Sad to see lemon squeezy acquired by stripe.
Empty words.
Lemon Squeezy is a merchant of record which means _they_ act as the merchant and sell the product to your customer. So they'll collect VAT and make sure it lands in the pockets of the right country etc. and will pay you only the remainder (minus their cut).
Since Lemon Squeezy uses Stripe under the hood as their payment processor you had to basically pay a cut to two companies if you used Lemon Squeezy but in exchange you literally have to worry about nothing. You just get a nice B2B reverse invoice and don't have to break your head around world wide (and especially EU) tax laws.
I really hope Stripe will double down on the whole MoR thing, it makes processing payments online so much nicer and less annoying.
Stripe is buying a lucrative business, but more importantly it is buying the complex knowhow of running an international tax-compliant merchant of record. They can then integrate this into their product. I switched to LemonSqueezy primarily out of concern for EU-wide tax ramifications (EU strikes again). Is there a reason to choose LemonSqueezy over Stripe if you are located in the US? There hasn't been a single VAT-compliance case to my knowledge and the need for MoR is unclear.
If anything, EU companies have it slightly easier because they can file all of their EU-based taxes using One Stop Shop.
It's not just the EU that charges VAT (or VAT-like taxes).
Most countries (and in the US's case, subregions within) charge some form of sales tax that's a pain to manage yourself if you're not a huge operation.
Always good to comply with tax laws (if not for the obviously good moral/ethical reasons, then definitely for legal reasons!)
[1] https://www.taxjar.com/blog/saas-california-sales-tax [2] https://www.cdtfa.ca.gov/lawguides/vol1/sutr/1502.html
Reduce the price to Stripe pricing + 1%, and this will be the default for everyone!
That’s a huge number of aspirational digital product vendors.
5 + 50 vs stripe’s lower direct take (for me 1.5 + 20). I just did a quick calculation on a really basic/modest digital product business. Sell something at €25 and sell €50k - 2000 customers. That’s going to be €7k with LSqz over a year, and with Stripe it’s going to be €1.15k
The difference is €16 a day.
The business makes you €137 a day.
If you spend a day each month sorting out admin and taxes because of stripe direct plus a few days paying a developer (you’re non-technical remember!) then that could easily be a cost of €5500 a year. Total cost including card processing is €6150 and it’s only €850 less than LemonSqueezy.
Why would you move?
And in particular why would you move sooner than 3 years if you are predicting similar revenue each year.
>Along the way, we received many acquisition offers and (Series A) term sheets from investors. But despite the allure of these opportunities, we knew that what we had built was truly special and needed the right partner to take it to the next level.
Wow. This is quite the smart and ballsy move. Congrats to the team. Looks like y'all knew what you were doing.
I found these surprising as I didn't see them mentioned on the pricing page near "Transaction fees ... 5% + 50¢" (https://www.lemonsqueezy.com/pricing).
I like to root for the home team (tech entrepreneurs like my former self getting paid out for taking a risk makes me happy)
M&A activity is a positive sign for the economy. Stripe wouldn’t be buying companies if they thought the economy was about to fall off a cliff, and Stripe is full of smart people (disclosure: I am a former Stripe).
If there were no acquisitions happening, starting (another) company would be much tougher to justify to my wife and my self.
From branding to the all UVP, it was a fast exit because it was meant to be.
Still a massive achievement
Selling your startup is not a good plan. Make it big, change the world, and swim in money.
they are looking at quick exits especially in this high interest rate environments and so are the backers
Very few entrepreneurs are looking to create companies that will provide its workers with forever jobs
It's sad but those few that are grinding it out and creating jobs, helping economies in those countries run proper are the unsung heroes.
Time will tell where this American greed will take Americans but so far, its not looking good.
If you have a swimming pool worth of money, or a pond, or a canal, or a river, or maybe an ocean - you can swim in all these. Some founders maybe don't want to turn 58 trying to reach that perfect cubic m. volume of water to be able to swim. They might rather want to start swimming when they are kinda younger (30s maybe?). Who knows. And while already swimming they might want to get another pool, maybe an olympic size later and so on, instead of keep waiting for that "perfectly sized water body for them".
> change the world
Oh ffs. Really? Is that even a thought on the distant horizon of startup founders? Haha.
There's so little competition in the payments space, and this acquisition means that there's even less. I know LemonSqueezy already relied on Stripe, but before the acquisition, there was still a potential path for them to break that dependency.
I tried out LemonSqueezy a bit last year and had a mediocre experience, but it was at least nice to see a payment provider focused on simple, straightforward use cases. Stripe and Paddle have so many different customers and flows that it's hard to use them for simple, standard things. I was hoping to see LemonSqueezy fill that niche, but now Stripe is folding LemonSqueezy into the rest of their complex systems.
When did this happen?
Now if only we could somehow get MoR for marketplaces...
For one thing we have the Making Tax Digital VAT reporting rules as soon as we cross our domestic VAT registration threshold (which is lower than £100k of annualised revenue within the scope of UK VAT so something a high growth startup is going to want to cross pretty quickly). To comply with those rules we need a 100% automated system for transferring VAT records from any services we use to collect payments into our MTD-compliant VAT reporting software. I'm still waiting for anyone to show me an easy and cost-effective way to do that properly with any non-MoR payment service provider. AFAIK none of the PSPs I've ever used has any documentation on how to do this, nor do any of the VAT reporting systems I've used since MTD came in. I'm not sure all of the approved reporting systems have the kind of API available that you'd need to implement this kind of data transfer even with significant programming/integration effort.
And that's only the easy case of domestic collection and reporting. Internationally there are several services that will accurately calculate the required tax for you based on whatever rules apply wherever your customer is and whatever they are buying (you hope) but again that's only the relatively easy part. You also need to handle all the registration, tax reporting, possibly specific customer invoicing requirements, and tax remittance obligations everywhere they might apply. Obviously that's completely impractical for any SME that isn't a tax specialist because no business at that scale has lawyers and accountants in every relevant part of the world to advise them and manage those relationships with the local tax authorities. In sensible places there are again thresholds for local sales where you don't have to do anything about tax until you're also doing a significant amount of business there that isn't going to happen overnight but who wants to try to work out everywhere in the world that isn't sensible like that?
Merchants of record usually charge pretty hefty fees compared to vanilla payment service providers but they're essentially a combination of automating a lot of pain and an insurance policy. Apparently the global tax system is now sufficiently opaque and risky that the market estimates the compliance overhead to be around 6-7% of all relevant trade worldwide.
I would love to use only Stripe, but MoR provides for me more than calculating how much tax I need to report per country. It takes a couple of days per month to prepare documents for my country's fiscal authority to report VAT and other taxes from customers inside and outside the EU. This is because in case of MoR I only have a couple of invoices per month but from a single company (the MoR) that is from one country. So there is little reporting done.
MoR for marketplaces basically means merchant of record for Stripe Connect and you, as the platform, take the tax liability via the MoR functionality automatically for your sellers (connected accounts), right?
Mind sending me an email at kevinpeters at stripe dot com? Would love to hear about the use case.
And probably just a great compliant to their TaxJar acquisition from 2021 (+ entry into Paddles space).
He also happens to have found ways to profit from that.
That sounds somewhat promising but not entirely committed.
I hope not, this time, but if I were a betting man…
I don't sticking with a product you've been working on for only 3 years is a big priority
What’s the barrier to entry for starting up a similar business?
One thing which is weird about tax is physical presences in some cases. In some countries, you actually might need a representative to file your taxes. Plus you need to learn how to register in those countries and how to file taxes.
There are probably more things that you need to look up, but that’s what I remember.
What's the barrier to entry for starting up a similar business?
The merchant of record model.
Smart founders will be looking carefully and observing how Stripe fails to retain clientele and think about creating something that fits the Lemon Squeezy gap in the market.
99% of SaaS won't reach the MRR needed to justify MoR
Of the 1% those breaking through 7 digit MRR can simply hire in house to manage tax remittance and not confuse their customers with invoices labelled with MoR's branding
All in all this seems like the fear campaign has worked beautifully for Paddle and Lemonsqueezy but some of us saw right through it and never really felt the need to pay 5%~11% (!!)
Looks like Stripe will shut down MoRs one by one
Didn’t care about my supposed tax liability in Saudi Arabia. I think I owe those guys $7. Come and get it.
Or in Serbia. Or the EU, more broadly. Or in the province of Saskatchewan. All of which I theoretically owe sales tax.
I’m registered for GST in Australia. I live in Australia. I will slavishly follow Australian law and submit my GST on time.
The rest of it? For a one-person business? Utterly unfeasible.
As someone who wants to do the right thing but would also like their business to actually do something useful and not spend 95% of its time doing admin work this is the kind of thing that stops me sleeping well at night. It's also why I've become something of an advocate of MoRs and a critic of basically all other traditional payment service providers. I fear the reckoning is a matter of when and not if and so passing the buck to an organisation that actually has a fighting chance of complying may be the only reasonable survival strategy. Of course then I lie awake worrying about the lack of competition in the MoR space - not helped by today's announcement in all honesty - and the dangers of being so heavily integrated with a specific third party service that can't easily be replaced and yet is critical to the sales process. What a time to be running a business in a world where this kind of international sales should be thriving.
In case of invoices from EU as I am living in an EU country and the business is registered in an EU country I have to take into account collecting or not VAT and what percentage of VAT needs to be collected. There is OSS VAT and some other facilities, but all this takes days per month from my time to handle. And I prefer to spend those days coding something.
Moreso if they are inside EU there is a mechanism to cross-check if the other side reported the invoice (either sent or received) so to be compliant if you sell to multiple countries you have to report invoices.
The same goes for selling to US specially in case of ebooks - there are treaties in place that define royalty percent when the final customer is an US citizen.
So maybe if you are small and have the business registered in EU, the fiscal authorities will not come for you, but if they come the penalty is big enough to get me out of business. Thus I use MoR where for the income I get one or two invoices per month from LS and that is the only thing to report. Better as they are registered in US the reporting is simpler :)
if you make close to or more than this from EU countries you can afford to hire
> Lemon Squeezy has been processing payments on Stripe since our inception.
They're not your competition if you are already their most important supplier.
