06:25.320 --> 00:06:27.240] It's silly.
[00:06:27.240 --> 00:06:27.800] Yeah.
[00:06:27.800 --> 00:06:35.320] And I mean, I understand so many of us in business just do not want to think about this at all.
[00:06:35.640 --> 00:06:36.920] I get it.
[00:06:37.240 --> 00:06:43.480] And I think understanding both and being able to see this clearly as an externality.
[00:06:43.480 --> 00:06:44.680] This is an externality.
[00:06:44.680 --> 00:06:45.560] An externality.
[00:06:45.560 --> 00:06:50.200] This is a negative externality imposed on businesses.
[00:06:50.520 --> 00:06:54.120] See, these sales taxes have nothing to do with businesses.
[00:06:54.120 --> 00:06:57.240] These are sales taxes on your customers.
[00:06:57.240 --> 00:07:07.640] Some governments, actually in the U.S., by the way, some states require they make the customer ultimately responsible for the tax.
[00:07:07.640 --> 00:07:19.120] So, if your merchant of record or your vendor or whoever doesn't collect and remit the sales tax on your behalf, those states will hold you as the customer ultimately liable.
[00:07:19.760 --> 00:07:24.000] And that's just a handful of states in the United States of America now.
[00:07:24.000 --> 00:07:30.960] Imagine every province and state and city worldwide who decide to come up with their own rules.
[00:07:31.760 --> 00:07:35.440] So, this is a tax on customers.
[00:07:35.440 --> 00:07:48.000] When governments first started collecting sales taxes, it made sense to put it on businesses because there's so much cash and checks, and credit cards weren't as common.
[00:07:48.000 --> 00:07:54.080] And it just made sense to say, well, the only way we can really collect this efficiently is through businesses.
[00:07:54.080 --> 00:08:00.400] I still think it was a mistake because I think that's an unfair liability to put on businesses.
[00:08:00.720 --> 00:08:12.560] When you're talking about this can add up, you know, some of these Europeans are paying the tax out of their own profit.
[00:08:13.840 --> 00:08:19.040] So, they're paying the government on behalf of their customers.
[00:08:19.360 --> 00:08:26.240] It'd be like, I don't know what a good metaphor for this is because it's just so ridiculous.
[00:08:26.240 --> 00:08:29.760] It would be like, I can't even think of anything.
[00:08:29.760 --> 00:08:33.040] It's just, it's such a ridiculous situation.
[00:08:33.040 --> 00:08:44.560] And I think at the very least, even self-righteous business owners that say this is just a part of business, yes, paying your business taxes is a part of business.
[00:08:44.560 --> 00:08:50.720] But I think everyone should be able to recognize this as a really unfortunate externality.
[00:08:50.720 --> 00:08:53.040] On the other hand, we've got to decide what we're going to do about it.
[00:08:53.040 --> 00:09:01.880] But this, to at least understand that this is a really unfortunate predicament that we're in right now.
[00:09:02.760 --> 00:09:09.480] Some people also said, I mentioned that, you know, here in Canada, and you've checked some of your receipts as well.
[00:09:09.480 --> 00:09:13.640] You know, about 50% of the vendors we check from Canada and the U.S.
[00:09:13.720 --> 00:09:22.280] and Australia, for whom this is a new concept, are not collecting these taxes properly.
[00:09:22.600 --> 00:09:30.280] So when we look at our receipts, there is no sales tax imposed when it should be on many of these receipts.
[00:09:30.600 --> 00:09:35.240] And someone criticized me and said, well, that's not an excuse for you to not do it properly.
[00:09:35.240 --> 00:09:36.520] That's what about ism.
[00:09:37.720 --> 00:09:42.680] We're not trying to deflect any of our responsibility in running a business.
[00:09:43.880 --> 00:09:54.680] We're just pointing out that there are many, many businesses in the U.S., Canada, Australia, New Zealand, who are struggling with this.
[00:09:54.680 --> 00:09:57.400] Many of us are using Stripe.
[00:09:57.400 --> 00:10:03.720] And Stripe has not given us a solution.
[00:10:04.280 --> 00:10:23.240] If Stripe had a built-in solution, just like they have with Stripe Carbon, they automatically take 1% or 2% off every payment and they remit it to all these companies and nonprofits doing climate action work.
[00:10:23.560 --> 00:10:26.760] If it worked like that, none of us would be complaining.
[00:10:27.080 --> 00:10:29.400] And the governments wouldn't be complaining either, right?
[00:10:29.400 --> 00:10:33.720] The governments don't care who remits the tax at the end of the day.
[00:10:33.720 --> 00:10:37.000] They just want the tax to be collected and remitted.
[00:10:37.240 --> 00:10:43.720] I mean, I'm sure these states and provinces wish it was easier too, because they would be, you know, generating more revenue.
[00:10:43.960 --> 00:10:48.000] But for whatever reason, it doesn't seem to have changed.
[00:10:48.000 --> 00:10:50.640] It just seems to be getting a little more complicated.
[00:10:44.840 --> 00:10:50.960] Yeah.
[00:10:51.600 --> 00:11:05.520] And I mean, speaking of Stripe, which we can talk about more later, but like they do have their Stripe tax product, which is pretty nice, except it's like kind of a half measure.
[00:11:05.520 --> 00:11:06.240] Yes.
[00:11:06.240 --> 00:11:09.120] And like, you know, when they announced it, I was like, oh, this is kind of cool.
[00:11:09.120 --> 00:11:09.840] This is exciting.
[00:11:09.840 --> 00:11:15.040] Like, they're going to calculate tax and charge tax based on where the customer lives and all this stuff.
[00:11:15.040 --> 00:11:18.880] And then you get to the point where you got to pay it.
[00:11:18.880 --> 00:11:21.760] And it's like, oh, we're just collecting, what is it going to have?
[00:11:21.760 --> 00:11:24.720] Money sitting around that's sales tax money that we have to remit.
[00:11:24.720 --> 00:11:29.760] And then, you know, there's the second part of that, which is filing in every state and all this stuff.
[00:11:29.760 --> 00:11:30.320] So.
[00:11:30.320 --> 00:11:30.960] Yeah.
[00:11:30.960 --> 00:11:44.400] Your perspective on this depends on what stage you are at in your business, what kind of business you have, and what payment processor you started with.
[00:11:45.040 --> 00:11:49.200] So Adam Wathan thinks we're crazy.
[00:11:49.200 --> 00:11:52.000] He's like, why are you guys even worried about this?
[00:11:52.000 --> 00:11:54.480] Just go with a merchant of record and be done.
[00:11:54.800 --> 00:12:00.400] But that's easier said than done when you've already started on Stripe.
[00:12:00.720 --> 00:12:13.040] And by the way, it's not crazy that when we started, this wasn't a big issue for us because in Canada, this legislation just came in.
[00:12:13.040 --> 00:12:16.640] It was only put into legislation in 2021.
[00:12:16.640 --> 00:12:17.880] And most of the U.S.
[00:12:17.840 --> 00:12:20.000] states, it's also fairly recent.
[00:12:20.000 --> 00:12:24.080] It's happened within Transistors's lifetime.
[00:12:24.080 --> 00:12:26.480] Yeah, I mean, I certainly didn't think about it.
[00:12:26.480 --> 00:12:29.760] I was like, yeah, you know, I didn't, it hadn't even crossed my mind.
[00:12:30.040 --> 00:12:42.120] Even the fact that Stripe only recently created Stripe Tax, and Stripe is a very North American-centric payment processor, it shows that all of this is new here.
[00:12:42.440 --> 00:12:54.680] And so this new legislation, now some of the provinces had some things already before that, but the GST legislation in Canada just came out in 2021 for what do they call it?
[00:12:54.680 --> 00:12:59.560] They call it the cross-border digital products and services tax.
[00:12:59.560 --> 00:13:12.440] In the U.S., famously, the states were very slow to impose any sort of digital sales tax, any sort of cross-border sales tax at all.
[00:13:13.720 --> 00:13:16.040] Amazon infamously took advantage of this.
[00:13:16.200 --> 00:13:17.240] That's very new.
[00:13:17.560 --> 00:13:34.680] I mean, yeah, when we started, I had maybe thought that we would have to collect sales tax in Illinois or something like that, but it either wasn't, that law wasn't active yet, or I mean, they don't collect sales tax for software as a service products.
[00:13:34.680 --> 00:13:38.520] And the Chicago tax is new within the last couple of years.
[00:13:38.760 --> 00:13:51.480] The advice you used to get in North America was if you are in a state that doesn't collect sales tax on SaaS, then you don't have to collect it and remit it.
[00:13:51.480 --> 00:13:55.880] And the other states had not figured out this cross-border thing yet.
[00:13:55.880 --> 00:13:59.400] And Canada hadn't created a national strategy yet.
[00:13:59.400 --> 00:14:04.200] Again, a little bit of empathy for those of us that are find ourselves in this situation.
[00:14:04.200 --> 00:14:09.080] At the same time, this makes me think of like, I mean, the internet's everywhere, right?
[00:14:09.080 --> 00:14:15.000] Like, I live in Chicago, but I could have signed up for Transistor when I was visiting Oklahoma.
[00:14:15.920 --> 00:14:24.400] But if I bought something in Oklahoma, I'd be paying Oklahoma sales tax, not Illinois sales tax, even though my credit card is linked to Illinois.
[00:14:25.200 --> 00:14:27.440] Well, I mean, this is where it comes in.
[00:14:27.760 --> 00:14:33.680] I mean, technically, it's where your permanent residence is, is where you're supposed to reflect it.
[00:14:34.960 --> 00:14:43.920] I actually thought of this with Estonia because Estonia has these digital residency things you can sign up for.
[00:14:43.920 --> 00:14:49.280] So you can become a resident of Estonia just by signing up online.
[00:14:49.280 --> 00:15:01.040] And I thought that would be hilarious if, you know, theoretically there could be a country that says, oh, yeah, you can become a full-time resident, quote unquote, of our country.
[00:15:01.040 --> 00:15:04.480] And we don't, you know, make you charge in remit sales tax here.
[00:15:04.480 --> 00:15:08.720] And then everybody could just become a resident of that country.
[00:15:08.720 --> 00:15:18.000] And then technically would then, you know, be out outside of a lot of the legislation, the way it's been written.
[00:15:18.000 --> 00:15:32.640] This is something else I noticed, though, is that in Canada, a lot of us in business have a US dollar credit card, but the address, and normally with a credit card, you put your home address or your office address.
[00:15:32.640 --> 00:15:45.440] So if, you know, these tax solutions that are just pinging your credit card's address and looking for, you know, where you live, are find your home address or home zip code.
[00:15:45.440 --> 00:15:58.800] But in this case, it had, I was using my US dollar credit card, but from a Canadian bank, and it was charging me Quebec sales tax, even though I'm not a resident of Quebec.
[00:15:58.800 --> 00:16:12.600] So, yeah, I think the other challenge is that, again, for those of us who have started on Stripe and have subscription businesses, so I think this would be different if we were just selling one-time digital products.
[00:16:12.600 --> 00:16:19.560] I think this would be different, again, if we'd started up with a different merchant of record whatever.
[00:16:19.560 --> 00:16:24.520] But for however many businesses are on Stripe, I'm guessing millions.
[00:16:24.520 --> 00:16:42.200] For the millions of companies that are using Stripe as their payment processor and who are, and I don't know what percentage of those are subscription businesses, we find ourselves in a real quandary because I tweeted out: hey, I am just looking, and I've done this multiple times.
[00:16:42.200 --> 00:17:21.720] I'm just looking for anybody who is in a similar stage as us with a SaaS business, who has thousands of active subscriptions, active credit cards in Stripe, and has successfully migrated to one of these solutions, Paddle, Lemon Squeezy, whatever, and didn't get a bunch more churn, didn't require customers to re-enter information, didn't change or make the checkout experience worse, and didn't require a bunch more development work on our side.
[00:17:21.720 --> 00:17:30.840] And I didn't even hear from anybody, maybe one person, but it wasn't clear if they were at our stage.
[00:17:31.000 --> 00:17:33.480] And when I followed up with them, they still haven't replied.
[00:17:33.480 --> 00:17:35.560] Maybe not that many companies have done it because it's.
[00:17:36.040 --> 00:17:44.680] Yeah, but you think if this is their business, they're trying to get people to switch to a merchant of record service.
[00:17:45.040 --> 00:18:06.960] You have to be able to give us some assurance that if we commit ourselves to doing all of the engineering work it would take to tear Stripe out of our app and put in a different solution, you have to show us the development experience is going to be the same or better.
[00:18:06.960 --> 00:18:09.200] And so far I haven't heard that.
[00:18:09.200 --> 00:18:12.240] The back channels of the internet are going right now.
[00:18:12.240 --> 00:18:24.240] And one person replied to that, actually, not just one, a bunch of people replied to that tweet and said the people they know that have switched haven't been happy.
[00:18:24.240 --> 00:18:31.200] That the SaaS companies that have switched to these merchant of records services wish they hadn't.
[00:18:31.200 --> 00:18:37.200] It ended up being just another, a different kind of headache.
[00:18:37.520 --> 00:18:40.400] And if we're going to choose our headaches.
[00:18:40.720 --> 00:18:47.600] Yeah, I mean, I would be very reluctant to do that just because that is, I mean, that's the core of our business.
[00:18:47.600 --> 00:18:50.560] Like, if that's screwed up, then like, well.
[00:18:51.520 --> 00:18:52.720] This is everything.
[00:18:52.720 --> 00:19:00.480] It's like, it's, it's, again, like, there's some things that are just, they would be unacceptable.
[00:19:00.480 --> 00:19:06.480] Like, you have to get your customers to reenter their credit card information.
[00:19:06.480 --> 00:19:10.880] Well, that would, that would literally kill the business for sure.
[00:19:10.880 --> 00:19:14.080] There's just, I just know it would.
[00:19:15.840 --> 00:19:21.200] Even like, so there's another solution that some folks recommended called Revan.
[00:19:21.520 --> 00:19:23.600] And I mean, we are looking at it.
[00:19:23.600 --> 00:19:25.360] There's a few things I'm worried about.
[00:19:25.360 --> 00:19:27.280] Reven's relatively new.
[00:19:27.280 --> 00:19:30.840] There's always a bit of nervousness when there's somebody that's new.
[00:19:31.160 --> 00:19:40.120] You're basically relying on their team of lawyers and their team of tax experts and their engineers to get all of this right.
[00:19:40.440 --> 00:19:45.000] And because, by the way, it's still not clear who is legally liable.
[00:19:45.000 --> 00:19:47.160] I got into lots of arguments about this too.
[00:19:47.160 --> 00:19:50.440] And now I've dug into different states' legislations.
[00:19:50.440 --> 00:20:04.120] And like I've said, depending on the state and the jurisdiction, it's not clear that a merchant of record would automatically be liable for non-compliance if they don't act on your behalf appropriately.
[00:20:04.120 --> 00:20:09.640] Remember, the governments in some cases will hold the customer liable if they haven't been paid.
[00:20:09.640 --> 00:20:15.880] So they just go down the stack and say, okay, well, merchant of record, you didn't pay.
[00:20:15.880 --> 00:20:18.280] Okay, well, now next it's the business.
[00:20:18.280 --> 00:20:19.960] Then next it's the customer.
[00:20:19.960 --> 00:20:27.800] So Revan is interesting, but it's part two of their three-step process.
[00:20:27.800 --> 00:20:28.680] Sign up today.
[00:20:28.680 --> 00:20:30.200] That sounds great.
[00:20:30.200 --> 00:20:32.120] Step two, setting up in Stripe.
[00:20:32.120 --> 00:20:38.360] We create a new Stripe account for your brand or migrate your existing one.
[00:20:38.360 --> 00:20:40.680] Yeah, what does the migration mean?
[00:20:41.000 --> 00:20:49.160] I think what that means is they still need to create a Stripe account that's registered to their company.
[00:20:49.160 --> 00:20:55.240] And then they migrate all of your customers to the Stripe account that's registered to your company.
[00:20:55.240 --> 00:21:03.560] I would love to see the legal, like, is this an official, officially supported thing from Stripe?
[00:21:03.560 --> 00:21:20.320] Or if this company goes belly up, is all of a sudden our Stripe account the property of Revan, and now all of the creditors are able to go after our revenue and our payouts and everything else.
[00:21:20.320 --> 00:21:24.160] This sounds, this step two makes me really nervous.
[00:21:24.160 --> 00:21:36.000] Yeah, I would be way more comfortable if it was just an API integration, webhook integration, where they add tax to the invoice before it's charged and then know how much to remit or something.
[00:21:36.000 --> 00:21:40.960] Yeah, and they're doing this because they are a merchant of record.
[00:21:40.960 --> 00:21:49.040] And so they, when you're a merchant of record, you have to be the one that collects payments, gets paid into your bank account, and then pays you out, right?
[00:21:49.040 --> 00:21:49.600] Right.
[00:21:49.600 --> 00:21:54.000] This is an enormous amount of trust you have to have in these.
[00:21:54.480 --> 00:22:08.960] It's akin to having a crypto exchange where you have to trust that the exchange is going to be going to stay liquid, is doing everything properly.
[00:22:08.960 --> 00:22:34.320] Like, this is another thing that's not quite clear: is that if a merchant of record is just collecting everybody's revenue, if something goes wrong, if they have creditors, if they get, let's say that they run into trouble with a government, they haven't been remitting to Lithuania properly, and then Lithuania goes after them and locks all of their accounts or something like that.
[00:22:34.320 --> 00:22:37.440] How does that affect every other customer in the network?
[00:22:37.440 --> 00:22:47.040] Yeah, I mean, it's not like it could be some Bernie Madoff-style Ponzi scheme where they're collecting money and paying out certain people, and then, well, now there's nothing left.
[00:22:47.040 --> 00:22:50.640] I mean, it's probably fine, you know, but right.
[00:22:50.640 --> 00:22:53.040] No, but it's that's stressful to think about.
[00:22:53.040 --> 00:23:03.560] I mean, it's it's just one more layer between you and your customer, and it's one more layer between you and your revenue.
[00:23:04.680 --> 00:23:07.800] Hey, how come your team doesn't have their own podcast?
[00:23:07.800 --> 00:23:12.760] Head over to transistor and use my coupon, transistor.fm/slash justin.
[00:23:12.760 --> 00:23:17.160] You'll get 15% off your first year of podcast hosting.
[00:23:17.800 --> 00:23:26.440] And just again, another reminder: you're doing all of this work, incurring all of these expenses for a tax that is not being imposed on you.
[00:23:26.440 --> 00:23:29.960] This is a tax governments are imposing on your customers.
[00:23:29.960 --> 00:23:31.160] It's so frustrating.
[00:23:31.160 --> 00:23:36.840] The other thing is this tax compliance company that we did go with that will remain nameless.
[00:23:36.840 --> 00:23:41.560] I had emailed them saying, listen, like we haven't made any progress yet.
[00:23:41.560 --> 00:23:44.280] You haven't shown us that you know your stuff.
[00:23:44.280 --> 00:23:48.760] You keep not responding to our emails, you know, a week at a time.
[00:23:48.760 --> 00:23:51.320] We keep not getting straight answers from you.
[00:23:51.560 --> 00:23:54.840] We have no idea how expensive this is going to get over time.
[00:23:54.840 --> 00:23:55.320] Yep.
[00:23:55.320 --> 00:23:56.040] That's enough.
[00:23:56.040 --> 00:23:57.400] We want out.
[00:23:57.720 --> 00:24:02.280] And we got an email from them saying, well, you're in a two-year contract?
[00:24:02.280 --> 00:24:03.160] One year.
[00:24:03.160 --> 00:24:04.840] A one-year contract.
[00:24:04.840 --> 00:24:05.160] Yeah.
[00:24:05.160 --> 00:24:05.720] One year.
[00:24:05.720 --> 00:24:13.960] If we sign this thing that cancels our account, we basically have to pay upfront the remaining balance of the account, which is, you know, like nine months.
[00:24:13.960 --> 00:24:14.440] Yeah.
[00:24:14.760 --> 00:24:16.040] And we still haven't done anything.
[00:24:16.040 --> 00:24:21.640] So it's like, well, I mean, that's not going to kill us, but it also doesn't make me feel great about the company.
[00:24:21.640 --> 00:24:26.520] Like, if that's honestly their model, they have these enterprise-style contracts that.
[00:24:26.760 --> 00:24:35.240] Yeah, I mean, they gave us a refund for the one thing they screwed up on, but like, all right, admit your mistake and then say, all right, well, we'll give you like six months back or something.
[00:24:35.240 --> 00:24:38.280] You can pay us up to like six months, and then we'll call it good.
[00:24:38.280 --> 00:24:38.680] Yeah.
[00:24:39.000 --> 00:24:40.360] But like, come on.
[00:24:40.360 --> 00:24:43.560] I mean, again, I know there's always going to be people that are like, well, you signed a contract.
[00:24:43.800 --> 00:24:44.440] Yeah, that's true.
[00:24:44.440 --> 00:24:46.240] I mean, we did it's true, we did.
[00:24:44.840 --> 00:24:46.640] You're right.
[00:24:46.960 --> 00:25:00.720] One thing that was surprising to me is how, like, again, I would say 50, 60 percent at least of people who responded were, especially from North America, especially if you're using Stripe, completely empathetic with our situation.
[00:25:00.720 --> 00:25:07.680] Although there's a big percentage of those folks that are just like, fuck this, we're not gonna do any of this.
[00:25:07.680 --> 00:25:17.920] Like, I mean, that's one option, but also now we're talking about it and it's on record, and people know we haven't been doing it, but we're trying, we're trying to, it's not like we're actually trying to like not do this.
[00:25:18.080 --> 00:25:34.000] This is the thing, this is the thing: the governments are for the people, and in this case, governments should be treating businesses as their partners in sales tax collection.
[00:25:34.000 --> 00:25:38.160] One, because if they want to make more revenue, they've got to make this easier.
[00:25:38.480 --> 00:25:43.760] And two, because you're asking us to do something on your behalf, right?
[00:25:44.160 --> 00:25:51.120] If you're asking me to do something on your behalf, and I don't even live in your country, some kindness would be appreciated.
[00:25:51.120 --> 00:26:00.080] You know, it's like this is how partnerships work: both government partnerships and business partnerships and government business partnerships.
[00:26:00.080 --> 00:26:05.040] You know, maybe there is one, maybe there's a country we can find out there that is like actually taking it seriously.
[00:26:05.040 --> 00:26:07.760] It has like an amazing payment portal and all this stuff.
[00:26:08.080 --> 00:26:09.520] We should find that and highlight it.
[00:26:09.520 --> 00:26:09.920] Oh, for sure.
[00:26:10.000 --> 00:26:15.120] Like, someone in their government is like, we need to do this right and like design an amazing website.
[00:26:15.120 --> 00:26:16.640] Yeah, yeah, yeah, yeah.
[00:26:16.960 --> 00:26:18.640] Make it super friendly.
[00:26:18.640 --> 00:26:19.040] Yeah.
[00:26:19.360 --> 00:26:23.360] This podcast is sponsored by the province of Saskatchewan.
[00:26:23.360 --> 00:26:26.480] Please makes tax compliance easy.
[00:26:27.520 --> 00:26:28.800] That could be you, Saskatchewan.
[00:26:28.800 --> 00:26:34.040] You could be this premier sponsor of the Build Your Sass podcast.
[00:26:35.640 --> 00:26:36.760] What's the deal with Saskatchewan?
[00:26:36.840 --> 00:26:37.640] Why are you?
[00:26:37.640 --> 00:26:40.040] Everyone's always ratting on Saskatchewan.
[00:26:40.680 --> 00:26:42.120] I just, they were the one.
[00:26:42.120 --> 00:26:51.720] Unfortunately, they have a not great website and they're, yeah, it's one of the Ohio.
[00:26:51.720 --> 00:26:54.680] You have such a big opportunity to turn things around here.
[00:26:55.720 --> 00:26:57.400] I could talk about Ohio's websites.
[00:26:57.400 --> 00:26:59.080] It's, I mean, this is the thing.
[00:26:59.080 --> 00:27:00.120] This is the thing.
[00:27:00.120 --> 00:27:01.880] We're your partners.
[00:27:01.880 --> 00:27:03.240] We're your partners.
[00:27:03.240 --> 00:27:05.880] So you need the tax.
[00:27:05.880 --> 00:27:08.680] Every government in the world needs the revenue.
[00:27:08.680 --> 00:27:12.120] We think you should be able to charge taxes on your citizens.
[00:27:12.120 --> 00:27:13.080] That's what this is about.
[00:27:13.400 --> 00:27:15.720] Totally not against, not against tax.
[00:27:15.720 --> 00:27:20.840] We're helping you, Ohio, Saskatchewan, collect taxes from your citizens.
[00:27:20.840 --> 00:27:21.240] Okay.
[00:27:21.560 --> 00:27:26.200] If you want us to do that, you've got to make it easy.
[00:27:26.200 --> 00:27:28.680] You've got to make it painless.
[00:27:28.680 --> 00:27:37.800] Because if we have to navigate your website and your website's broken, which has happened numerous times, you log into some of these and they just don't work.
[00:27:37.800 --> 00:27:39.560] They give you a 404.
[00:27:39.800 --> 00:27:41.720] What do you want us to do?
[00:27:41.720 --> 00:27:46.840] And remember, you're not the only person that's asking of us.
[00:27:46.840 --> 00:27:56.120] Like, eventually it's going to also be Chicago and then Edmonton and then, you know, London.
[00:27:56.120 --> 00:28:00.680] And then it's just going to keep, this is just going to increase.
[00:28:00.680 --> 00:28:02.760] So it's got to be easier.
[00:28:03.160 --> 00:28:07.880] If you're a government person listening, make this easy.
[00:28:07.880 --> 00:28:08.760] Become our partner.
[00:28:08.760 --> 00:28:11.480] That's why we need one world government.
[00:28:11.480 --> 00:28:11.880] Yeah.
[00:28:12.200 --> 00:28:15.920] One time zone, and one sales tax.
[00:28:14.920 --> 00:28:16.960] It'll be good.
[00:28:17.120 --> 00:28:34.160] Merchants of record, if you're out there and you're still listening, and I know a lot of you are listening, we're open, but right now, the merchants of record I've looked at, it would cost $63,000 more per year, $5,000 per month, but that's only right now.
[00:28:34.480 --> 00:28:45.840] If you factor in growth, and we serve largely prosumers, SMBs, we're talking about a lot of monthly invoices, and you folks charge per invoice.
[00:28:45.840 --> 00:28:49.520] And so these costs are only going to scale.
[00:28:49.520 --> 00:29:03.520] Also, if we, because you take a percentage of the charged amount, the more we go upmarket, so the more people we charge $200,000, $500 a month, the more we pay there as well.
[00:29:03.520 --> 00:29:12.640] So we're talking about $63,000 or $5,250 a month right now, but that's only going to get more expensive.
[00:29:12.640 --> 00:29:24.720] Right, which is why, like with this previous company we were trying to go with, like we're paying a premium because we thought this would just be like, oh, yeah, we'll talk to you one time and then hook up Stripe to this platform and we'll be good to go.
[00:29:24.720 --> 00:29:30.960] Yeah, because whatever they were forecasting, our first year with them was going to be 10 grand.
[00:29:30.960 --> 00:29:45.680] And then depending on how many sales regions we went with, the idea was that it would kind of scale, but we would be for the first few years anyway, we would be in the hundreds of dollars per month, not the thousands of dollars per month.
[00:29:45.680 --> 00:29:54.800] And like at this point, like, you know, I'm usually like pretty aware of money and we're spending and try to be pretty frugal about this stuff, but like the money doesn't even bother me anymore at this point.
[00:29:54.800 --> 00:29:59.120] It's just like the amount of time we're spending on this is ridiculous.
[00:29:59.120 --> 00:30:03.560] Which I think is Adam Wadden's point, which is why are you making it so difficult on yourself?
[00:30:04.120 --> 00:30:11.000] But I think the more I discuss things with those people, I think they can understand that we can't go back in time.
[00:30:11.000 --> 00:30:18.920] Like, maybe, sure, if we could go back in time to 2018 and choose Paddle, maybe things would have been better.
[00:30:19.320 --> 00:30:20.360] Here we are.
[00:30:20.360 --> 00:30:22.600] Lemon Squeeze didn't exist back then.
[00:30:22.600 --> 00:30:25.800] And I think the only other merchant of record option was Gumroad.
[00:30:25.800 --> 00:30:26.760] But we didn't.
[00:30:26.760 --> 00:30:31.000] We were on Stripe and we registered our company through Stripe Atlas.
[00:30:31.000 --> 00:30:35.560] Like, Stripe seemed to be the best solution at the time.
[00:30:36.280 --> 00:30:39.400] You know, they bought TaxJar and they introduced Stripe Tax.
[00:30:39.400 --> 00:30:42.440] And it's like, all right, seems like things are moving along.
[00:30:42.440 --> 00:30:47.080] And I have to believe they're still trying to do something about this and are just not talking about it.
[00:30:47.400 --> 00:30:49.000] Have I quoted Derek Reimer yet?
[00:30:49.000 --> 00:30:59.400] He summarized it by saying, Dear Stripe, we SaaS founders are desperate for a full-stack global tax compliance solution without having to leave you for a merchant of record.
[00:30:59.400 --> 00:31:01.560] Are you planning to solve this?
[00:31:01.560 --> 00:31:04.520] So we've criticized some governments.
[00:31:04.520 --> 00:31:07.400] I think Stripe deserves some criticism here.
[00:31:07.400 --> 00:31:07.880] Yeah.
[00:31:08.440 --> 00:31:14.760] You know, you have many companies who rely on you.
[00:31:14.760 --> 00:31:29.880] And for them to not have a solution that works now, you know, like I said, a lot of these North American tax rules came in around 2020, 2021, 2022.
[00:31:30.520 --> 00:31:33.880] That's plenty of time for you to figure something out.
[00:31:33.880 --> 00:31:45.200] And the rumors I've heard in the rumor mill, in the back channels of the internet, are: A, that there were people working on this and they were laid off or the project was canceled.
[00:31:45.200 --> 00:31:46.240] These are all subsets.
[00:31:44.680 --> 00:31:48.400] I don't know if these are true, but this is what I'm hearing.
[00:31:49.120 --> 00:31:56.720] The other rumor I've heard is that they're aware, but they have nothing that's going to be ready before 2025.
[00:31:56.720 --> 00:32:01.840] I mean, I have to assume that's why they bought TaxJar is because they saw other companies doing this.
[00:32:01.840 --> 00:32:02.240] Yeah.
[00:32:02.560 --> 00:32:04.640] And they wanted to get ahead of it.
[00:32:04.640 --> 00:32:09.120] But all the things I've heard is that it's not really integrated at all yet.
[00:32:09.120 --> 00:32:12.880] Yeah, TaxJar is just for the United States right now.
[00:32:12.880 --> 00:32:13.520] Is that right?
[00:32:13.600 --> 00:32:14.640] US and Canada?
[00:32:15.040 --> 00:32:15.920] Maybe Canada.
[00:32:15.920 --> 00:32:16.320] Yeah.
[00:32:16.640 --> 00:32:18.160] We really are in a hard place.
[00:32:18.160 --> 00:32:33.440] Like I said, even if you're European and you think that we should just take this seriously and do it right now, or switching payment providers at this point, it may just not be an option.
[00:32:33.440 --> 00:32:49.040] Like it's literally the difference between we could switch and lose our business or like switching to something now that we have thousands of customers already in the system and all of this infrastructure built in.
[00:32:49.040 --> 00:32:52.400] Like we're also not using Stripe checkout, right?
[00:32:52.400 --> 00:32:54.000] Like we built our own stuff.
[00:32:54.640 --> 00:32:56.480] So this is deep in the app.
[00:32:56.480 --> 00:32:59.520] This is not a simple switch.
[00:32:59.520 --> 00:33:09.600] It's not like, you know, if we were just selling digital, single digital downloads or one-time purchases, let's just swap the checkout button.
[00:33:09.600 --> 00:33:10.640] Who cares?
[00:33:10.640 --> 00:33:15.280] Revan, again, I'm nervous about having to set up another Stripe account.
[00:33:15.280 --> 00:33:43.560] And then the other thing is, if we set up all of our reporting that we have built into Stripe, like all of our records for MRR, churn, historic, churn, all those stuff, we start a new Stripe account and we now lose the lifetime of data or the value of that lifetime of data because we're going to have a break, which again impairs us to be able to run our business realistically.
[00:33:43.560 --> 00:33:51.720] I don't think any government would want us to risk our business in order to become compliant.
[00:33:51.720 --> 00:33:56.360] Otherwise, we're not going to be able to charge any of your customers sales tax and remit it for you.
[00:33:56.360 --> 00:34:04.840] And you're not going to be able to get any of the income tax we're paying through the company and through all of our employees' personal income tax.
[00:34:05.160 --> 00:34:13.240] Revan, right now, I mean, if Reven folks are listening, we would love a solution that would work for us.
[00:34:14.200 --> 00:34:18.600] But starting a new Stripe account, that just seems not great.
[00:34:18.600 --> 00:34:19.960] Yeah, I mean, it must be illegal.
[00:34:20.040 --> 00:34:21.480] It must be a legal thing.
[00:34:21.480 --> 00:34:25.880] Well, and I'm also wondering legally, I got to dig into that.
[00:34:25.880 --> 00:34:31.320] Like, legally, does Stripe even approve of this officially?
[00:34:31.320 --> 00:34:32.120] Right, right.
[00:34:32.440 --> 00:34:34.520] I'm not, it's not clear.
[00:34:34.520 --> 00:34:35.160] It says there's.
[00:34:35.480 --> 00:34:40.600] If they can migrate it, I mean, Stripe must have a migration set up somehow.
[00:34:40.600 --> 00:34:53.640] Oh, they have a migration setup, but I'm worried, like if you choose to protect your business using Reven, you implement Reven as your business's non-exclusive authorized reseller.
[00:34:53.640 --> 00:35:00.040] It's worth noting that this reseller role is performed for compliance reasons only and not to establish a new distribution channel.
[00:35:01.840 --> 00:35:04.920] But but they now own our Stripe account.
[00:35:04.880 --> 00:35:06.600] Like, like it's under their company.
[00:35:06.600 --> 00:35:07.160] Right.
[00:35:07.160 --> 00:35:14.360] This approach enables us to grant our sellers limited direct access to their respective Stripe account.
[00:35:14.960 --> 00:35:22.480] From a legal point of view, we provide access in the context of a service and data process agreement, including in our terms and conditions.
[00:35:22.480 --> 00:35:31.280] The seller's task is to implement and host the checkout on the website and optionally manage billing-related customer requests on our behalf to operate our reselling business.
[00:35:31.600 --> 00:35:35.520] This is just sounding me more nervous the more you read.
[00:35:35.520 --> 00:35:39.040] Yeah, I think a lot of folks want to know what we're considering now.
[00:35:39.360 --> 00:35:44.960] Here's what I'm thinking: I feel like we should get out of this contract with that company.
[00:35:44.960 --> 00:35:47.920] And just, I mean, either maybe get some money back or call it a loss.
[00:35:48.240 --> 00:35:50.480] Call it a loss, water under the bridge.
[00:35:50.480 --> 00:35:53.840] Feels like throwing money down the throwing money down the toilet.
[00:35:53.840 --> 00:36:03.680] This is the way I will rationalize it: I think the amount our kind patron supporters have given us over the years will likely equal that amount.
[00:36:03.680 --> 00:36:12.960] And so it's just like they have invested in our learning, and now we are going to share that learning with the community at large.
[00:36:12.960 --> 00:36:19.200] Which is don't sign an agreement with these big enterprise tax compliance companies.
[00:36:19.200 --> 00:36:19.600] Yeah.
[00:36:19.920 --> 00:36:22.800] I have been in touch with some of the smaller ones.
[00:36:22.800 --> 00:36:24.240] They're great people.
[00:36:24.240 --> 00:36:28.240] There's a few reasons it still makes me nervous.
[00:36:28.240 --> 00:36:41.520] There's just, I can't really talk about it too much over here, but it's just there's some things that are just like, even things like multiple typos in their emails, it just makes me nervous.
[00:36:41.920 --> 00:36:52.480] I'm going to entrust you with this tax compliance solution, which is literally, I'm trusting you to dot your eyes for every tax region in the world.
[00:36:52.800 --> 00:37:02.760] And again, it doesn't make me trust your merchant of record service more or your tax compliance service more when I check your customers who are using the solution.
[00:37:02.840 --> 00:37:08.280] And I get, I'm seeing bad checkout forms that aren't listing the proper taxes.
[00:37:08.280 --> 00:37:08.680] Right.
[00:37:09.320 --> 00:37:09.640] Yeah.
[00:37:09.880 --> 00:37:11.800] Typos in your emails.
[00:37:11.800 --> 00:37:30.600] And even like, I'm, I get put on to salespeople, even for smaller companies that don't seem to understand SaaS, that don't seem to understand the North American perspective, that assume that we're just going to put the tax inside our existing price points.
[00:37:30.600 --> 00:37:43.400] That just assume it's like easy to show every visitor in the world a contextual price based on their location and the amount of taxes we're supposed to be showing those people.
[00:37:43.400 --> 00:37:58.520] Here's what I think we should do: Stripe Tax is the best solution when it comes to clearly articulating the taxes that are being collected and paid on the invoices.
[00:37:58.520 --> 00:38:08.520] Yeah, I mean, yeah, the collection side of it, I think, Stripe Tax, we haven't turned it on yet or registered in any states, but it feels like they have that stuff pretty well under control.
[00:38:08.520 --> 00:38:09.240] Yeah.
[00:38:09.560 --> 00:38:13.800] So, and even my guess is we're going to be able to get reports.
[00:38:13.800 --> 00:38:22.680] This is some of the problems with the third-party compliance tools: they just want you to add an amount to your existing sale amount.
[00:38:22.680 --> 00:38:28.280] So it's not broken out in the Stripe invoice, how much of that is sales tax and how much of that is not.
[00:38:28.280 --> 00:38:35.640] They require you to use their tool as a like a third-party invoice generating thing.
[00:38:36.120 --> 00:38:39.320] And then all the reporting is in their tool.
[00:38:39.640 --> 00:38:59.440] I would prefer to keep all of that in Stripe, keep it simple, and then Stripe just says, Here's how much tax you've collected in the UK, here's how much tax you've collected, and then for the customer, it's clearly articulated on their Stripe invoice: here's how much tax was added to your invoice.
[00:38:59.440 --> 00:39:13.440] I mean, on top of that, once we turn that on, we also probably want to communicate to the customers we have in those places and be like, Hey, like, starting on this date, like things might look a little different.
[00:39:13.440 --> 00:39:16.480] Like, sorry, that's the law.
[00:39:16.480 --> 00:39:18.320] If you're upset, here's a coupon.
[00:39:18.480 --> 00:39:19.280] Like, I don't know.
[00:39:19.280 --> 00:39:33.840] I mean, some I think most people will probably be fine, but yeah, yeah, I mean, this is the other thing: we have to manage now expectations on behalf of the government, which is like, you know, why did my price go up?
[00:39:33.840 --> 00:39:37.120] How come you guys were charging it before or weren't charging it before, and now you are?
[00:39:37.120 --> 00:39:40.880] It's like, well, this is your government.
[00:39:40.960 --> 00:39:41.840] This isn't us.
[00:39:41.840 --> 00:39:44.640] This is, we're doing your government a service here.
[00:39:45.680 --> 00:39:59.520] And right now, with Stripe tax, the advice we're getting in the back channels from people with North American SaaS companies that actually have customers and recurring billing, some of those SaaS founders who are, again, big companies that you've heard of, are like, we're just ignoring it.
[00:39:59.920 --> 00:40:01.200] That's the opinion of some.
[00:40:01.680 --> 00:40:08.720] The folks that are starting to take it seriously, saying the advice they're getting from their accountants is you have to start somewhere.
[00:40:08.720 --> 00:40:16.400] Again, like these, there's only going to be more and more regions that start requiring tax, right?
[00:40:16.400 --> 00:40:20.640] So, you know, Saskatchewan today, Regina tomorrow, right?
[00:40:20.640 --> 00:40:23.360] It's like, it's going to just increase.
[00:40:23.840 --> 00:40:26.160] Is that the title of the episode?
[00:40:27.440 --> 00:40:29.520] Saskatchewan today, Regina tomorrow.
[00:40:30.440 --> 00:40:33.000] Regina is the capital of Saskatchewan.
[00:40:33.240 --> 00:40:35.560] There's only going to be more and more tax regions.
[00:40:35.560 --> 00:40:41.320] It's going to be literally impossible to be compliant with every tax region in the world.
[00:40:43.000 --> 00:40:49.080] The other thing I was like, to what extent are people willing to take this?
[00:40:49.080 --> 00:41:01.880] Like, if North Korea decides to impose a tax on all democracies and any capitalist country, will you also recognize that?
[00:41:01.880 --> 00:41:02.840] Well, of course not.
[00:41:02.840 --> 00:41:04.520] That would be ridiculous.
[00:41:05.720 --> 00:41:12.440] The spectrum of ridiculousness, this is all on the spectrum of ridiculousness, right?
[00:41:12.840 --> 00:41:16.600] So, of course, the North Korea example is the most ridiculous.
[00:41:16.600 --> 00:41:24.840] The idea that we would have to do any of this for a foreign government where we have no employees and we don't live there is ridiculous.
[00:41:24.840 --> 00:41:27.720] So, this is all on the spectrum of ridiculousness.
[00:41:27.720 --> 00:41:36.360] It's only going to get crazier if we just the advice we're getting is to start with the United States and Canada and just start there.
[00:41:36.360 --> 00:41:38.920] That's where TaxJar currently works, right?
[00:41:38.920 --> 00:41:41.640] Stripe, Tax, and TaxJar currently work there.
[00:41:41.640 --> 00:41:42.520] And we did talk to them.
[00:41:42.520 --> 00:41:48.360] We'll have to talk to them again to see if it's not a similar situation of what we got into with the other company.
[00:41:48.920 --> 00:41:50.760] And that's a manageable place for us to start.
[00:41:50.760 --> 00:41:57.160] We've only exceeded thresholds in 12 regions in North America.
[00:41:57.160 --> 00:42:00.840] 12 regions is something we can do on our own.
[00:42:00.840 --> 00:42:03.720] We can figure this out we can we can go through it.
[00:42:03.720 --> 00:42:06.040] It's a place for us to get started, right?
[00:42:06.040 --> 00:42:06.600] Yeah.
[00:42:07.240 --> 00:43:45.960] And I mean, by the way, your exceeded threshold, like when you exceed the threshold in the UK, for example, is after one transaction your exceeded threshold in switzerland is one transaction right so we've exceeded three thresholds in europe and the eu i don't want to say i we have to start somewhere i think this is what we're going to do is just start stripe tax tax jar become compliant in the countries we live in and have employees in and then you know hopefully stripe and tax jar get their act together and um become our partners in this because uh we're really drowning here and um we we need an iterative solution yeah so that's our plan right what we think is actually turn on stripe tax to collect in certain regions yeah probably use tax jar although we still have to talk to them plus i don't know if they help with registration or we have to do that ourselves yeah i think i think we still i think no i think stripe helps with registration now tax jar you mean uh let's see stripe does they might like point you to a website i think i mean the other thing is that it it's this isn't cheap on stripe either but it's still cheaper than a merchant of record i think it's an additional 0.5 percent for stripe tax.
[00:43:45.960 --> 00:43:46.760] So the u.S.
[00:43:46.800 --> 00:43:49.800] filing partner is taxChar.
[00:43:49.800 --> 00:43:54.200] And they do have european filing partners, so we could also look into that.
[00:43:54.200 --> 00:43:56.200] They'll tell you where to register.
[00:43:56.200 --> 00:43:56.760] Yeah.
[00:43:57.400 --> 00:44:03.240] But again, for us to start with these 12 regions and register there, I think we can do that.
[00:44:03.240 --> 00:44:03.880] Yeah.
[00:44:04.360 --> 00:44:10.440] And then maybe we hire someone part-time to do the admin on this if we really don't want to.
[00:44:10.440 --> 00:44:15.160] Like just say, hey, you're responsible for making these payments for us.
[00:44:15.880 --> 00:44:16.360] Right?
[00:44:16.360 --> 00:44:16.760] Yeah.
[00:44:17.000 --> 00:44:22.200] It is a mess, but we want to try to do the right thing.
[00:44:22.200 --> 00:44:32.920] And so we're going to start where we can start without sacrificing the business on the altar of and hopefully, hopefully not our sanity either.
[00:44:32.920 --> 00:44:34.280] And hopefully not our sanity.
[00:44:34.280 --> 00:44:34.760] Yeah.
[00:44:34.760 --> 00:44:35.000] Yeah.
[00:44:35.000 --> 00:44:35.320] Yeah.
[00:44:35.320 --> 00:44:35.640] Yeah.
[00:44:35.640 --> 00:44:36.600] Exactly.
[00:44:36.600 --> 00:44:37.560] There's trade-offs.
[00:44:37.560 --> 00:44:38.840] It's always trade-off, right?
[00:44:40.520 --> 00:44:41.400] That's probably enough.
[00:44:41.400 --> 00:44:48.440] That's 49 minutes and 13 seconds of more exciting tax compliance talk.
[00:44:48.760 --> 00:44:50.040] Thanks for sticking with us.
[00:44:50.040 --> 00:44:54.520] Thanks to everyone who replied, even those that disagree with us.
[00:44:54.520 --> 00:44:56.440] Nice to hear from you.
[00:44:57.080 --> 00:45:02.600] Thanks to all of those who DM'd me privately and said, this is also a problem for me, and I'm super stressed out.
[00:45:02.600 --> 00:45:06.120] And I wish I'm so thankful you talked about it.
[00:45:06.760 --> 00:45:22.600] John, why don't we thank our lovely Patreon supporters who will be helping us pay off our enterprise bill?
[00:45:22.600 --> 00:45:23.640] Who are the people?
[00:45:23.720 --> 00:45:25.000] We got a few new supporters too.
[00:45:25.000 --> 00:45:26.920] Who are the people supporting this podcast?
[00:45:26.920 --> 00:45:28.040] Yeah, thanks to everyone.
[00:45:28.280 --> 00:45:31.000] We have Greg Park, who I believe is new.
[00:45:31.000 --> 00:45:31.720] Nice.
[00:45:31.720 --> 00:46:00.960] We have Mitchell Davis from recruitkit.com.au, Marcel Falay from WeAreBold.af, Ole Kulik, Ethan Gunderson, Anton Zorin from ProudCamp.com, Bill Kondo, Alex Payne, Ward from memberspace.com, Russell Brown from Fotivo.com, Evandra Sassi, Austin Lovelace, Michael Sitfer, Fathom, the lovely Fathom Analytics folks.
[00:46:00.960 --> 00:46:01.520] Yeah.
[00:46:01.840 --> 00:46:08.000] My brother Dan Buddha, Colin Gray, Darby Frey, and Dave Junta.
[00:46:08.000 --> 00:46:09.440] Junta.
[00:46:10.400 --> 00:46:10.960] Nice.
[00:46:10.960 --> 00:46:12.160] Thanks for listening, everyone.
[00:46:12.160 --> 00:46:14.000] We'll see you next week.
[00:46:30.640 --> 00:46:34.480] Podcast hosting is provided by transistor.fm.
[00:46:34.480 --> 00:46:45.760] They host our MP3 files, generate our RSS feed, provide us with analytics, and help us distribute the show to Spotify, Apple Podcasts, and more.
[00:46:45.760 --> 00:46:56.960] If you want to start your own podcast or you want to switch to Transistor, go to transistor.fm/slash Justin and get 15% off your first year.

Prompt 2: Key Takeaways

Now please extract the key takeaways from the transcript content I provided.

Extract the most important key takeaways from this part of the conversation. Use a single sentence statement (the key takeaway) rather than milquetoast descriptions like "the hosts discuss...". 

Limit the key takeaways to a maximum of 3. The key takeaways should be insightful and knowledge-additive. 

IMPORTANT: Return ONLY valid JSON, no explanations or markdown. Ensure:
- All strings are properly quoted and escaped
- No trailing commas
- All braces and brackets are balanced
Format: {"key_takeaways": ["takeaway 1", "takeaway 2"]}

Prompt 3: Segments

Now identify 2-4 distinct topical segments from this part of the conversation.

For each segment, identify:
- Descriptive title (3-6 words)  
- START timestamp when this topic begins (HH:MM:SS format)
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Most important Key takeaway from that segment. Key takeaway must be specific and knowledge-additive.
- Brief summary of the discussion

IMPORTANT: The timestamp should mark when the topic/segment STARTS, not a range. Look for topic transitions and conversation shifts.

Return ONLY valid JSON. Ensure all strings are properly quoted, no trailing commas:
{
  "segments": [
    {
      "segment_title": "Topic Discussion", 
      "timestamp": "01:15:30",
      "key_takeaway": "main point from this segment",
      "segment_summary": "brief description of what was discussed"
    }
  ]
}

Timestamp format: HH:MM:SS (e.g., 00:05:30, 01:22:45) marking the START of each segment.

Prompt 4: Media Mentions

Now scan the transcript content I provided for ACTUAL mentions of specific media titles:

Find explicit mentions of:
- Books (with specific titles)
- Movies (with specific titles)  
- TV Shows (with specific titles)
- Music/Songs (with specific titles)

DO NOT include:
- Websites, URLs, or web services
- Other podcasts or podcast names

IMPORTANT: 
- Only include items explicitly mentioned by name. Do not invent titles.
- Valid categories are: "Book", "Movie", "TV Show", "Music"
- Include the exact phrase where each item was mentioned
- Find the nearest proximate timestamp where it appears in the conversation
- THE TIMESTAMP OF THE MEDIA MENTION IS IMPORTANT - DO NOT INVENT TIMESTAMPS AND DO NOT MISATTRIBUTE TIMESTAMPS
- Double check that the timestamp is accurate - a timestamp will NEVER be greater than the total length of the audio
- Timestamps are given as ranges, e.g. 01:13:42.520 --> 01:13:46.720. Use the EARLIER of the 2 timestamps in the range.

Return ONLY valid JSON. Ensure all strings are properly quoted and escaped, no trailing commas:
{
  "media_mentions": [
    {
      "title": "Exact Title as Mentioned",
      "category": "Book",
      "author_artist": "N/A",
      "context": "Brief context of why it was mentioned",
      "context_phrase": "The exact sentence or phrase where it was mentioned",
      "timestamp": "estimated time like 01:15:30"
    }
  ]
}

If no media is mentioned, return: {"media_mentions": []}

Full Transcript

[00:00:00.240 --> 00:00:03.440] This podcast is hosted by Transistor.fm.
[00:00:17.760 --> 00:00:18.640] Hey, everyone.
[00:00:18.640 --> 00:00:20.240] Welcome to Build Your SAS.
[00:00:20.240 --> 00:00:24.160] This is the behind-the-scenes story of building a web app in 2023.
[00:00:24.160 --> 00:00:26.560] I'm John Buddha, a software engineer.
[00:00:26.560 --> 00:00:28.000] And I'm Justin Jackson.
[00:00:28.000 --> 00:00:31.840] I do sales tax compliance for SaaS companies.
[00:00:32.400 --> 00:00:35.840] Follow along as we figure this shit out.
[00:00:35.840 --> 00:00:37.120] Did you get a promotion?
[00:00:38.480 --> 00:00:40.640] I don't know if that's a promotion.
[00:00:40.640 --> 00:00:54.480] Although, judging from the number of unsolicited DMs and emails from sales tax compliance professionals since our last episode that I've received, it seems lucrative.
[00:00:55.120 --> 00:00:57.600] Are you going to switch to becoming a sales tax lobbyist?
[00:00:58.480 --> 00:01:00.880] I mean, I may do that.
[00:01:00.880 --> 00:01:02.800] I may just become a lobbyist.
[00:01:03.280 --> 00:01:06.560] Can you become an international lobbyist?
[00:01:06.800 --> 00:01:07.760] That sounds exhausting.
[00:01:08.080 --> 00:01:09.040] I don't think so.
[00:01:09.680 --> 00:01:12.000] That would almost be worse than sales tax compliance.
[00:01:12.000 --> 00:01:16.080] I would have to register as a lobbyist in every jurisdiction in the world.
[00:01:16.320 --> 00:01:17.280] You would.
[00:01:18.560 --> 00:01:23.360] Well, folks, that last episode hit a nerve.
[00:01:23.680 --> 00:01:34.240] We talked about sales tax compliance and we got a lot of responses from all sorts of folks.
[00:01:34.240 --> 00:01:38.320] And there's a few different camps I think we've noticed.
[00:01:38.880 --> 00:01:55.120] Broadly, I would say folks in North America who are using Stripe and already have customers and subscriptions, and for whom digital sales tax compliance is new, are like, Agree with us.
[00:01:55.120 --> 00:01:56.560] This is difficult.
[00:01:56.560 --> 00:01:57.840] This is ridiculous.
[00:01:57.840 --> 00:01:59.680] This is why, why is it built?
[00:01:59.680 --> 00:02:00.680] Why is it this way?
[00:02:00.920 --> 00:02:03.560] I didn't even realize we needed to do this.
[00:02:04.200 --> 00:02:09.720] And then a lot of folks in the EU were not as empathetic.
[00:02:09.720 --> 00:02:12.680] They're just saying, well, this is just a normal part of business.
[00:02:13.000 --> 00:02:18.760] And that was, I think that's pretty indicative of the response we got.
[00:02:18.760 --> 00:02:19.400] What do you think, John?
[00:02:19.480 --> 00:02:26.600] I think that, I mean, yeah, it is a normal part of running a business, but I think in the US, people are just less aware of it.
[00:02:26.600 --> 00:02:37.720] I mean, it's maybe harder to do as well, but it's just like, I don't know, people are unaware or think it's something they just need to do later.
[00:02:38.520 --> 00:02:46.120] I'm actually having a discussion right at the same point with Adam Wavin.
[00:02:47.400 --> 00:02:50.120] Let's just talk about some of the responses we got here.
[00:02:51.640 --> 00:03:01.560] So one anonymous European, whom I won't credit, said, once again, I noticed that the indie hacking community has a somewhat naive approach to what running a business actually entails.
[00:03:01.560 --> 00:03:06.840] As a European, not having a plan for sales tax is mind-boggling.
[00:03:07.800 --> 00:03:17.000] To which Cooper replied, who is also from the EU, I think it might be a European perspective as we have been dealing with that from day one.
[00:03:17.000 --> 00:03:20.520] So it's just one of the parts of running a business from the start.
[00:03:20.520 --> 00:03:23.640] It can't really be neglected in the EU.
[00:03:23.640 --> 00:03:44.760] Although, I just want to take a quick aside here and say, you know, I tested some of these EU companies' checkout pages, and they are using some of these merchant of record services, and they incorrectly assigned the tax for British Columbia and Canada, where I live.
[00:03:46.000 --> 00:03:53.680] So this idea I think is ridiculous, and I'm gonna make an argument for it right now.
[00:03:53.680 --> 00:04:08.160] This idea that every small software company should be in perfect compliance with every government jurisdiction in the world that decides to come up with a tax.
[00:04:08.160 --> 00:04:15.680] And by the way, this could mean countries, provinces, states, and in the case of Chicago, even cities.
[00:04:16.000 --> 00:04:17.680] We may even get to neighborhoods.
[00:04:19.040 --> 00:04:25.200] If you're in this neighborhood, you have to charge your customers 20% tax.
[00:04:25.200 --> 00:04:33.040] I think Daniel Vassilo articulated this well when he said: it is going to become impossible to be compliant everywhere.
[00:04:33.040 --> 00:04:44.880] The kingdom of Tonga could tomorrow come up with an internet tax and require you to remit 25% of your sales to the tax office in person in their local currency, and they won't tell you about it.
[00:04:44.880 --> 00:04:49.440] It's just a cost-benefit analysis.
[00:04:49.680 --> 00:04:52.640] I think there's two kinds of things here, right?
[00:04:52.640 --> 00:05:21.200] One, even if you're in the EU, I think you have to recognize that for governments to expect companies to collect a tax on customers, this isn't a tax on businesses, a tax on customers on their behalf in every region in the world, including country, state, province, and city.
[00:05:21.200 --> 00:05:40.200] So soon we it is possible we are going to go from a hundred tax regions to a hundred thousand tax regions and expecting small businesses to be responsible for all of this compliance on our side is ridiculous and it's going to get more ridiculous.
[00:05:40.200 --> 00:05:46.120] On top of that, I mean in the U.S., if you if you if you buy something, I think this is how it works.
[00:05:46.120 --> 00:05:56.360] If you buy something and you don't pay sales tax, you're supposed to actually file that in your tax return and pay a used tax just so that someone gets the tax.
[00:05:56.360 --> 00:05:59.720] But I don't know that people do that.
[00:05:59.720 --> 00:06:00.360] Yeah.
[00:06:00.360 --> 00:06:07.960] It's just putting the onus on these small businesses and individuals to take care of the stuff that should be automated.
[00:06:07.960 --> 00:06:15.240] I mean, it's kind of related to like actually filing your taxes in the U.S., which should be like basically a one-click thing.
[00:06:15.240 --> 00:06:24.440] But then we have this tax, this whole tax industry that took it over and lobbies on behalf of their companies to basically not make it easy to file taxes in the U.S.
[00:06:24.760 --> 00:06:25.320] Yep.
[00:06:25.320 --> 00:06:27.240] It's silly.
[00:06:27.240 --> 00:06:27.800] Yeah.
[00:06:27.800 --> 00:06:35.320] And I mean, I understand so many of us in business just do not want to think about this at all.
[00:06:35.640 --> 00:06:36.920] I get it.
[00:06:37.240 --> 00:06:43.480] And I think understanding both and being able to see this clearly as an externality.
[00:06:43.480 --> 00:06:44.680] This is an externality.
[00:06:44.680 --> 00:06:45.560] An externality.
[00:06:45.560 --> 00:06:50.200] This is a negative externality imposed on businesses.
[00:06:50.520 --> 00:06:54.120] See, these sales taxes have nothing to do with businesses.
[00:06:54.120 --> 00:06:57.240] These are sales taxes on your customers.
[00:06:57.240 --> 00:07:07.640] Some governments, actually in the U.S., by the way, some states require they make the customer ultimately responsible for the tax.
[00:07:07.640 --> 00:07:19.120] So, if your merchant of record or your vendor or whoever doesn't collect and remit the sales tax on your behalf, those states will hold you as the customer ultimately liable.
[00:07:19.760 --> 00:07:24.000] And that's just a handful of states in the United States of America now.
[00:07:24.000 --> 00:07:30.960] Imagine every province and state and city worldwide who decide to come up with their own rules.
[00:07:31.760 --> 00:07:35.440] So, this is a tax on customers.
[00:07:35.440 --> 00:07:48.000] When governments first started collecting sales taxes, it made sense to put it on businesses because there's so much cash and checks, and credit cards weren't as common.
[00:07:48.000 --> 00:07:54.080] And it just made sense to say, well, the only way we can really collect this efficiently is through businesses.
[00:07:54.080 --> 00:08:00.400] I still think it was a mistake because I think that's an unfair liability to put on businesses.
[00:08:00.720 --> 00:08:12.560] When you're talking about this can add up, you know, some of these Europeans are paying the tax out of their own profit.
[00:08:13.840 --> 00:08:19.040] So, they're paying the government on behalf of their customers.
[00:08:19.360 --> 00:08:26.240] It'd be like, I don't know what a good metaphor for this is because it's just so ridiculous.
[00:08:26.240 --> 00:08:29.760] It would be like, I can't even think of anything.
[00:08:29.760 --> 00:08:33.040] It's just, it's such a ridiculous situation.
[00:08:33.040 --> 00:08:44.560] And I think at the very least, even self-righteous business owners that say this is just a part of business, yes, paying your business taxes is a part of business.
[00:08:44.560 --> 00:08:50.720] But I think everyone should be able to recognize this as a really unfortunate externality.
[00:08:50.720 --> 00:08:53.040] On the other hand, we've got to decide what we're going to do about it.
[00:08:53.040 --> 00:09:01.880] But this, to at least understand that this is a really unfortunate predicament that we're in right now.
[00:09:02.760 --> 00:09:09.480] Some people also said, I mentioned that, you know, here in Canada, and you've checked some of your receipts as well.
[00:09:09.480 --> 00:09:13.640] You know, about 50% of the vendors we check from Canada and the U.S.
[00:09:13.720 --> 00:09:22.280] and Australia, for whom this is a new concept, are not collecting these taxes properly.
[00:09:22.600 --> 00:09:30.280] So when we look at our receipts, there is no sales tax imposed when it should be on many of these receipts.
[00:09:30.600 --> 00:09:35.240] And someone criticized me and said, well, that's not an excuse for you to not do it properly.
[00:09:35.240 --> 00:09:36.520] That's what about ism.
[00:09:37.720 --> 00:09:42.680] We're not trying to deflect any of our responsibility in running a business.
[00:09:43.880 --> 00:09:54.680] We're just pointing out that there are many, many businesses in the U.S., Canada, Australia, New Zealand, who are struggling with this.
[00:09:54.680 --> 00:09:57.400] Many of us are using Stripe.
[00:09:57.400 --> 00:10:03.720] And Stripe has not given us a solution.
[00:10:04.280 --> 00:10:23.240] If Stripe had a built-in solution, just like they have with Stripe Carbon, they automatically take 1% or 2% off every payment and they remit it to all these companies and nonprofits doing climate action work.
[00:10:23.560 --> 00:10:26.760] If it worked like that, none of us would be complaining.
[00:10:27.080 --> 00:10:29.400] And the governments wouldn't be complaining either, right?
[00:10:29.400 --> 00:10:33.720] The governments don't care who remits the tax at the end of the day.
[00:10:33.720 --> 00:10:37.000] They just want the tax to be collected and remitted.
[00:10:37.240 --> 00:10:43.720] I mean, I'm sure these states and provinces wish it was easier too, because they would be, you know, generating more revenue.
[00:10:43.960 --> 00:10:48.000] But for whatever reason, it doesn't seem to have changed.
[00:10:48.000 --> 00:10:50.640] It just seems to be getting a little more complicated.
[00:10:44.840 --> 00:10:50.960] Yeah.
[00:10:51.600 --> 00:11:05.520] And I mean, speaking of Stripe, which we can talk about more later, but like they do have their Stripe tax product, which is pretty nice, except it's like kind of a half measure.
[00:11:05.520 --> 00:11:06.240] Yes.
[00:11:06.240 --> 00:11:09.120] And like, you know, when they announced it, I was like, oh, this is kind of cool.
[00:11:09.120 --> 00:11:09.840] This is exciting.
[00:11:09.840 --> 00:11:15.040] Like, they're going to calculate tax and charge tax based on where the customer lives and all this stuff.
[00:11:15.040 --> 00:11:18.880] And then you get to the point where you got to pay it.
[00:11:18.880 --> 00:11:21.760] And it's like, oh, we're just collecting, what is it going to have?
[00:11:21.760 --> 00:11:24.720] Money sitting around that's sales tax money that we have to remit.
[00:11:24.720 --> 00:11:29.760] And then, you know, there's the second part of that, which is filing in every state and all this stuff.
[00:11:29.760 --> 00:11:30.320] So.
[00:11:30.320 --> 00:11:30.960] Yeah.
[00:11:30.960 --> 00:11:44.400] Your perspective on this depends on what stage you are at in your business, what kind of business you have, and what payment processor you started with.
[00:11:45.040 --> 00:11:49.200] So Adam Wathan thinks we're crazy.
[00:11:49.200 --> 00:11:52.000] He's like, why are you guys even worried about this?
[00:11:52.000 --> 00:11:54.480] Just go with a merchant of record and be done.
[00:11:54.800 --> 00:12:00.400] But that's easier said than done when you've already started on Stripe.
[00:12:00.720 --> 00:12:13.040] And by the way, it's not crazy that when we started, this wasn't a big issue for us because in Canada, this legislation just came in.
[00:12:13.040 --> 00:12:16.640] It was only put into legislation in 2021.
[00:12:16.640 --> 00:12:17.880] And most of the U.S.
[00:12:17.840 --> 00:12:20.000] states, it's also fairly recent.
[00:12:20.000 --> 00:12:24.080] It's happened within Transistors's lifetime.
[00:12:24.080 --> 00:12:26.480] Yeah, I mean, I certainly didn't think about it.
[00:12:26.480 --> 00:12:29.760] I was like, yeah, you know, I didn't, it hadn't even crossed my mind.
[00:12:30.040 --> 00:12:42.120] Even the fact that Stripe only recently created Stripe Tax, and Stripe is a very North American-centric payment processor, it shows that all of this is new here.
[00:12:42.440 --> 00:12:54.680] And so this new legislation, now some of the provinces had some things already before that, but the GST legislation in Canada just came out in 2021 for what do they call it?
[00:12:54.680 --> 00:12:59.560] They call it the cross-border digital products and services tax.
[00:12:59.560 --> 00:13:12.440] In the U.S., famously, the states were very slow to impose any sort of digital sales tax, any sort of cross-border sales tax at all.
[00:13:13.720 --> 00:13:16.040] Amazon infamously took advantage of this.
[00:13:16.200 --> 00:13:17.240] That's very new.
[00:13:17.560 --> 00:13:34.680] I mean, yeah, when we started, I had maybe thought that we would have to collect sales tax in Illinois or something like that, but it either wasn't, that law wasn't active yet, or I mean, they don't collect sales tax for software as a service products.
[00:13:34.680 --> 00:13:38.520] And the Chicago tax is new within the last couple of years.
[00:13:38.760 --> 00:13:51.480] The advice you used to get in North America was if you are in a state that doesn't collect sales tax on SaaS, then you don't have to collect it and remit it.
[00:13:51.480 --> 00:13:55.880] And the other states had not figured out this cross-border thing yet.
[00:13:55.880 --> 00:13:59.400] And Canada hadn't created a national strategy yet.
[00:13:59.400 --> 00:14:04.200] Again, a little bit of empathy for those of us that are find ourselves in this situation.
[00:14:04.200 --> 00:14:09.080] At the same time, this makes me think of like, I mean, the internet's everywhere, right?
[00:14:09.080 --> 00:14:15.000] Like, I live in Chicago, but I could have signed up for Transistor when I was visiting Oklahoma.
[00:14:15.920 --> 00:14:24.400] But if I bought something in Oklahoma, I'd be paying Oklahoma sales tax, not Illinois sales tax, even though my credit card is linked to Illinois.
[00:14:25.200 --> 00:14:27.440] Well, I mean, this is where it comes in.
[00:14:27.760 --> 00:14:33.680] I mean, technically, it's where your permanent residence is, is where you're supposed to reflect it.
[00:14:34.960 --> 00:14:43.920] I actually thought of this with Estonia because Estonia has these digital residency things you can sign up for.
[00:14:43.920 --> 00:14:49.280] So you can become a resident of Estonia just by signing up online.
[00:14:49.280 --> 00:15:01.040] And I thought that would be hilarious if, you know, theoretically there could be a country that says, oh, yeah, you can become a full-time resident, quote unquote, of our country.
[00:15:01.040 --> 00:15:04.480] And we don't, you know, make you charge in remit sales tax here.
[00:15:04.480 --> 00:15:08.720] And then everybody could just become a resident of that country.
[00:15:08.720 --> 00:15:18.000] And then technically would then, you know, be out outside of a lot of the legislation, the way it's been written.
[00:15:18.000 --> 00:15:32.640] This is something else I noticed, though, is that in Canada, a lot of us in business have a US dollar credit card, but the address, and normally with a credit card, you put your home address or your office address.
[00:15:32.640 --> 00:15:45.440] So if, you know, these tax solutions that are just pinging your credit card's address and looking for, you know, where you live, are find your home address or home zip code.
[00:15:45.440 --> 00:15:58.800] But in this case, it had, I was using my US dollar credit card, but from a Canadian bank, and it was charging me Quebec sales tax, even though I'm not a resident of Quebec.
[00:15:58.800 --> 00:16:12.600] So, yeah, I think the other challenge is that, again, for those of us who have started on Stripe and have subscription businesses, so I think this would be different if we were just selling one-time digital products.
[00:16:12.600 --> 00:16:19.560] I think this would be different, again, if we'd started up with a different merchant of record whatever.
[00:16:19.560 --> 00:16:24.520] But for however many businesses are on Stripe, I'm guessing millions.
[00:16:24.520 --> 00:16:42.200] For the millions of companies that are using Stripe as their payment processor and who are, and I don't know what percentage of those are subscription businesses, we find ourselves in a real quandary because I tweeted out: hey, I am just looking, and I've done this multiple times.
[00:16:42.200 --> 00:17:21.720] I'm just looking for anybody who is in a similar stage as us with a SaaS business, who has thousands of active subscriptions, active credit cards in Stripe, and has successfully migrated to one of these solutions, Paddle, Lemon Squeezy, whatever, and didn't get a bunch more churn, didn't require customers to re-enter information, didn't change or make the checkout experience worse, and didn't require a bunch more development work on our side.
[00:17:21.720 --> 00:17:30.840] And I didn't even hear from anybody, maybe one person, but it wasn't clear if they were at our stage.
[00:17:31.000 --> 00:17:33.480] And when I followed up with them, they still haven't replied.
[00:17:33.480 --> 00:17:35.560] Maybe not that many companies have done it because it's.
[00:17:36.040 --> 00:17:44.680] Yeah, but you think if this is their business, they're trying to get people to switch to a merchant of record service.
[00:17:45.040 --> 00:18:06.960] You have to be able to give us some assurance that if we commit ourselves to doing all of the engineering work it would take to tear Stripe out of our app and put in a different solution, you have to show us the development experience is going to be the same or better.
[00:18:06.960 --> 00:18:09.200] And so far I haven't heard that.
[00:18:09.200 --> 00:18:12.240] The back channels of the internet are going right now.
[00:18:12.240 --> 00:18:24.240] And one person replied to that, actually, not just one, a bunch of people replied to that tweet and said the people they know that have switched haven't been happy.
[00:18:24.240 --> 00:18:31.200] That the SaaS companies that have switched to these merchant of records services wish they hadn't.
[00:18:31.200 --> 00:18:37.200] It ended up being just another, a different kind of headache.
[00:18:37.520 --> 00:18:40.400] And if we're going to choose our headaches.
[00:18:40.720 --> 00:18:47.600] Yeah, I mean, I would be very reluctant to do that just because that is, I mean, that's the core of our business.
[00:18:47.600 --> 00:18:50.560] Like, if that's screwed up, then like, well.
[00:18:51.520 --> 00:18:52.720] This is everything.
[00:18:52.720 --> 00:19:00.480] It's like, it's, it's, again, like, there's some things that are just, they would be unacceptable.
[00:19:00.480 --> 00:19:06.480] Like, you have to get your customers to reenter their credit card information.
[00:19:06.480 --> 00:19:10.880] Well, that would, that would literally kill the business for sure.
[00:19:10.880 --> 00:19:14.080] There's just, I just know it would.
[00:19:15.840 --> 00:19:21.200] Even like, so there's another solution that some folks recommended called Revan.
[00:19:21.520 --> 00:19:23.600] And I mean, we are looking at it.
[00:19:23.600 --> 00:19:25.360] There's a few things I'm worried about.
[00:19:25.360 --> 00:19:27.280] Reven's relatively new.
[00:19:27.280 --> 00:19:30.840] There's always a bit of nervousness when there's somebody that's new.
[00:19:31.160 --> 00:19:40.120] You're basically relying on their team of lawyers and their team of tax experts and their engineers to get all of this right.
[00:19:40.440 --> 00:19:45.000] And because, by the way, it's still not clear who is legally liable.
[00:19:45.000 --> 00:19:47.160] I got into lots of arguments about this too.
[00:19:47.160 --> 00:19:50.440] And now I've dug into different states' legislations.
[00:19:50.440 --> 00:20:04.120] And like I've said, depending on the state and the jurisdiction, it's not clear that a merchant of record would automatically be liable for non-compliance if they don't act on your behalf appropriately.
[00:20:04.120 --> 00:20:09.640] Remember, the governments in some cases will hold the customer liable if they haven't been paid.
[00:20:09.640 --> 00:20:15.880] So they just go down the stack and say, okay, well, merchant of record, you didn't pay.
[00:20:15.880 --> 00:20:18.280] Okay, well, now next it's the business.
[00:20:18.280 --> 00:20:19.960] Then next it's the customer.
[00:20:19.960 --> 00:20:27.800] So Revan is interesting, but it's part two of their three-step process.
[00:20:27.800 --> 00:20:28.680] Sign up today.
[00:20:28.680 --> 00:20:30.200] That sounds great.
[00:20:30.200 --> 00:20:32.120] Step two, setting up in Stripe.
[00:20:32.120 --> 00:20:38.360] We create a new Stripe account for your brand or migrate your existing one.
[00:20:38.360 --> 00:20:40.680] Yeah, what does the migration mean?
[00:20:41.000 --> 00:20:49.160] I think what that means is they still need to create a Stripe account that's registered to their company.
[00:20:49.160 --> 00:20:55.240] And then they migrate all of your customers to the Stripe account that's registered to your company.
[00:20:55.240 --> 00:21:03.560] I would love to see the legal, like, is this an official, officially supported thing from Stripe?
[00:21:03.560 --> 00:21:20.320] Or if this company goes belly up, is all of a sudden our Stripe account the property of Revan, and now all of the creditors are able to go after our revenue and our payouts and everything else.
[00:21:20.320 --> 00:21:24.160] This sounds, this step two makes me really nervous.
[00:21:24.160 --> 00:21:36.000] Yeah, I would be way more comfortable if it was just an API integration, webhook integration, where they add tax to the invoice before it's charged and then know how much to remit or something.
[00:21:36.000 --> 00:21:40.960] Yeah, and they're doing this because they are a merchant of record.
[00:21:40.960 --> 00:21:49.040] And so they, when you're a merchant of record, you have to be the one that collects payments, gets paid into your bank account, and then pays you out, right?
[00:21:49.040 --> 00:21:49.600] Right.
[00:21:49.600 --> 00:21:54.000] This is an enormous amount of trust you have to have in these.
[00:21:54.480 --> 00:22:08.960] It's akin to having a crypto exchange where you have to trust that the exchange is going to be going to stay liquid, is doing everything properly.
[00:22:08.960 --> 00:22:34.320] Like, this is another thing that's not quite clear: is that if a merchant of record is just collecting everybody's revenue, if something goes wrong, if they have creditors, if they get, let's say that they run into trouble with a government, they haven't been remitting to Lithuania properly, and then Lithuania goes after them and locks all of their accounts or something like that.
[00:22:34.320 --> 00:22:37.440] How does that affect every other customer in the network?
[00:22:37.440 --> 00:22:47.040] Yeah, I mean, it's not like it could be some Bernie Madoff-style Ponzi scheme where they're collecting money and paying out certain people, and then, well, now there's nothing left.
[00:22:47.040 --> 00:22:50.640] I mean, it's probably fine, you know, but right.
[00:22:50.640 --> 00:22:53.040] No, but it's that's stressful to think about.
[00:22:53.040 --> 00:23:03.560] I mean, it's it's just one more layer between you and your customer, and it's one more layer between you and your revenue.
[00:23:04.680 --> 00:23:07.800] Hey, how come your team doesn't have their own podcast?
[00:23:07.800 --> 00:23:12.760] Head over to transistor and use my coupon, transistor.fm/slash justin.
[00:23:12.760 --> 00:23:17.160] You'll get 15% off your first year of podcast hosting.
[00:23:17.800 --> 00:23:26.440] And just again, another reminder: you're doing all of this work, incurring all of these expenses for a tax that is not being imposed on you.
[00:23:26.440 --> 00:23:29.960] This is a tax governments are imposing on your customers.
[00:23:29.960 --> 00:23:31.160] It's so frustrating.
[00:23:31.160 --> 00:23:36.840] The other thing is this tax compliance company that we did go with that will remain nameless.
[00:23:36.840 --> 00:23:41.560] I had emailed them saying, listen, like we haven't made any progress yet.
[00:23:41.560 --> 00:23:44.280] You haven't shown us that you know your stuff.
[00:23:44.280 --> 00:23:48.760] You keep not responding to our emails, you know, a week at a time.
[00:23:48.760 --> 00:23:51.320] We keep not getting straight answers from you.
[00:23:51.560 --> 00:23:54.840] We have no idea how expensive this is going to get over time.
[00:23:54.840 --> 00:23:55.320] Yep.
[00:23:55.320 --> 00:23:56.040] That's enough.
[00:23:56.040 --> 00:23:57.400] We want out.
[00:23:57.720 --> 00:24:02.280] And we got an email from them saying, well, you're in a two-year contract?
[00:24:02.280 --> 00:24:03.160] One year.
[00:24:03.160 --> 00:24:04.840] A one-year contract.
[00:24:04.840 --> 00:24:05.160] Yeah.
[00:24:05.160 --> 00:24:05.720] One year.
[00:24:05.720 --> 00:24:13.960] If we sign this thing that cancels our account, we basically have to pay upfront the remaining balance of the account, which is, you know, like nine months.
[00:24:13.960 --> 00:24:14.440] Yeah.
[00:24:14.760 --> 00:24:16.040] And we still haven't done anything.
[00:24:16.040 --> 00:24:21.640] So it's like, well, I mean, that's not going to kill us, but it also doesn't make me feel great about the company.
[00:24:21.640 --> 00:24:26.520] Like, if that's honestly their model, they have these enterprise-style contracts that.
[00:24:26.760 --> 00:24:35.240] Yeah, I mean, they gave us a refund for the one thing they screwed up on, but like, all right, admit your mistake and then say, all right, well, we'll give you like six months back or something.
[00:24:35.240 --> 00:24:38.280] You can pay us up to like six months, and then we'll call it good.
[00:24:38.280 --> 00:24:38.680] Yeah.
[00:24:39.000 --> 00:24:40.360] But like, come on.
[00:24:40.360 --> 00:24:43.560] I mean, again, I know there's always going to be people that are like, well, you signed a contract.
[00:24:43.800 --> 00:24:44.440] Yeah, that's true.
[00:24:44.440 --> 00:24:46.240] I mean, we did it's true, we did.
[00:24:44.840 --> 00:24:46.640] You're right.
[00:24:46.960 --> 00:25:00.720] One thing that was surprising to me is how, like, again, I would say 50, 60 percent at least of people who responded were, especially from North America, especially if you're using Stripe, completely empathetic with our situation.
[00:25:00.720 --> 00:25:07.680] Although there's a big percentage of those folks that are just like, fuck this, we're not gonna do any of this.
[00:25:07.680 --> 00:25:17.920] Like, I mean, that's one option, but also now we're talking about it and it's on record, and people know we haven't been doing it, but we're trying, we're trying to, it's not like we're actually trying to like not do this.
[00:25:18.080 --> 00:25:34.000] This is the thing, this is the thing: the governments are for the people, and in this case, governments should be treating businesses as their partners in sales tax collection.
[00:25:34.000 --> 00:25:38.160] One, because if they want to make more revenue, they've got to make this easier.
[00:25:38.480 --> 00:25:43.760] And two, because you're asking us to do something on your behalf, right?
[00:25:44.160 --> 00:25:51.120] If you're asking me to do something on your behalf, and I don't even live in your country, some kindness would be appreciated.
[00:25:51.120 --> 00:26:00.080] You know, it's like this is how partnerships work: both government partnerships and business partnerships and government business partnerships.
[00:26:00.080 --> 00:26:05.040] You know, maybe there is one, maybe there's a country we can find out there that is like actually taking it seriously.
[00:26:05.040 --> 00:26:07.760] It has like an amazing payment portal and all this stuff.
[00:26:08.080 --> 00:26:09.520] We should find that and highlight it.
[00:26:09.520 --> 00:26:09.920] Oh, for sure.
[00:26:10.000 --> 00:26:15.120] Like, someone in their government is like, we need to do this right and like design an amazing website.
[00:26:15.120 --> 00:26:16.640] Yeah, yeah, yeah, yeah.
[00:26:16.960 --> 00:26:18.640] Make it super friendly.
[00:26:18.640 --> 00:26:19.040] Yeah.
[00:26:19.360 --> 00:26:23.360] This podcast is sponsored by the province of Saskatchewan.
[00:26:23.360 --> 00:26:26.480] Please makes tax compliance easy.
[00:26:27.520 --> 00:26:28.800] That could be you, Saskatchewan.
[00:26:28.800 --> 00:26:34.040] You could be this premier sponsor of the Build Your Sass podcast.
[00:26:35.640 --> 00:26:36.760] What's the deal with Saskatchewan?
[00:26:36.840 --> 00:26:37.640] Why are you?
[00:26:37.640 --> 00:26:40.040] Everyone's always ratting on Saskatchewan.
[00:26:40.680 --> 00:26:42.120] I just, they were the one.
[00:26:42.120 --> 00:26:51.720] Unfortunately, they have a not great website and they're, yeah, it's one of the Ohio.
[00:26:51.720 --> 00:26:54.680] You have such a big opportunity to turn things around here.
[00:26:55.720 --> 00:26:57.400] I could talk about Ohio's websites.
[00:26:57.400 --> 00:26:59.080] It's, I mean, this is the thing.
[00:26:59.080 --> 00:27:00.120] This is the thing.
[00:27:00.120 --> 00:27:01.880] We're your partners.
[00:27:01.880 --> 00:27:03.240] We're your partners.
[00:27:03.240 --> 00:27:05.880] So you need the tax.
[00:27:05.880 --> 00:27:08.680] Every government in the world needs the revenue.
[00:27:08.680 --> 00:27:12.120] We think you should be able to charge taxes on your citizens.
[00:27:12.120 --> 00:27:13.080] That's what this is about.
[00:27:13.400 --> 00:27:15.720] Totally not against, not against tax.
[00:27:15.720 --> 00:27:20.840] We're helping you, Ohio, Saskatchewan, collect taxes from your citizens.
[00:27:20.840 --> 00:27:21.240] Okay.
[00:27:21.560 --> 00:27:26.200] If you want us to do that, you've got to make it easy.
[00:27:26.200 --> 00:27:28.680] You've got to make it painless.
[00:27:28.680 --> 00:27:37.800] Because if we have to navigate your website and your website's broken, which has happened numerous times, you log into some of these and they just don't work.
[00:27:37.800 --> 00:27:39.560] They give you a 404.
[00:27:39.800 --> 00:27:41.720] What do you want us to do?
[00:27:41.720 --> 00:27:46.840] And remember, you're not the only person that's asking of us.
[00:27:46.840 --> 00:27:56.120] Like, eventually it's going to also be Chicago and then Edmonton and then, you know, London.
[00:27:56.120 --> 00:28:00.680] And then it's just going to keep, this is just going to increase.
[00:28:00.680 --> 00:28:02.760] So it's got to be easier.
[00:28:03.160 --> 00:28:07.880] If you're a government person listening, make this easy.
[00:28:07.880 --> 00:28:08.760] Become our partner.
[00:28:08.760 --> 00:28:11.480] That's why we need one world government.
[00:28:11.480 --> 00:28:11.880] Yeah.
[00:28:12.200 --> 00:28:15.920] One time zone, and one sales tax.
[00:28:14.920 --> 00:28:16.960] It'll be good.
[00:28:17.120 --> 00:28:34.160] Merchants of record, if you're out there and you're still listening, and I know a lot of you are listening, we're open, but right now, the merchants of record I've looked at, it would cost $63,000 more per year, $5,000 per month, but that's only right now.
[00:28:34.480 --> 00:28:45.840] If you factor in growth, and we serve largely prosumers, SMBs, we're talking about a lot of monthly invoices, and you folks charge per invoice.
[00:28:45.840 --> 00:28:49.520] And so these costs are only going to scale.
[00:28:49.520 --> 00:29:03.520] Also, if we, because you take a percentage of the charged amount, the more we go upmarket, so the more people we charge $200,000, $500 a month, the more we pay there as well.
[00:29:03.520 --> 00:29:12.640] So we're talking about $63,000 or $5,250 a month right now, but that's only going to get more expensive.
[00:29:12.640 --> 00:29:24.720] Right, which is why, like with this previous company we were trying to go with, like we're paying a premium because we thought this would just be like, oh, yeah, we'll talk to you one time and then hook up Stripe to this platform and we'll be good to go.
[00:29:24.720 --> 00:29:30.960] Yeah, because whatever they were forecasting, our first year with them was going to be 10 grand.
[00:29:30.960 --> 00:29:45.680] And then depending on how many sales regions we went with, the idea was that it would kind of scale, but we would be for the first few years anyway, we would be in the hundreds of dollars per month, not the thousands of dollars per month.
[00:29:45.680 --> 00:29:54.800] And like at this point, like, you know, I'm usually like pretty aware of money and we're spending and try to be pretty frugal about this stuff, but like the money doesn't even bother me anymore at this point.
[00:29:54.800 --> 00:29:59.120] It's just like the amount of time we're spending on this is ridiculous.
[00:29:59.120 --> 00:30:03.560] Which I think is Adam Wadden's point, which is why are you making it so difficult on yourself?
[00:30:04.120 --> 00:30:11.000] But I think the more I discuss things with those people, I think they can understand that we can't go back in time.
[00:30:11.000 --> 00:30:18.920] Like, maybe, sure, if we could go back in time to 2018 and choose Paddle, maybe things would have been better.
[00:30:19.320 --> 00:30:20.360] Here we are.
[00:30:20.360 --> 00:30:22.600] Lemon Squeeze didn't exist back then.
[00:30:22.600 --> 00:30:25.800] And I think the only other merchant of record option was Gumroad.
[00:30:25.800 --> 00:30:26.760] But we didn't.
[00:30:26.760 --> 00:30:31.000] We were on Stripe and we registered our company through Stripe Atlas.
[00:30:31.000 --> 00:30:35.560] Like, Stripe seemed to be the best solution at the time.
[00:30:36.280 --> 00:30:39.400] You know, they bought TaxJar and they introduced Stripe Tax.
[00:30:39.400 --> 00:30:42.440] And it's like, all right, seems like things are moving along.
[00:30:42.440 --> 00:30:47.080] And I have to believe they're still trying to do something about this and are just not talking about it.
[00:30:47.400 --> 00:30:49.000] Have I quoted Derek Reimer yet?
[00:30:49.000 --> 00:30:59.400] He summarized it by saying, Dear Stripe, we SaaS founders are desperate for a full-stack global tax compliance solution without having to leave you for a merchant of record.
[00:30:59.400 --> 00:31:01.560] Are you planning to solve this?
[00:31:01.560 --> 00:31:04.520] So we've criticized some governments.
[00:31:04.520 --> 00:31:07.400] I think Stripe deserves some criticism here.
[00:31:07.400 --> 00:31:07.880] Yeah.
[00:31:08.440 --> 00:31:14.760] You know, you have many companies who rely on you.
[00:31:14.760 --> 00:31:29.880] And for them to not have a solution that works now, you know, like I said, a lot of these North American tax rules came in around 2020, 2021, 2022.
[00:31:30.520 --> 00:31:33.880] That's plenty of time for you to figure something out.
[00:31:33.880 --> 00:31:45.200] And the rumors I've heard in the rumor mill, in the back channels of the internet, are: A, that there were people working on this and they were laid off or the project was canceled.
[00:31:45.200 --> 00:31:46.240] These are all subsets.
[00:31:44.680 --> 00:31:48.400] I don't know if these are true, but this is what I'm hearing.
[00:31:49.120 --> 00:31:56.720] The other rumor I've heard is that they're aware, but they have nothing that's going to be ready before 2025.
[00:31:56.720 --> 00:32:01.840] I mean, I have to assume that's why they bought TaxJar is because they saw other companies doing this.
[00:32:01.840 --> 00:32:02.240] Yeah.
[00:32:02.560 --> 00:32:04.640] And they wanted to get ahead of it.
[00:32:04.640 --> 00:32:09.120] But all the things I've heard is that it's not really integrated at all yet.
[00:32:09.120 --> 00:32:12.880] Yeah, TaxJar is just for the United States right now.
[00:32:12.880 --> 00:32:13.520] Is that right?
[00:32:13.600 --> 00:32:14.640] US and Canada?
[00:32:15.040 --> 00:32:15.920] Maybe Canada.
[00:32:15.920 --> 00:32:16.320] Yeah.
[00:32:16.640 --> 00:32:18.160] We really are in a hard place.
[00:32:18.160 --> 00:32:33.440] Like I said, even if you're European and you think that we should just take this seriously and do it right now, or switching payment providers at this point, it may just not be an option.
[00:32:33.440 --> 00:32:49.040] Like it's literally the difference between we could switch and lose our business or like switching to something now that we have thousands of customers already in the system and all of this infrastructure built in.
[00:32:49.040 --> 00:32:52.400] Like we're also not using Stripe checkout, right?
[00:32:52.400 --> 00:32:54.000] Like we built our own stuff.
[00:32:54.640 --> 00:32:56.480] So this is deep in the app.
[00:32:56.480 --> 00:32:59.520] This is not a simple switch.
[00:32:59.520 --> 00:33:09.600] It's not like, you know, if we were just selling digital, single digital downloads or one-time purchases, let's just swap the checkout button.
[00:33:09.600 --> 00:33:10.640] Who cares?
[00:33:10.640 --> 00:33:15.280] Revan, again, I'm nervous about having to set up another Stripe account.
[00:33:15.280 --> 00:33:43.560] And then the other thing is, if we set up all of our reporting that we have built into Stripe, like all of our records for MRR, churn, historic, churn, all those stuff, we start a new Stripe account and we now lose the lifetime of data or the value of that lifetime of data because we're going to have a break, which again impairs us to be able to run our business realistically.
[00:33:43.560 --> 00:33:51.720] I don't think any government would want us to risk our business in order to become compliant.
[00:33:51.720 --> 00:33:56.360] Otherwise, we're not going to be able to charge any of your customers sales tax and remit it for you.
[00:33:56.360 --> 00:34:04.840] And you're not going to be able to get any of the income tax we're paying through the company and through all of our employees' personal income tax.
[00:34:05.160 --> 00:34:13.240] Revan, right now, I mean, if Reven folks are listening, we would love a solution that would work for us.
[00:34:14.200 --> 00:34:18.600] But starting a new Stripe account, that just seems not great.
[00:34:18.600 --> 00:34:19.960] Yeah, I mean, it must be illegal.
[00:34:20.040 --> 00:34:21.480] It must be a legal thing.
[00:34:21.480 --> 00:34:25.880] Well, and I'm also wondering legally, I got to dig into that.
[00:34:25.880 --> 00:34:31.320] Like, legally, does Stripe even approve of this officially?
[00:34:31.320 --> 00:34:32.120] Right, right.
[00:34:32.440 --> 00:34:34.520] I'm not, it's not clear.
[00:34:34.520 --> 00:34:35.160] It says there's.
[00:34:35.480 --> 00:34:40.600] If they can migrate it, I mean, Stripe must have a migration set up somehow.
[00:34:40.600 --> 00:34:53.640] Oh, they have a migration setup, but I'm worried, like if you choose to protect your business using Reven, you implement Reven as your business's non-exclusive authorized reseller.
[00:34:53.640 --> 00:35:00.040] It's worth noting that this reseller role is performed for compliance reasons only and not to establish a new distribution channel.
[00:35:01.840 --> 00:35:04.920] But but they now own our Stripe account.
[00:35:04.880 --> 00:35:06.600] Like, like it's under their company.
[00:35:06.600 --> 00:35:07.160] Right.
[00:35:07.160 --> 00:35:14.360] This approach enables us to grant our sellers limited direct access to their respective Stripe account.
[00:35:14.960 --> 00:35:22.480] From a legal point of view, we provide access in the context of a service and data process agreement, including in our terms and conditions.
[00:35:22.480 --> 00:35:31.280] The seller's task is to implement and host the checkout on the website and optionally manage billing-related customer requests on our behalf to operate our reselling business.
[00:35:31.600 --> 00:35:35.520] This is just sounding me more nervous the more you read.
[00:35:35.520 --> 00:35:39.040] Yeah, I think a lot of folks want to know what we're considering now.
[00:35:39.360 --> 00:35:44.960] Here's what I'm thinking: I feel like we should get out of this contract with that company.
[00:35:44.960 --> 00:35:47.920] And just, I mean, either maybe get some money back or call it a loss.
[00:35:48.240 --> 00:35:50.480] Call it a loss, water under the bridge.
[00:35:50.480 --> 00:35:53.840] Feels like throwing money down the throwing money down the toilet.
[00:35:53.840 --> 00:36:03.680] This is the way I will rationalize it: I think the amount our kind patron supporters have given us over the years will likely equal that amount.
[00:36:03.680 --> 00:36:12.960] And so it's just like they have invested in our learning, and now we are going to share that learning with the community at large.
[00:36:12.960 --> 00:36:19.200] Which is don't sign an agreement with these big enterprise tax compliance companies.
[00:36:19.200 --> 00:36:19.600] Yeah.
[00:36:19.920 --> 00:36:22.800] I have been in touch with some of the smaller ones.
[00:36:22.800 --> 00:36:24.240] They're great people.
[00:36:24.240 --> 00:36:28.240] There's a few reasons it still makes me nervous.
[00:36:28.240 --> 00:36:41.520] There's just, I can't really talk about it too much over here, but it's just there's some things that are just like, even things like multiple typos in their emails, it just makes me nervous.
[00:36:41.920 --> 00:36:52.480] I'm going to entrust you with this tax compliance solution, which is literally, I'm trusting you to dot your eyes for every tax region in the world.
[00:36:52.800 --> 00:37:02.760] And again, it doesn't make me trust your merchant of record service more or your tax compliance service more when I check your customers who are using the solution.
[00:37:02.840 --> 00:37:08.280] And I get, I'm seeing bad checkout forms that aren't listing the proper taxes.
[00:37:08.280 --> 00:37:08.680] Right.
[00:37:09.320 --> 00:37:09.640] Yeah.
[00:37:09.880 --> 00:37:11.800] Typos in your emails.
[00:37:11.800 --> 00:37:30.600] And even like, I'm, I get put on to salespeople, even for smaller companies that don't seem to understand SaaS, that don't seem to understand the North American perspective, that assume that we're just going to put the tax inside our existing price points.
[00:37:30.600 --> 00:37:43.400] That just assume it's like easy to show every visitor in the world a contextual price based on their location and the amount of taxes we're supposed to be showing those people.
[00:37:43.400 --> 00:37:58.520] Here's what I think we should do: Stripe Tax is the best solution when it comes to clearly articulating the taxes that are being collected and paid on the invoices.
[00:37:58.520 --> 00:38:08.520] Yeah, I mean, yeah, the collection side of it, I think, Stripe Tax, we haven't turned it on yet or registered in any states, but it feels like they have that stuff pretty well under control.
[00:38:08.520 --> 00:38:09.240] Yeah.
[00:38:09.560 --> 00:38:13.800] So, and even my guess is we're going to be able to get reports.
[00:38:13.800 --> 00:38:22.680] This is some of the problems with the third-party compliance tools: they just want you to add an amount to your existing sale amount.
[00:38:22.680 --> 00:38:28.280] So it's not broken out in the Stripe invoice, how much of that is sales tax and how much of that is not.
[00:38:28.280 --> 00:38:35.640] They require you to use their tool as a like a third-party invoice generating thing.
[00:38:36.120 --> 00:38:39.320] And then all the reporting is in their tool.
[00:38:39.640 --> 00:38:59.440] I would prefer to keep all of that in Stripe, keep it simple, and then Stripe just says, Here's how much tax you've collected in the UK, here's how much tax you've collected, and then for the customer, it's clearly articulated on their Stripe invoice: here's how much tax was added to your invoice.
[00:38:59.440 --> 00:39:13.440] I mean, on top of that, once we turn that on, we also probably want to communicate to the customers we have in those places and be like, Hey, like, starting on this date, like things might look a little different.
[00:39:13.440 --> 00:39:16.480] Like, sorry, that's the law.
[00:39:16.480 --> 00:39:18.320] If you're upset, here's a coupon.
[00:39:18.480 --> 00:39:19.280] Like, I don't know.
[00:39:19.280 --> 00:39:33.840] I mean, some I think most people will probably be fine, but yeah, yeah, I mean, this is the other thing: we have to manage now expectations on behalf of the government, which is like, you know, why did my price go up?
[00:39:33.840 --> 00:39:37.120] How come you guys were charging it before or weren't charging it before, and now you are?
[00:39:37.120 --> 00:39:40.880] It's like, well, this is your government.
[00:39:40.960 --> 00:39:41.840] This isn't us.
[00:39:41.840 --> 00:39:44.640] This is, we're doing your government a service here.
[00:39:45.680 --> 00:39:59.520] And right now, with Stripe tax, the advice we're getting in the back channels from people with North American SaaS companies that actually have customers and recurring billing, some of those SaaS founders who are, again, big companies that you've heard of, are like, we're just ignoring it.
[00:39:59.920 --> 00:40:01.200] That's the opinion of some.
[00:40:01.680 --> 00:40:08.720] The folks that are starting to take it seriously, saying the advice they're getting from their accountants is you have to start somewhere.
[00:40:08.720 --> 00:40:16.400] Again, like these, there's only going to be more and more regions that start requiring tax, right?
[00:40:16.400 --> 00:40:20.640] So, you know, Saskatchewan today, Regina tomorrow, right?
[00:40:20.640 --> 00:40:23.360] It's like, it's going to just increase.
[00:40:23.840 --> 00:40:26.160] Is that the title of the episode?
[00:40:27.440 --> 00:40:29.520] Saskatchewan today, Regina tomorrow.
[00:40:30.440 --> 00:40:33.000] Regina is the capital of Saskatchewan.
[00:40:33.240 --> 00:40:35.560] There's only going to be more and more tax regions.
[00:40:35.560 --> 00:40:41.320] It's going to be literally impossible to be compliant with every tax region in the world.
[00:40:43.000 --> 00:40:49.080] The other thing I was like, to what extent are people willing to take this?
[00:40:49.080 --> 00:41:01.880] Like, if North Korea decides to impose a tax on all democracies and any capitalist country, will you also recognize that?
[00:41:01.880 --> 00:41:02.840] Well, of course not.
[00:41:02.840 --> 00:41:04.520] That would be ridiculous.
[00:41:05.720 --> 00:41:12.440] The spectrum of ridiculousness, this is all on the spectrum of ridiculousness, right?
[00:41:12.840 --> 00:41:16.600] So, of course, the North Korea example is the most ridiculous.
[00:41:16.600 --> 00:41:24.840] The idea that we would have to do any of this for a foreign government where we have no employees and we don't live there is ridiculous.
[00:41:24.840 --> 00:41:27.720] So, this is all on the spectrum of ridiculousness.
[00:41:27.720 --> 00:41:36.360] It's only going to get crazier if we just the advice we're getting is to start with the United States and Canada and just start there.
[00:41:36.360 --> 00:41:38.920] That's where TaxJar currently works, right?
[00:41:38.920 --> 00:41:41.640] Stripe, Tax, and TaxJar currently work there.
[00:41:41.640 --> 00:41:42.520] And we did talk to them.
[00:41:42.520 --> 00:41:48.360] We'll have to talk to them again to see if it's not a similar situation of what we got into with the other company.
[00:41:48.920 --> 00:41:50.760] And that's a manageable place for us to start.
[00:41:50.760 --> 00:41:57.160] We've only exceeded thresholds in 12 regions in North America.
[00:41:57.160 --> 00:42:00.840] 12 regions is something we can do on our own.
[00:42:00.840 --> 00:42:03.720] We can figure this out we can we can go through it.
[00:42:03.720 --> 00:42:06.040] It's a place for us to get started, right?
[00:42:06.040 --> 00:42:06.600] Yeah.
[00:42:07.240 --> 00:43:45.960] And I mean, by the way, your exceeded threshold, like when you exceed the threshold in the UK, for example, is after one transaction your exceeded threshold in switzerland is one transaction right so we've exceeded three thresholds in europe and the eu i don't want to say i we have to start somewhere i think this is what we're going to do is just start stripe tax tax jar become compliant in the countries we live in and have employees in and then you know hopefully stripe and tax jar get their act together and um become our partners in this because uh we're really drowning here and um we we need an iterative solution yeah so that's our plan right what we think is actually turn on stripe tax to collect in certain regions yeah probably use tax jar although we still have to talk to them plus i don't know if they help with registration or we have to do that ourselves yeah i think i think we still i think no i think stripe helps with registration now tax jar you mean uh let's see stripe does they might like point you to a website i think i mean the other thing is that it it's this isn't cheap on stripe either but it's still cheaper than a merchant of record i think it's an additional 0.5 percent for stripe tax.
[00:43:45.960 --> 00:43:46.760] So the u.S.
[00:43:46.800 --> 00:43:49.800] filing partner is taxChar.
[00:43:49.800 --> 00:43:54.200] And they do have european filing partners, so we could also look into that.
[00:43:54.200 --> 00:43:56.200] They'll tell you where to register.
[00:43:56.200 --> 00:43:56.760] Yeah.
[00:43:57.400 --> 00:44:03.240] But again, for us to start with these 12 regions and register there, I think we can do that.
[00:44:03.240 --> 00:44:03.880] Yeah.
[00:44:04.360 --> 00:44:10.440] And then maybe we hire someone part-time to do the admin on this if we really don't want to.
[00:44:10.440 --> 00:44:15.160] Like just say, hey, you're responsible for making these payments for us.
[00:44:15.880 --> 00:44:16.360] Right?
[00:44:16.360 --> 00:44:16.760] Yeah.
[00:44:17.000 --> 00:44:22.200] It is a mess, but we want to try to do the right thing.
[00:44:22.200 --> 00:44:32.920] And so we're going to start where we can start without sacrificing the business on the altar of and hopefully, hopefully not our sanity either.
[00:44:32.920 --> 00:44:34.280] And hopefully not our sanity.
[00:44:34.280 --> 00:44:34.760] Yeah.
[00:44:34.760 --> 00:44:35.000] Yeah.
[00:44:35.000 --> 00:44:35.320] Yeah.
[00:44:35.320 --> 00:44:35.640] Yeah.
[00:44:35.640 --> 00:44:36.600] Exactly.
[00:44:36.600 --> 00:44:37.560] There's trade-offs.
[00:44:37.560 --> 00:44:38.840] It's always trade-off, right?
[00:44:40.520 --> 00:44:41.400] That's probably enough.
[00:44:41.400 --> 00:44:48.440] That's 49 minutes and 13 seconds of more exciting tax compliance talk.
[00:44:48.760 --> 00:44:50.040] Thanks for sticking with us.
[00:44:50.040 --> 00:44:54.520] Thanks to everyone who replied, even those that disagree with us.
[00:44:54.520 --> 00:44:56.440] Nice to hear from you.
[00:44:57.080 --> 00:45:02.600] Thanks to all of those who DM'd me privately and said, this is also a problem for me, and I'm super stressed out.
[00:45:02.600 --> 00:45:06.120] And I wish I'm so thankful you talked about it.
[00:45:06.760 --> 00:45:22.600] John, why don't we thank our lovely Patreon supporters who will be helping us pay off our enterprise bill?
[00:45:22.600 --> 00:45:23.640] Who are the people?
[00:45:23.720 --> 00:45:25.000] We got a few new supporters too.
[00:45:25.000 --> 00:45:26.920] Who are the people supporting this podcast?
[00:45:26.920 --> 00:45:28.040] Yeah, thanks to everyone.
[00:45:28.280 --> 00:45:31.000] We have Greg Park, who I believe is new.
[00:45:31.000 --> 00:45:31.720] Nice.
[00:45:31.720 --> 00:46:00.960] We have Mitchell Davis from recruitkit.com.au, Marcel Falay from WeAreBold.af, Ole Kulik, Ethan Gunderson, Anton Zorin from ProudCamp.com, Bill Kondo, Alex Payne, Ward from memberspace.com, Russell Brown from Fotivo.com, Evandra Sassi, Austin Lovelace, Michael Sitfer, Fathom, the lovely Fathom Analytics folks.
[00:46:00.960 --> 00:46:01.520] Yeah.
[00:46:01.840 --> 00:46:08.000] My brother Dan Buddha, Colin Gray, Darby Frey, and Dave Junta.
[00:46:08.000 --> 00:46:09.440] Junta.
[00:46:10.400 --> 00:46:10.960] Nice.
[00:46:10.960 --> 00:46:12.160] Thanks for listening, everyone.
[00:46:12.160 --> 00:46:14.000] We'll see you next week.
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