Taxes: Sales Tax & 1099s

What gets charged at checkout, and how income reporting works for your sellers. Two of the most common questions founders get once their marketplace goes live.

1099s & income reporting (automatic)

Because Stripe processes the payouts on your marketplace, Stripe is also the system of record for your sellers' tax forms. You don't generate or file anything for them.

For US sellers, Stripe issues a 1099-K when they cross the current IRS reporting threshold, emails it to them directly, and posts it in their seller dashboard.
Sellers find their forms under Seller dashboard → Finance → Tax documents (a secure tax-document area powered by Stripe).
EU and UK sellers get the local equivalents handled the same way.
You handle your own business taxes on your commission as normal - that part is just regular business income.

On the 1099-K dollar threshold

The IRS reporting threshold for 1099-Ks has changed several times in recent years and may change again. You don't need to track it - Stripe applies the current federal and state rules automatically and only issues forms to sellers who qualify.

Sales tax on purchases (not added at checkout)

Prometora does not add sales tax or VAT on top of the price at checkout. In practice this means:

Prices are tax-inclusive - the listed price is the final price the buyer pays.
There is no extra tax line calculated or added during checkout.
Each seller is responsible for any sales tax or VAT they owe on their earnings.

This is the same approach the major no-code marketplace platforms take, and it keeps checkout fast - buyers aren't asked for a billing address just to calculate a tax rate.

Why not calculate tax automatically?

US sales tax is destination-based - the rate depends on exactly where the buyer is, so automatic calculation requires collecting each buyer's address and computing the rate jurisdiction by jurisdiction. That adds friction at checkout and only becomes worthwhile once a marketplace reaches substantial volume. For most marketplaces at launch, tax-inclusive pricing is the right call.

When does collecting sales tax become relevant?

In the US, marketplace facilitator laws can eventually make the platform (you) responsible for collecting and remitting sales tax - but only once you cross a state's economic nexus threshold. These thresholds vary by state - most commonly $100,000 in annual sales into that state (some states also count transactions, such as 200 sales a year, though many are now phasing that part out). The Sales Tax Institute keeps a free, regularly updated economic nexus state guide with the current threshold for every state.

Below those thresholds (where most marketplaces sit at launch and for a good while after), neither you nor most of your individual sellers are required to collect sales tax.
As you scale into those thresholds, automated collection can be enabled, and you would register to collect in the relevant states. If you're approaching that point, get in touch and we'll walk through the options with you.

Not tax advice

This page explains how Prometora and Stripe handle tax mechanically - it is not legal or tax advice. Tax rules differ by country, state, and situation. When in doubt, check with a qualified tax professional for your specific business.

What your sellers see

Sellers don't need to do anything special to get their tax forms. Inside their dashboard:

Finance

Section in the seller dashboard

→

Tax documents

→

1099-K ready

Downloaded or emailed by Stripe

For more on how sellers get connected to Stripe in the first place, see How Sellers Connect Stripe, and for the overall money flow and commission split, see Payments & Stripe.

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