E-commerce
Merchant of Record platforms for Delaware LLCs: Paddle and Lemon Squeezy
Paddle and Lemon Squeezy operate as Merchant of Record, handling US sales tax and EU VAT for digital-product sellers. When MoR makes sense for a Delaware LLC.
What Merchant of Record means
MoR is the legal seller for tax purposes. Customers transact with the MoR, not directly with the underlying business. The MoR handles sales tax registration in US states, VAT in the EU and UK, and similar consumption taxes globally.
The underlying business (your Delaware LLC) receives revenue from the MoR after MoR fees and tax remittance.
When MoR makes sense
Digital products sold globally to consumers: SaaS subscriptions, downloadable products, ebooks, courses. The tax-compliance overhead of registering for sales tax in 30+ US states and VAT in 27 EU countries is substantial; MoR absorbs that overhead for a 5-7% fee.
Smaller-volume sellers: the per-transaction MoR fee may be cheaper than the cost of multi-jurisdictional tax registration and accounting.
When direct billing makes sense
B2B SaaS with US-only enterprise customers: nexus is concentrated, US sales-tax obligations are manageable, MoR fee is unnecessary.
Higher-volume sellers where the MoR percentage cost exceeds the direct compliance cost. Larger SaaS companies often graduate from MoR to direct billing after revenue scale justifies the in-house tax operation.
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