Tailwind Labs CEO Adam Wathan is no stranger to the billing and payments landscape. Having built integrations with payment service providers in the past (and inadvertently becoming a payments expert in the process), he wanted to take a different approach with Tailwind UI – using a merchant of record or reseller that would handle all elements of the business’ payments infrastructure
Adam was hoping this model would offer relief from sales tax liabilities and reduce the admin burden of bookkeeping. But after finding a provider and getting set up, there was still an underlying concern over its stance on sales tax and what would happen if they were audited by the Canadian Revenue Agency (CRA).
“We always had an undercurrent of anxiety around sales tax. Gumroad handled some of it for us but didn’t really have a solid stance on who was ultimately liable.”
In 2020, Gumroad was impacted by changes to PayPal’s terms and requested that clients manage their payments through PayPal directly. This new requirement made Adam’s concerns about sales tax a reality and meant a lot more work to manage payments in-house. Adam explains:
“I’d actively avoided making my own PayPal account, it’s not a service I enjoy working with and it would really complicate our bookkeeping because we’d have to manage every payment, rather than payouts. Also, using our own account makes us the merchant and definitely liable for sales tax.”