[abc126589]

It depends on your situation but if you are in the US I'd create an LLC and do business with that. It takes a few minutes if you use services that file for you.

Second will be dealing with sales tax and it's a nightmare. If you sell to customers in Europe you need to pay VAT to different countries at different rates. Same goes for US states that tax very differently. We moved recently to paddle.com which acts as a reseller and so they take care of all sales tax collection and remittance (they are the one selling the app after all). We moved away from PayPal and so far it's been very smooth.

[ryanwaggoner]

You can also do what I do and just ignore those foreign taxes, on both practical and philosophical grounds.

On a practical level, no foreign government is going to bother you until your sales are in the millions, at least. They don’t have the ability to know your sales in the first place, and you’re way too small to bother trying to go after. Especially since there’s no real enforcement mechanism for, say, France to try and collect $200 from some random American online software business.

Philosophically, I vehemently disagree with the premise that a foreign jurisdiction can tax my business because their citizens choose to visit my website and buy things. Should German websites pay a 200% tax if citizens of Eritrea buy things from their website, just because Eritrea passes a law that says that? I have zero representation or connection to these jurisdictions, and if they want tax money or to stop their citizens from using my website, that’s between the citizens and their government. Until there’s some enforcement mechanism, I’ll just keep ignoring them like I always have.

[abc126589]

How about sales taxes in the US. Do you keep records to when you hit tax nexus and start collecting it then? Manually or using some service? I'd be interested in learning how you approached this problem.

[john_moscow]

I second this. If you sell worldwide, there isn't any reason for you to handle the taxes and payment methods on your own. Actually, there's a whole bunch of companies that would do that for a relatively small cut (about 5% give or take). From the top of my head: 2Checkout, Bluesnap, DigitalRiver, FastSpring. I don't know much about Paddle, but they spammed me quite aggressively using the email from a leaked LinkedIn dump, so I'm not sure how much I would trust them.