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SaaS Invoicing 101: Taxes, Receipts, and Compliance Basics
SaaS Invoicing 101: Taxes, Receipts, and Compliance Basics
Invoicing and tax compliance aren't exciting — but getting them wrong can result in fines, audits, or lost customer trust. Here's what every SaaS founder needs to know.
Invoicing Basics
What Stripe Provides Automatically
Stripe generates invoices for every subscription payment. These include:
- Invoice number, date, and due date
- Customer name and email
- Line items (plan name, quantity, price)
- Subtotal, tax (if configured), and total
- Payment status
What You Need to Add
| Element | Required? | Notes |
|---|---|---|
| Your business name and address | Yes | Legal requirement in most jurisdictions |
| Tax ID (if registered) | Depends | Required in EU (VAT number), some US states |
| Customer's tax ID | Depends | Required for B2B in EU |
| Tax breakdown | If charging tax | Show tax rate and amount separately |
| Currency | Yes | Stripe includes this |
Sales Tax and VAT
If You Sell in the US
- Sales tax varies by state (0-10%+)
- Some states don't tax SaaS, others do
- You're only required to collect in states where you have "nexus" (economic presence)
- Threshold: Many states require collection after $100K in sales or 200 transactions in that state
If You Sell in the EU
- VAT applies to all digital services sold to EU customers
- B2C: Charge VAT at the customer's country rate (19-27%)
- B2B: Reverse charge (customer handles VAT) — collect their VAT number
- You need to register for VAT OSS (One Stop Shop) or use a merchant of record
The Simple Solution: Stripe Tax
Stripe Tax automatically calculates, collects, and reports taxes. It costs 0.5% per transaction on top of standard Stripe fees. Enable it in the Stripe Dashboard and it handles:
- Tax rate calculation based on customer location
- Tax-inclusive or tax-exclusive pricing
- Invoice tax line items
- Tax reporting
Merchant of Record (MoR) Option
If tax compliance feels overwhelming, use a Merchant of Record like Paddle or LemonSqueezy. They legally sell the product on your behalf and handle all tax collection, remittance, and compliance.
| Factor | You Handle Taxes | Merchant of Record |
|---|---|---|
| Your responsibility | Collection, remittance, filing | None (they do it all) |
| Cost | Stripe fees + Stripe Tax (0.5%) | 5% + 50¢ per transaction |
| Control | Full | Limited |
| Best for | US-only sales, technical founders | Global sales, solo founders |
Receipt and Invoice Best Practices
- Send receipt immediately after payment (Stripe does this automatically)
- Include invoice PDF in email or make downloadable in app
- Show invoice history in user's billing settings page
- Include refund info when applicable
- Annual summary — Some customers need annual totals for their accounting
Comparing billing tools? Read Stripe vs Paddle vs Chargebee.
Setting up billing? See How to Build SaaS Billing With Stripe.
