Billing
Tax Compliance Guide for Firstsales.io
5min
Effective Date: December 1, 2024
At Little SaaS, Inc. ("we," "us," or "our"), we utilize Lemon Squeezy as our authorized payment processor for Firstsales.io. This guide provides detailed information on tax compliance to ensure transparency and adherence to global tax regulations.
1. Merchant of Record
- Definition: Lemon Squeezy acts as the Merchant of Record (MoR) for all transactions made through Firstsales.io. This means they are responsible for processing payments, handling tax compliance, and managing fraud prevention on our behalf.
- Implications:As the MoR, Lemon Squeezy assumes the liability for sales tax collection and remittance, ensuring that all transactions comply with applicable tax laws.https://docs.lemonsqueezy.com/help/payments/sales-tax-vat
2. Sales Tax and VAT Handling
- Calculation and Collection: Lemon Squeezy automatically calculates and collects the appropriate sales tax or Value-Added Tax (VAT) based on the customer's location and the nature of the product or service. https://docs.lemonsqueezy.com/help/payments/sales-tax-vat
- Remittance: Collected taxes are remitted to the relevant tax authorities by Lemon Squeezy, ensuring compliance with regional tax laws.
3. Tax Inclusive Pricing
- Setting Prices:You have the option to set product prices as tax-inclusive or tax-exclusive. This setting applies across all products in your store. For subscriptions, all future invoices will reflect the chosen tax setting https://docs.lemonsqueezy.com/help/payments/sales-tax-vat
- Customer Invoices: Depending on your pricing settings, customer invoices will display whether taxes are included in the product price or added at checkout.
4. Reporting and Documentation
- Accessing Reports: Lemon Squeezy provides detailed sales and tax reports accessible through your account dashboard, facilitating financial record-keeping and compliance.
- Audit Support: In the event of a tax audit, Lemon Squeezy maintains comprehensive records of all transactions and tax remittances, supporting compliance verification.
5. Income Tax Obligations
- Payouts: While Lemon Squeezy handles sales tax and VAT, you are responsible for reporting and paying income taxes on the payouts received from sales.
- Consultation Recommended: We advise consulting with a tax professional to ensure compliance with income tax obligations in your jurisdiction.
6. International Considerations
- Global Compliance: Lemon Squeezy manages tax compliance across multiple countries, including complex regions like the European Union, ensuring adherence to local tax laws. https://www.lemonsqueezy.com/blog/eu-saas-vat
- Currency Support: Transactions are processed in various currencies, with tax calculations adjusted accordingly to comply with regional requirements.
7. Customer Communication
- Tax Information: During checkout, customers are informed of any applicable taxes, ensuring transparency in pricing.
- Invoices: Customer invoices detail the tax amount charged, aligning with legal requirements for documentation.
8. Changes in Tax Laws
- Monitoring: Lemon Squeezy continuously monitors changes in tax legislation to ensure ongoing compliance.
- Adaptation: Our systems are updated as necessary to reflect new tax rates or regulations, maintaining compliance across all regions.
9. Exemptions and Special Cases
- Tax-Exempt Customers: If a customer qualifies for tax exemption, they must provide valid documentation. Lemon Squeezy processes such exemptions in accordance with applicable laws.
- Product-Specific Taxes: Certain products may be subject to specific tax rates or exemptions, which are managed by Lemon Squeezy's tax calculation system.
10. Compliance Assurance
- Liability Coverage: By acting as the MoR, Lemon Squeezy assumes responsibility for sales tax compliance, reducing your liability in tax matters.
- Peace of Mind: This arrangement allows you to focus on your business operations, knowing that tax compliance is professionally managed.
For any questions or further clarification on tax-related matters, please contact us at [email protected].
Note: This guide is subject to change. Significant updates will be communicated via your registered email address.
Updated 01 Dec 2024
Did this page help you?