Implementing Taxes for your Membership Site
Whoever thinks that technology is complicated has clearly not considered coordinating taxes to a worldwide diversified membership website. In reality, even contemplating it could have the possibility of causing blurred vision and lightheadedness.
The most important thing to remember regarding managing taxes for a membership website is to seek professional advice. However, the issue can be complex enough that your accountant may be left in a state of confusion. Don't let the difficulty of the issue as an excuse to avoid the problem.
In this blog this article, we'll focus on providing you with a general overview of the current tax laws and regulations in relation with the internet economy, and particularly web-based membership websites.
Remember that not all membership websites has the same features. You may only provide details, while another's might offer downloadable products or deliver physical items. There might be various tax rates involved with each.
Changes in Tax Landscape Changing Tax Landscape
Sales tax is made more complicated by the fact that each nation has slightly different rules. Sometimes it becomes extremely granular, as countries like the USA or Canada where the sales tax is different according to state and province. Sales taxes are often self-regulating and are something most people do not know about.
For example, imagine I purchase an item from you, which is subject to sales tax. Whatever the reason, you don't charge me the appropriate sales tax. If you believe the problem is resolved, you're wrong. Being the customer, I would be responsible to assess the amount of tax that I owe and then submitting the tax to the appropriate tax authority. You can imagine how often this occurs, isn't it?
The digital economy has grown to a point that government officials are not inclined to shut their eye to the tax revenue that is lost when digital services, products and memberships are able to cross the international and local borders. The most sweeping example of this can be found in the rules enacted in the EU in the month of January.
The basic idea behind what is clear from what the EU has stated is that, if you offer digital services or goods to EU clients, then you have to be able to charge them EU VAT. And yes, that means exactly what it does. You may not only be paying, reporting and reporting taxes locally, you'll also need to submit a tax return in respect of taxes owed to the EU taxes you're accountable to collect.
It can seem daunting at times, However, there's good news. By using , the whole process is made simpler in a relatively simple way.
How to manage your tax liability
One of the last things you'd like to do is spend excessive amounts of time tracking sales taxes for each required jurisdiction. If you're using the plugin, the scenario isn't as difficult as you think.
Not only are you accountable for collecting and paying sales taxes, you are accountable for the reporting process and keeping records. In the case of the EU there are requirements for keeping records for a period of 10 years, clearly identifying the transaction as either in the case of b2c, requiring two forms of proof to verify the location of the client. Oh, and in case you thought that was not enough, within the EU alone, there are 23 rates for VAT. Yikes!
If your site's membership is located in the US it is easy to discover how burdensome the rules might be. Luckily there are some alternatives that could simplify your work more manageable.
Quaderno
In addition to handling VAT, Quaderno can be useful in automating invoicing, data storage and for other tax-related compliance.
Taxamo
Taxamo represents our second option. Although not specifically created for integration Taxamo, it's compatible with the three most popular gateways, including Braintree, Stripe, and PayPal and subscription support is also included.
Taxamo offers a very like feature set, which includes managed VAT rates, tax settlement files, complete invoicing that is compliant, and much more. They are also currently working to roll out tax services that incorporate different jurisdictions across the globe as is required. For instance, Australia is introducing GST for digital services from July 2017, and it's only one country among many.
Pricing for Taxamo is a slightly different method based on the number of the number of transactions. In a plan that is pay-as you-go, the cost is EUR0.20 per transaction, for up to 20k transactions. After that point the cost for an enterprise plan decreases to EUR0.05 per transaction.
Wrap-Up
Everyone hates taxation. They are, however, an everyday thing. The digital economy is growing in scope, the governments of the world are coming to terms to the fact that they're losing a huge chunk of tax revenue.
When the EU regulations were initially rolled out there was an outcry regarding the likely complexity dealing with taxes for typical small-sized business. Fortunately, as new services providers emerge on to the market, the amount of work required from you is going to decrease. It will be easier to focus the time you need managing your website as well as providing benefits to your users.
There's one thing for certain, the rules are slowly being implemented, which will require firms that use digital technology to collect taxes regardless of location. It is possible to monitor and track the transactions of each one is in place. It goes without saying that there is only the matter of time before enforcement begins. And you can be sure that it will involve cooperation among government authorities in order to make sure that everyone's tax dollars are being collected.
If you've implemented a global tax solution to your membership website and would like to share your thoughts in the comments below.