The business of selling software

I thought I'd throw this out there for y'all to find out what is required to sell software. Do you have to set up a bank account to use for your book keeping records? Do you have to report taxes? How do you accept payment? What about when someone wants their money back? Do you pay extra for a website where you advertise stuff for sale, but use some other service to actually do the transaction (e.g. shareit)? Are there limits to how much you can make before you need to report it? etc...

(mainly a USA question)

Don't have to but it would make stuff a whole lot easier to manage.


Absolutely, any profit made should be taxed unless you fancy a visit from the IRS.

As many methods as possible. Mainly credit cards/transfer cards and Paypal. But don't rule out cheque and postal order (UK) and maybe even wire transfer, but they are pretty unlikely of course.

You give it back with no fuss (even if you think they are dodgy) to keep your customer service rating high. Also hardly anyone will want their money back.


I do this for my framework but I don't think it's appropriate for games where you need a smoother integrated system, oh and don't forget to use the portals.

heh, depends how illegal you want to be. When I do an annual tax return I have to tell them about bank interest which is pretty minor so they sure as hell want to know about £100 or whatever.

OK I know I could have answered these in more depth but I figured that's enough info to get you started...good luck.

-Use a service that allows you to accept a credit card.

-File an S corporation in Nevada and pay your taxes quarterly:
http://www.corpmakers.com

-Register your program name as a trademark:
http://www.uspto.gov

Total costs: about $800.

> What about when someone wants their money back?

I would go with offering a demo version and saying that all sales are final. The demo taking care of the "does it work on my system" question.

You might just as well give people their money back, no questions asked. Two reasons for this.

1) If you DO offer refunds, you can stick a big money back guarantee sign on your site. This looks good, and gives confidence to people who would never ask for a refund anyway.

2) If you DO NOT offer refunds, people can get them anyway. They can simply issue a chargeback and then, not only do you lose the $20 they paid, but you likely lose another $5-15 in chargeback fees.

Bottom line is, if they want a refund, they will get one. So you might as well make it easy and make it a selling point.

> They can simply issue a chargeback and then

As a merchant you have the right to refuse the chargeback. You will be required to offer proof that the service was rendered - and if it was within the limits of the law you will get your money back. (within the limits of whatever goofy laws exist in said country, state, postal code, etc...)

You can ( almost ) never prove an online transaction. Short of the buyer admitting they bought it and retracting the chargeback, you're just going to end up with a chargeback.

Record everything, every transaction - just keep in paper log book if you can't afford the software. And when you can afford the software make sure you pay someone to teach you how to use it properly otherwise you'll always be going back to your paper log to work out stuff (Heh, Jake knows what I mean)..

Many companies go bust because of poor accounting - don't be one of them.

This is all good stuff, thanks.

So basically you are required to keep a book of your transactions, or to use a bank account that records it. And then you gotta pay the tax in the appropriate manner.

Do you have to register as a business or have a tax ID or anything official like that? Or register your company name? Or a business address?

What about working from home, if your home becomes your office, isn't there some laws about that?

And websites, if you're paying someone to provide bandwidth you probably need to pay quite a bit to serve all the interested customers? like, you buy a business package that gives permission to sell products from the site?

Do both.

I did all that and it cost about £90 or something, + bought a domain or two, some webspace etc = extra costs + I hire a proper accountant for my year end accounts.

Yeah a GOOD law where I claim a portion of all my heat/light/phone/internet as company expenses and right them off against tax and pay them back to myself.

Re: refunds, yeah Research shows that you'll make MORE sales by offering a no quibble refund than by not having that "advertsing". It's simply not worth the hassle to "contest" stuff.

Gonna need a prety good monthly bandwidth depending on the traffic you expect (hope for). Also, I don't have to tell the people who are my web host that I'm selling stuff from there, but I may need to plug in a shopping engine to my site code soon - but that's fine and should be free if I link to big name engines who charge a fee per transaction.

To be honest, any business runs roughly the same way, I run a plastering business, MD Plastering Services (Anyone need a reskim :) ), it's only the product that's different at the end of the day, you offer software, I offer, well, plastering.



What Grey said



Visit your local tax office, because my business is in construction, I had to apply as a CIS (Construction Industry Sceme) card holder, also, I had to declare if I was a sub-contractor or a contractor, I'm the latter, which means I can hire people, though, I have to pay their taxes for them.

Not sure about IT, but I imagine it's along the same lines... you either work for someone programming as a sub-contractor and they pay your taxes, or you work for yourself, which means you have to declare your own... It's not that hard, once you visit the tax office, they send you the required information

EDIT: I also get £0.40 a mile back in tax, I roughly do 400 mile a week, wahey! :)

EDIT: And don't forget, you'll be eligible for 'new business' grants too of the goverment (If you qualify)



Same as Grey, you can even claim the VAT back from your bog roll if you want! :)



Don't just rely on the internet, get your product into as many publications as you can, PC Format review independent developer games, contact them, you never know. Even go so far as hiring yourself freelance in your local paper(s), you never know!

Dabz

PS There's also VAT, as in, being VAT registered, I'm not at the moment, though, I do remember Grey saying something about he is.

Quick run-down on being VAT registered Grey? ;)