The Taxes you Pay for Your Membership Site
If you believe that technology is complex, you haven't thought about tax management for an internationally diversified membership website. Honestly, just considering this is enough to raise the potential for confusion and even confusion and even.
The first thing you need to be aware of when dealing with taxes for a website that is a member's site is to speak with a professional. The issue is complex enough to the point that the accountant you hire could be in confusion. Don't use the difficulty of the situation be used as reason to not deal with this issue.
In this post we'll concentrate on providing you with a general overview of the current tax environment in relation to digital economies, particularly the web-based websites for membership.
Keep in mind that not every one of the sites for membership are the same. It could be a site that only provides details, or another's could offer downloadable goods or even ship physical products. Tax rates may differ for each. rates involved with the different sites.
Tax Laws and the Changing Tax Landscape
Sales tax is made more complicated by the fact that each nation has their own set of rules. Sometimes, the rules are even more granular like in those in the USA or Canada where the sales tax differs according to the provincial and state. Sales tax is often self-regulating, which is a fact which most people don't are aware of.
Consider, for example, that I purchase something from you that is then offered without sales tax. Whatever the reason, you do not charge me with the appropriate tax on sales. If you think the issue is solved, then you're not right. As the purchaser, legally I'm responsible for self-assessing the amount of tax that I am liable for and reporting it to the proper tax authority. It's easy to imagine how frequently this is the case, can't you?
The economics of the digital age is now at a level that government officials do not want to overlook the loss of tax revenue as digital products, services and memberships can cross national and international boundaries. One of the largest instances of this is found in the rules that were enacted by the EU at the beginning of January.
The essence of what's clear from what the EU has said is that if you offer digital goods or services to EU customers, then you must be able to charge them EU tax. That's precisely what it is. There's a chance that you're not paying tax, reporting and reporting locally, but you'll need submit taxes for the EU taxes you're responsible for obtaining.
It's difficult to define the least - however, there's some positive news. By using a device this whole procedure can be simplified by a simple procedure.
How to limit your tax liability
The last thing you want to be dealing with being able to track taxes on sales from various countries that require it. If you're using software, your situation isn't as difficult as you might imagine.
In addition to being in charge for collecting and remitting sales taxes, you are also accountable for reporting sales tax and keeping track of records. If you're located within the EU there are requirements for keeping records for a period of 10 years, and identifying transactions as b2b or b2c, and collecting two documents to prove the address of the purchaser. As if all that wasn't enough, within the EU in the EU alone, there exist 23 different tax rates for VAT. Yikes!
If your site's membership is headquartered in the US You'll quickly discover how burdensome the rules can be. Luckily there are some alternatives that could make life simpler.
Quaderno
Although it handles VAT issue, Quaderno helps with automating invoicing, data storage, and various tax-related compliance issues.
Taxamo
Taxamo offers a second choice. Though it was not created specifically to work with the three most popular gateways, it's compatible with three of the most well-known platforms, which include Braintree, Stripe, and PayPal and subscription support is available.
Taxamo offers a similar set of features which include tax that is managed, VAT rate management as well as the ability to invoicing for tax settlements that is compliant fully-integrated reporting and many other. Taxamo is currently working to roll out tax-related solutions which include other global jurisdictions as necessary. As an example, Australia is introducing GST on digital services starting in July 2017. It's just one of many nations.
Pricing for Taxamo differs slightly from the system dependent on the number of transactions. In a plan that is pay-as you-go, it costs EUR0.20 per transaction the first 20k transactions. Beyond that level the plan for enterprises is EUR0.05 per transaction.
Cover It up
Everyone hates taxation. Yet, they're an integral part of everyday life. The digital economy is growing in scope, governments all over the globe are coming to terms to the fact that they're losing a big portion of tax revenues.
In the beginning, when EU regulations first became available, there was some outrage over the possible complexity involved in tax issues for the typical small-sized business. When new service providers appear onto the market and are able to offer services, the amount of work needed by you will decrease. Your time will be free to devote your time managing your site and providing the benefits your customers deserve.
There is a reason that laws are gradually being put in place, requiring companies that have an online presence to collect taxes regardless of where they are in. It is possible to track and track each transaction is also already established. It goes without saying that there is only an issue of time until enforcement begins. It is certain that the collaboration between the officials of the state to ensure that all tax dollars of citizens are taken care of.
If you've implemented a tax-saving system for your membership site and you'd like to post your ideas on this site, please do so.
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