#barbud_best-practices
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snow fable
Hi palamedes happy 4th of July!
I was wondering how I should setup my tax settings to collect taxes for my connected accounts. Iām currently in Texas and so if I have a subscription out of state do I have to pay taxes for that state or Texas since my physical location is in TX but I could be collecting payments from other states
vocal prism
Hi there!
snow fable
Also I help my connected accounts sell alcohol so I have their menu and based on a users cart total I make a call to calculate the tax by passing in the corresponding tax codes and was wondering if the connected account has to set up the tax settings to handle it in their own state (am i responsible if a bar signs up in NJ and i collect the tax from the user and it goes into their connected account) i wouldnāt physically have an office or anything, im just middle manning the transaction
vocal prism
and you're using Stripe hosted checkout?
snow fable
No I use payment intents and currently make an api call to calculate the tax
vocal prism
Gotcha, and what is your funds flow / what kind of connected accounts are you using?
snow fable
I think this is the setup
But Iām not sure if it should be direct and your connected account pays stripe fees instead
I chose destination because users would use my app to order a drink and the description for direct charges is that users are unaware of your platformās existence which is t the caseā¦but I would like the bar to pay creditcard fees and not sure how that will work
vocal prism
So that setup would not be for direct charges - that is destination charges, where the payments happen on the platform and some of the funds are transfered to the connected account.
This doc is a good primer on the differences in the funds flows:
https://docs.stripe.com/connect/charges#separate-charges-transfers
snow fable
Ok yea so I was thinking something like this, but I donāt have an app fee so instead is it possible to deduct stripe fees and then transfer? Ex : $10 charge , (.59) stripe fees , bar gets 9.41ā¦.i donāt keep any fees since I have them on monthly subscription
vocal prism
Yeah, you would just need to use platform fees to pass the processing fees on to the connected account
But to bring this back to your original question, I ask because the connect setup may impact how you do taxes
snow fable
I guess this is better example, just no application feeā¦and also connected account should be responsible for taxes after I collect from user
vocal prism
so direct charges with standard accounts, then?
snow fable
Thatās what I was thinking initially to have direct charges with connected accounts but not sureā¦I donāt want to collect an application fee so I was thinking this route, but the description on the site is throwing me off since the user interacts with my app to order
Or if I know how much the stripe fee will be before hand I can charge that as the app fee but without application fee would be best and simple
ivory forgeBOT
vocal prism
The main differences are what Stripe account the transactions take place on and who the merchant of record is, as well as considerations about who is responsible for losses and that kind of thing.
If you use Standard Accounts & Direct Charges, then the charges exist on your connected accounts
If you use Destination Charges or Separate Charges & Transfers (with Express/Custom accounts), then those Charges exist on the platform, but you still have some ability to designate the connect account as the merchant of record. I would say these flows give you more control over the connected accounts and more flexibility about how you can recoup Stripe fees
snow fable
Yea ideally Iād like the charges to go right to the bar so itās transparent pricing, I donāt take any cut and all transactions should belong to them
dull gulch
Either flow can support that use-case, and I actually think in both cases the difficulty would be charging a fee that is just keeping what Stripe charged you on the payment. Unfortunately we don't have a simple parameter to tell Stripe to just do something with the Stripe fee amount, you will need to specify it as the fee or transfer amount on the intents you create at some point.
So like if you have a $10 payment and the Stripe fee is $.60 you could do that via direct charges with an application fee of $.60 or by creating a destination charge that transfers $9.40 to the connected acount. The difficulty is you wouldn't know the exact amount until after the payment is created, and it can't be modified at that point. So some users try to estimate the fee beforehand and set things based on that.
A flow that may actually make this a bit easier is Separate Charges & Transfers. SC&T is like a less automated version of destination charges, you create and confirm the payment and then have to separately create a transfer afterwards. But here that could mean that you successfully charge the payment, retrieve the Stripe fee for it, and then transfer the payment total minus the fee to the bar.
https://docs.stripe.com/connect/separate-charges-and-transfers
snow fable
But in the image above for direct charges what if I just send 0 for application fee wouldnāt that mean that the bar would get the actual amount minus stripe feesā¦similar to their existing setup where a $10 menu item when paid by card is charged a creditcard fee and then they get the difference
dull gulch
Yes sorry, I just realized that š¤¦āāļø I was thinking of a similar yet totally different situation where you need to do that
snow fable
If I have multiple bars, I donāt want all that to pool up in my account, they should go to the connected account and all the fees and taxes should be handled at that levelā¦I just middleman it but without any fees since I charge them a subscription
snow fable
Yes sorry, I just realized that š¤¦āāļø I was thinking of a similar yet totally di...
Yea I was thinking to create a tab system that ends when the users night is over so that they can keep a running tab through multiple bars but thatās too complicated for now lol
dull gulch
Ah interesting! Always love hearding people's cool use cases.
And to get back to the taxes aspect, if you do Standard Accounts + Direct Charges you will need to specify tax settings + make registrations via the API for each connected account. For accounts without full dashboard access + SC&T you would just need to handle settings and registration on your platform account itself. We have this doc that links to a doc for each of those cases. We call the direct charges scenario "Tax for software platforms" and the other flows "Tax for marketplaces" here:
https://docs.stripe.com/tax/connect
snow fable
Instead of destination shouldnāt I use direct though?
snow fable
I guess this is better example, just no application feeā¦and also connected accou...
Basically do this with $0 app fee?
dull gulch
Oh sorry mistyped, just one of those days. Yes direct charges would work best with Standard accounts, if you are using connected accounts without full dashboard access then separate charges and transfers would be best for passing on only the Stripe fee to your users.
snow fable
All good, and I see you wrote standard accountā¦is that connected account or is connected account not supported
dull gulch
Connect is supported there, a standard account is the default account configuration. It is a bit of a legacy term but the setup you are talking about for use with direct charges would fall under the connect umbrella.
I guess the real distinction I am trying to make is whether your connected accounts get full dashboard access. Direct charges work best for connected accounts that have full dashboard access, destination charges or SC&T work best for accounts with express dashboard access or no dashboard access. It is technicall possible to use any charge type with any dashboard access level, but it can make things like handling refunds and disputes more difficult.
snow fable
Oh ok, if needed I can allow the stripe dashboard accessā¦i donāt think Iāll add a refund button in my app but the user can talk to the bartender and they can go into the dashboard and refundā¦it wouldnāt be up to me to refund them, and in my T&C I state thereās no refunds if you order and are underage to prevent underage drinking
Can the dashboard be embedded in my app or will it redirect in the web browser?
dull gulch
Nice! And if you want the bars to be able to initiate refunds themselves the full stripe dashboard has UI for that. I forget if the Express one does but can double check, I do know that our connect embedded components have pre-built UI for that. Or of course you could always create your own UI and initiate refunds via the API
https://docs.stripe.com/connect/supported-embedded-components/payments
snow fable
Ok awesome so you think this is the best fit for my use case?
Express dashboard doesnāt allow direct
And none makes my platform responsible for stripe fees, so I think this is right
dull gulch
Yep, that configuration definitely makes sense for what you are setting up. You could implement it with other ones but as you note passing on the fees would be more difficult
snow fable
Awesome thanks for helping me fix this!
And for the tax I should follow tax for software platforms, I think thatās appropriate here right?
dull gulch
Yes that one looks like it would line up best with your use-case
snow fable
Perfect! One last thing, I saw in the tax pricing that it charges 50 cents for an api call which includes 10 callsā¦.i was wondering if thereās a better way to handle that since sometimes the items are only a few dollars and can get very expensive
vocal prism
Hi there - I'm back and I'll be picking up for Pompey š
You're asking if there's a way to get better pricing on Tax?
snow fable
hi, i was wondering if theres other options, i saw on reddit that they were saying to have automatically calculated enabled or something and that would only charge 0.5% or something, and just wanted some clarification on that
vocal prism
Automatic tax calculations aren't supported on the PaymentIntents API, unfortunately
snow fable
ok so the only option is to go the 50 cent route? theres no other workaround?
vocal prism
If you need tax calculations on the PaymentIntents API, the Tax API is the only solution as far as I'm aware (and this is new)
snow fable
ok yea im gonna have to see, since 50 cents for these small transactions is too much
theres no montly plan?
vocal prism
I don't know much about pricing - we focus on integrations questions here
You can reach out to sales to inquire here
snow fable
ok cool ill reach out to sales, as far as integration goes, when using direct charges, the connected account (bar) will be responsible for providing all that info right? and all that will be in the "tax for software platforms" integration?
vocal prism
Yes, they will provide that information directly in the stripe dashboard
snow fable
ok awesome, yea i think thats all for now then...thank you guys so much for the help! have a great weekend