Slashdot Mirror
Kicktaxing: The Crazy Complexity of Paying Tax Correctly On Crowdfunding
eggboard writes "I thought I knew what I was doing when I budgeted for a Kickstarter campaign. I spent weeks sorting out details, set a number ($48,000) that included expenses, Kickstarter fees, and a margin of error. In the end, we raised over $56,000. But my tax planning nearly put a crimp in cash flow, and could have been real problem. It all worked out, but I've written a detailed guide for people for before and after a campaign to avoid my mistakes."
What's with the constant stream of links to medium.com? Is there anything useful there, or are they more or less clickbait?
And spend.
homosexuals loooove tesla coils.
Obama has ruined the country. Just don't even bother trying to do any business until after 2017 at the earliest. You don't need to pay any taxes to the corrupt Obama regime if you don't make any money. Obama's days are numbered. He will be replaced in 2017. Don't allow him any revenue.
You can write the most insightful/thrilling/useful article ever in the history of mankind, but if you place it on a site where people get a lot of ads they will still accuse you of treachery.
As you say it's not so in this case, but it gives the appearance of being so just because Medium.com has started popping up all over like mushrooms after a rainstorm - so it seems like yet another linkbait site just from the context of where the links to medium are all found, around links to all the sites people have learned to despise.
I myself will not click a link anymore if it goes to businessinsider or the same sort of place, no matter how good the subject may sound.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
WTF - you know, every other small business person thinks of this shit BEFORE they start. It's not hard, really. Quit pretending you're running a lemonade stand in your parents driveway.
Is it just my observation, or are there way too many stupid people in the world?
...to get in a man's way.
If you use accrual basis you can then (in theory) report the kickstarter funds as deferred revenues and also defer the tax until goods/services are delivered. Only a cash based business would need to pay tax prior.
...Paying Tax Correctly for USA citizens on Crowdfunding
Fixed that for ya. Remember guys, the internet is WORLDWIDE.
Survey which ot4ers what to
Why not set up a proper business and then run a non-calendar taxable year? Wouldn't that solve the end of year tax problem?
As a small business owner, I can say that the US tax system really needs to be simplified. I started my business 3 years ago, and had to learn the accounting and tax side myself (I couldn't afford a CPA or book keeper at the time). For a nation that claims to be built on small businesses, it sure is crazy trying to figure out what's needed to run start or run one.
You may want to read the VERY NEXT FUCKING SENTENCE of my post.
Damn!
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I didn't mean to come off complaining about Medium - I don't mind reading it.
I just wanted to point out why people might think it was click bait, not discourage you or anyone else from using it.
I think it's very good for readers, because it doesn't have cruft. It's words, no ads, photos/video well presented.
Generally I agree but I have two problems with it:
1) Too large/spread out, I prefer denser text. Perhaps I can use the browser font settings to correct for that, hmm...
2) The exact same format of giant image followed by text gets boring after just two articles, then I have a lot of trouble bothering to finish reading anything there for a while.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Today is his 5th anniversy of his $850 Billion to "save the economy". All the experts are saying it kept the economy down. Net job gain from that stimilus to today is -9 Million jobs (Yes that is negative). The GOP has been hammering him all day about it and he or none of his people want to talk about the issue.
So I'm guessing you are a shill that approves of NSA spying, drone strikes, and keeping Gitmo open along with all the other things Obama does, since you are coming here and making up stories to try and cover for the most corrupt presdent the US has ever had.
He got into these problems with revenue matching because he is running his business on cash basis accounting. In general only very small businesses can be run on cash basis accounting almost all manufacturing oriented businesses use accrual accounting. With accrual accounting you would book the Kickstarter money as a customer deposit and then recognize it as income when the product ships.
http://www.investopedia.com/te...
You can actually fail at funding with kickstarter it has happened in the past. It's basically a donation system. Do donations get taxed? NO! Niether should these...
The moderators and other tools prevent useless stuff from rising to the top.
Sometimes.
(Sorry, couldn't help myself)
And regardless of your motives, the fact that you both wrote and submitted the article can open you up to accusations of self-aggrandizement, of which the Slashthink is very very suspicious.
If this is a warning about what others might think, meant as a courtesy, then it's not well worded. If it's a request not to self-submit, then it's a worthless statement. Slashdot is about conversation. If the topic is worthy of conversation among nerds, geeks, techies, etc, then somebody needs to submit it. It doesn't do any good to tell people that they ought to be bashful.
I, for one, welcome your submission.
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
That website is disgusting and the text is ridiculously huge. I'm not reading that.
Dude, "Ctrl -". How do you survive on the Internet?
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
The article does talk about gifts not being taxable. The problem arises when you start giving rewards in exchange for those gifts. If you can run a Kickstarter in which people give you money and you don't give them anything back, then you're fine.
So, is the point of this whole diatribe to let people know that most of the crowd funding sites except maybe Indiegogo issue a 1099? Why would any money received ever be taxable, unless there's a 1099? While this question might seem trivial or just stupid, I ask this because I attempted to setup a crowd funding topic, and was rebuffed by at least two sites because they wanted a verified Paypal account into which the CONTRIBUTORS would be depositing monies, which I completely couldn't understand because I thought the point of the CF sites was to be the recipient/aggregator of the funds?!?!?! Why on earth would I want to have Paypal skim off their 3% for absolutely no work. I then lose 10% to the CF folks, and another 3% to Paypal, which would then be yet another entity in the line of fire for issuing a 1099.
Guy ended up with more revenue than he spent, so he had to pay taxes.
He didn't think to consult an accountant which would have been able to make the balance sheet negative without any issue.
What if you take the money and assuming you succeed you make the resulting product available to the whole world for the same price (could be zero or more) - donors don't get any preferential treatment.
You may get a lower amount of donations but how much less tax would you pay and how much less work would that involve?
If a company has revenues of $10 million and also has expenses of $10 million (let's say it all went to payroll), they have zero profit. Why in the world would they have to pay taxes on revenue? People like you make it impossible to have intelligent discussions about taxation issues.
Stop paying taxes until the US government's abuses of power are reined in.
Protest in the only way that will actually affect them.
Starve the beast!
Good stuff, don't listen to the losers ;)
Just a random thought
Has anyone done a Kickstarter in Idaho? I wonder how you would get around the tax issues there.
"(One more tip: my accountant says that Washington State requires that I inform customers that sales tax will either be included or added to purchases. Kickstarter doesn’t let you automatically surcharge sales tax, which varies by delivery ZIP code, in any case. I chose to include it. Other states may also have this requirement.)"
You are not allowed to include the tax in ID! Retailers can't do 'we pay the sales tax" sales there either.
I had to kludge our accounting system to deal with ID and WA sales tax (plus lack of OR) at the same time in the medical field which has even more exemptions than normal. Some items are taxed depending on WHO (vet vs dr) you sell it to as well as where! Half the items are only taxed in one state but not the SAME state. Ended up with a 1000 line tax code file :( On top of that one of our big customers was the state of Wa who determines what tax to pay (not Olympia nor our rate!?!) on which items no matter what you bill. We survived an audit with a zero bill :)
oops, more than i planned. Was just supposed to be an attaboy ;)
There's less than 1.0% chance of getting audited. So just get creative with your return.
For many, self-employment tax is another really good reason to try to steady things and avoid "bouncing revenue", if there's the chance that you could end up taking a loss the next year. Big profit one year? Pay big tax! Loss next year? Sorry, bud, no refund!
I confess to getting first-hand experience with this, as I'm accounting on an accrual basis, and just paid taxes for a rather large amount of work done that may eventually have to be written off as bad debt, or at the least is going to cost me to collect, since the guys behind the business have disappeared, and I'll likely go into the red next year. Paying >15% tax on money I haven't actually got...ouch!