Challenge

Outseta was founded in 2016 with the idea that subscription startups experience inefficiencies during the process of discovering, evaluating, and integrating basic operational tools. These companies often had to stitch together multiple solutions in order to get the functionality they needed. Outseta was founded to eliminate this inefficiency as an all-in-one tech stack for growing SaaS and membership businesses.

Outseta provided core functionality for billing, CRM, email automation, help desk, and authentication, but did not support tax compliance, and it continued to hear from customers that this was a big area of concern. “Basically, customers said they were terrified that if they don’t report tax appropriately, the powers that be were going to come after them and put them out of business,” said Outseta Founder Geoff Roberts. In addition, Outseta was losing business to MoR products and other billing systems that had integrated tax solutions.

As Outseta’s business grew, it also needed a solution for its own tax compliance. “We had gotten to the point where we were processing a reasonable amount of revenue and were going to need to start remitting ourselves,” said Roberts.

When Outseta evaluated tax solutions, it considered multiple options, including becoming a merchant of record (MoR). A MoR is legally authorized and responsible for processing customer payments on behalf of a business. This means a MoR is liable for all the financial, legal, and compliance aspects of these transactions. Outseta considered becoming a MoR for its customers or using a third-party MoR for both its own tax compliance and its customers.

“I’ll be the first one to tell you that for a long time I thought that a MoR solution would be the best option for our customers,” Said Roberts. “Our customers are early-stage founders—most of them bootstrapped. They don’t want to deal with this stuff. We went pretty far down the path of offering a MoR solution to our customers.”

However, after further evaluation, Outseta began to see the downsides of becoming a MoR for tax compliance, including significantly higher costs and added platform risk.

“With a MoR our customers would have to pay the highest possible tax rates in every geographic location—because the MoR was over tax thresholds in those geographies even though their own business was not. It just wasn’t a cost-effective or scaleable solution for our customers,” said Roberts.

Solution

After Outseta decided against the MoR option, Stripe Tax became the obvious choice. “It was clear that Stripe Tax was the right move. It was easy to integrate, allowed us to offer a more unified solution, and the pricing was more efficient than a merchant of record,” said Roberts.

With Tax, Outseta’s customers can now meet their own sales tax, VAT, and GST obligations automatically with just a few clicks. Tax integrates seamlessly with Connect and Payments to provide a seamless tax compliance experience for its customers.

Results

Outseta’s customers are excited about the ability to monitor their own tax obligations with Tax and feel relieved to have a solution in place. Now that Outseta has integrated Tax, prospects and customers trust that they are using a robust tax solution without the risks and fees that come with the MoR model.

Additionally, Outseta can now focus on growth without manually monitoring tax thresholds. The Outseta team relies on the Tax monitoring Dashboard to tell them exactly where they need to remit tax, and when they are approaching thresholds in new geographies. Outseta is now aware of the 32 countries where it has tax obligations, and can monitor over 50 other geographies to maintain compliance.

Since Outseta was already using other Stripe products, it was easy to integrate Tax because the team was already familiar with the Stripe APIs. Having all of its financial tools on Stripe is a huge benefit and time-saver since the Outseta team doesn’t have to learn multiple APIs. As a company built around software efficiency, Outseta sees major benefits in using Stripe to streamline its financial processes.