Collecting too much sales tax from customers can create a compliance obligation for your business, even if the mistake was accidental. The excess amount generally should not be treated as additional business revenue. Depending on the state, you may need to refund the customer, report and remit the excess to
Collecting sales tax without the required state permit can create a compliance problem for an LLC. The consequences depend on the state, but a business may face penalties, interest, registration requirements, additional filing obligations, and potentially an audit. There is also an important distinction between collecting sales tax without a
Yes. A foreign-owned LLC can generally register for state sales tax without an ITIN. An Individual Taxpayer Identification Number (ITIN) is a federal tax identification number for individuals, while state sales-tax registration is a separate process. For foreign founders, this distinction is easy to miss. A non-US owner may not
Not necessarily. A foreign-owned LLC does not automatically need a US sales tax permit before making its first sale. Whether registration is required before that sale depends on the state, the nature of the product or service, the company's physical presence, and whether the business has already created sales tax
Website design and development services may be subject to US sales tax, but there is no nationwide rule requiring every web designer or developer to charge sales tax. The answer depends primarily on the state involved, whether the business has sales tax nexus there, and exactly what the customer is
Yes, selling downloadable software can trigger US sales tax obligations, but it does not automatically do so in every state. The key issue is that US sales tax is not governed by one nationwide rule. Each state determines which products are taxable, when a seller has an obligation to collect
Yes, subscription businesses may have to collect sales tax in the United States, but there is no single rule that applies to every subscription. The answer depends on three separate questions: whether the business has sales tax nexus in a state, whether the subscription is taxable in that state, and
Yes, selling API access can create US sales tax obligations, but it does not automatically mean you must collect sales tax from every US customer. For API businesses, the answer depends on several factors: where your customers are located, whether your company has sales tax nexus in a state, how
AI SaaS companies may have to collect sales tax from US customers, but there is no single nationwide rule that applies to every AI software business. The answer depends on where the company has sales tax nexus, how much it sells into a particular state, and how that state classifies
Consultants do not automatically have to collect sales tax from US clients. Whether a consultant must charge sales tax depends on the state involved, whether the consultant has created sales tax nexus, and whether the particular consulting service is taxable under that state's laws. This can be confusing because the
Software development companies do not automatically have to charge US sales tax simply because they sell software development services to American customers. The answer depends on the state, the type of development work being performed, whether the business has created sales tax nexus, and how the transaction is classified under
Digital marketing agencies do not automatically have to charge US sales tax simply because they serve customers in the United States. Whether an agency must collect sales tax depends on where it has established sales tax nexus, what services it provides, and how the relevant state treats those services. That
Selling services to customers in the United States does not automatically mean your business has sales tax nexus in every state. However, depending on the state, the type of service you provide, your sales volume, and how the service is delivered, selling to US customers can create an obligation to
Using a Merchant of Record (MoR) can simplify payments, subscriptions, and global sales-tax compliance for a SaaS company. But it also creates an accounting question that founders often overlook: When the customer pays an MoR, what exactly should the LLC record as revenue? The answer depends on the legal and
Yes. A US LLC can generally use different Merchant of Record (MoR) providers for different products, provided the relevant MoR platforms allow the arrangement and each product, transaction flow, and business relationship complies with their terms. This can be a practical strategy for SaaS companies selling different types of software,
For a non-US SaaS founder selling software to customers around the world, choosing a payment provider is about much more than accepting credit cards. International SaaS sales can create obligations around VAT, GST, sales tax, invoices, refunds, fraud, chargebacks, and subscription payments. A Merchant of Record (MoR) can take much
