Key takeaways
- A Merchant of Record usually gets you selling sooner, with less upfront cost.
- A local entity gives you full control, at a fixed yearly cost.
- Many digital businesses start with a Merchant of Record and add an entity once a market proves itself.
What a Merchant of Record does
A Merchant of Record is the legal seller in the transaction. It sells your product to the customer, issues the invoice, and takes responsibility for collecting and remitting the indirect tax due on the sale. You receive the proceeds, net of tax and fees, without registering a company in that country.
The trade-off is control. The Merchant of Record’s name may appear on the customer’s receipt, and its terms sit between you and the buyer.
What a local entity gives you
A local subsidiary lets you contract directly with customers, open a local bank account and build a local team. It also comes with incorporation, directors, registrations, bookkeeping, audits and filings, which take time to set up and cost money every year whether or not sales arrive.
Side by side
| Topic | Merchant of Record | Local entity |
|---|---|---|
| Time to first sale | Faster | Slower: set-up comes first |
| Upfront cost | Low; fees tied to sales | Higher; fixed annual costs |
| Tax registration | Handled by the seller of record | Your responsibility |
| Customer relationship | Shared | Full control |
| Best for | Testing and early scale | Proven, strategic markets |
When to switch
Revisit the decision when a market’s revenue makes the fixed cost of an entity small by comparison, when enterprise customers ask to contract with a local company, or when you plan to hire locally. Until then, keeping the market light lets you spend on growth instead of administration.
Not sure which model fits your next market? Tell us where you want to sell and we’ll walk you through the options. You can also read more about our Merchant of Record and market entry services.