Implementing Taxes for your Membership Site
If you think technology is complicated has clearly never looked into managing taxes on a global membership site. Even thinking about this could be a risk of causing blurred vision and lightheadedness.
One of the first things to consider in the case of handling taxes on a membership website is to speak with a professional. In the event that you do it can become difficult enough that your accountant might be wondering what you should do. But don't use the complexity of the situation as a reason to ignore the problem.
In this piece, we'll focus on presenting a broad overview of the tax system for the digital economy and particularly the membership sites.
Remember that not every membership website is exactly the same. It could only provide information and another's may offer downloads or tangible goods. There might be various taxes for each one.
Tax Laws and the Changing Tax Landscape
Taxes on sales are further complicated because of the fact that each nation has different regulations. Sometimes it becomes extremely granular, as for countries like those in the USA or Canada where the sales tax is different by provincial and state. Taxes on sales are usually self-regulating and the majority of people are not aware about.
Imagine, for instance, that I purchase an item from you, which is delivered without sales tax. For whatever reason, you do not charge me with the sales tax applicable. If you think that the issue has been resolved, then it's not true. Since I am the buyer legally responsible for making an assessment of the amount of taxes I'm liable for and submitting it to the tax authority that is appropriate. Imagine how often it occurs, don't?
The digital economy has grown to the point that governments haven't yet figured out how to operate blind and oblivious to the loss of tax revenue as digital services, products and memberships travel across national and international boundaries. An excellent example of this is the latest regulations issued from the EU in the month of January.
What is the essence of does the EU has stated is that when selling digital services or products to EU customers, you must be in a position to charge EU VAT. And yes, that means precisely what it means. Apart from making payments as well as reporting and paying taxes locally, but you'll need to submit an annual tax return to collect taxation derived from EU taxes you're accountable for collecting.
The process can be daunting sometimes, but there's good news. With the help of a software, the entire process can be made easier by using a simple method.
Controlling Your Tax Liability
One of the last things you'd like to deal with is the time of time tracking sales taxes for every required state. If you're using the software, your situation won't be as difficult than you believe.
Additionally, you are in charge of paying and collecting sales tax, you're also responsible for reporting and archiving records. To be a member of the EU there's a requirement for keeping records for a period of 10 years, marking the transactions as either b2b or B2C, as well as obtaining two documents that prove the place of residence for the buyer. If that weren't enough, within the EU alone there are 23 variations of tax rates for VAT. Yikes!
If the membership website you are using has its head office in the US it's easy to realize how difficult to meet the requirements could prove to be. There are several choices available to make life more manageable.
Quaderno
Even though it is not able to handle TVA, Quaderno can be useful for automated invoices, the information storage and other tax-related issues.
Taxamo
Taxamo is our other option. Though it was not created specifically for integration with Taxamo is compatible with three popular gateways such as Braintree, Stripe, and PayPal and also subscription service is provided.
Taxamo has a similar features set that includes controlled VAT rates, tax settlement files, complete invoicing that is fully compliant and many more. Taxamo is working on plans to roll out tax services that incorporate other global jurisdictions according to the requirements. For instance, Australia is introducing GST for digital services beginning in July 2017. And that's one of many countries.
Pricing for Taxamo is slightly different pricing model that is based on the number of the number of transactions. For a plan which is pay-as you-go pricing is EUR0.20 per transaction for the initial 20k transactions. After that, the price of an enterprise plan is reduced to EUR0.05 per transaction.
Wrap It Up
Everyone hates taxation. Unfortunately, they are just a fact of life. With the growth of the digital economy on a global the scale of globalization, governments everywhere are waking up to the reality that they're not catching up huge amounts of tax revenues.
When the EU regulations were first announced initially, there was some concern over the possibility of difficulty handling tax issues for small companies. As more service companies are forming, the amount of effort required from you is going to decrease. You'll be able to spend your time managing your site as well as delivering quality for your customers.
There is a reason that the regulations are slowly being implemented and will require businesses who operate online to collect tax regardless of location. It is possible to keep track of the transactions of each one has been put in place. The fact is that it's an upcoming date before the enforcement process begins. There is no doubt that the cooperation will occur between the government agencies to ensure that all tax money is being received.
If you've successfully implemented a global tax solution on your website for memberships and would like to share your thoughts on this page.
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