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Merchant of Record: The Complete Guide for SaaS Founders
- Merchant of Record (MoR) is the legal entity selling your SaaS product/services, handling payment collection, tax compliance, fraud management, etc.
- Options for MoR include being the seller yourself or using platforms like Paddle or Lemon Squeezy.
- Choosing to be the MoR (e.g., with Stripe) gives control but requires managing tax compliance, disputes, and legal risks.
- Platforms like Paddle handle invoicing, tax compliance, and legal responsibilities, simplifying operations for SaaS founders.
- Pros of using MoR platforms include global tax compliance, simplified legal operations, and improved customer trust through compliant invoicing.
- Cons include higher fees, limited checkout control, and difficulty scaling complex SaaS models.
- Using MoR platforms reduces the burden of handling taxes, financial reporting, and legal compliance for international sales.
- Considerations when choosing MoR include global tax compliance, billing control, complexity of pricing models, and customer preferences.
- Switching MoR providers later can be challenging, highlighting the importance of making an informed decision from the start.
- Choosing the right MoR approach is crucial for successful international growth and operational efficiency for SaaS businesses.
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