Money, sales tax and addresses · A term for founders abroad
What is a merchant of record?
A service such as Paddle that sells your product as the legal seller, handling payments, sales tax and VAT, and pays you what's left.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 65 of 105 in the glossary, filed under M.Every term, A to Z
Merchant of record, for a founder abroad.
The merchant of record is the seller on the customer's receipt and the taxpayer for sales tax and VAT wherever it sells. Services such as Paddle, Lemon Squeezy and FastSpring take that role: you deliver the product and receive a payout after their fee, which is higher than a payment processor's.
It needs no US company and no Stripe review, which makes it a common first step for a solo founder abroad selling software. A US company with its own Stripe account keeps more of each sale but takes on its own sales tax.
Read next · guide · 3 minStripe for non-residents: what a US LLC gets you, and what Stripe can still refuseWhat founders ask next.
- Merchant of record or Stripe?
- A merchant of record handles sales tax and VAT for you at a higher fee. Stripe charges less but leaves the tax to you.
03 · See also
- Money, sales tax and addressesNexusThe link with a state that obliges a seller to collect its sales tax, created by a presence there or by sales above the state's threshold.Read the term
- Money, sales tax and addressesMarketplace facilitatorA marketplace such as Amazon or Etsy that state law makes responsible for collecting sales tax on its sellers' sales.Read the term
- Money, sales tax and addressesEconomic nexusSales into a state above its threshold, usually $100,000 a year, which makes a seller elsewhere collect that state's sales tax with no presence there.Read the term
- Money, sales tax and addressesResale certificateA form a registered seller gives a supplier to buy goods for resale without paying sales tax, based on its sales tax registration in a state.Read the term
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