I'm currently working on a number of projects which are nearig completion, and looking to publish through digital distribution(through third parties, steam-like platforms)
Does anyone know about Australian law and tax law in regards to this. Do I need to register as a sole trader,or is it sufficient to declare any money made as private income on my tax return, due to it effectively being royalties.
What if multiple people are involved? Does partnership need to be formed, or can money be paid out to each person(with a clear paper trail of course) for then to declare privately.
All of these are assuming I trade only under my own name, as I believe you need to form a sole trader/partnership arrangement in order to trade under a different name.
Thanks for any answers you can provide.
This is something I have been thinking about a lately, when my project reaches completion (a little while yet), what do I need to do?
As a one man band, I was thinking sole trader would be the way to go. Any insight from people already doing this would be great.
I'm no accountant or anything, but heres how I see things from my own experience:
1. Operating as a sole trader ie registering an ABN is easy and free, and you can then get tax deductions for equipment used and what not, and I guess there would be other tax benefits too. I'm not sure whether or not you would HAVE to register an ABN, someone else could answer that better than me, but it can't hurt to do it anyway.
2. Once you have registered an ABN (free) you can register a business name (not free) and operate under that name.
3. If you have other people earning money from it as well then I'm pretty sure you would need to be a registered business, then you can either do a partnership agreement, or have the business in your name and have the other people listed as employees using PAYG or by subcontracting them in which case they would all need separate ABN's as well.
Thats all I know, and like I said there are definitely more qualified people out there to answer your questions, but I just thought I'd share anyway. By the way as a disclaimer, I'm not an accountant/lawyer so just use this as advice :P You can find out more at business.gov.au and other resources that the government have for this type of thing
Hmm I'm not sure, in my case I had an ABN before I registered my business name. I think you can do it either way, however if you register the business name after the ABN you have to update your details with the Australian Business Register to include the registered business name as a trading name for your ABN. That makes it handy because you can register an ABN and get to work but still have time to think about what name you want to use for your business.
How you structure your company depends on what your future plans are. Fact is the minute you start earning money from your efforts the ATO will take an interest in you, especially in how you're reporting those earnings. Also, speaking from experience, the tax office does monitor income from overseas sources.
As already mentioned there are a number of options available to you, setting up as a sole trader being the easiest to manage and report on. There are quite a few benefits to setting up a company, including the ability to claim deductions on your equipment - you can even claim on games that you've bought - but the downside is the required reporting. It's not difficult, mostly time-consuming.
Every state has a department of small business that can help you to get started and plenty of literature on running a business. I'd definitely recommend you head in to one of the offices and have a chat.
It gets slightly more complicated if you have bigger plans and you, for example, want to take advantage of government initiatives to support your business. Victoria and New South Wales have support programs - I'm working with the Queensland govt on a new initiative for devs - but they are typically only open to companies and not sole traders.
If you'd like to talk through the options a little more feel free to call me. Happy to help where I can.
CEO, Game Developers's Association of Australia
T: 03 9008 5978
Another interesting thing to know about registering a company is that a company name is more secure than a business name. If you register a business name in your state, someone could register a company with the same name, which would be nation wide, and I'm pretty sure legally they are completely allowed to. Registering a company is a lot bigger deal though I think, so like Tony said it all depends on your plans for the future. I just think its great that we have departments of small business, and the GDAA to help assist budding developers and business people to get started in this beautiful country of ours.
Anthony has informed me that he's written a blog post about this very topic which will be of interest to one man bands to medium sized start-ups like Rockethands. Highly informative stuff and well worth a read!
All good advice.
Even as an individual, once you register an ABN you'll still have to submit BAS statements to the ATO (they will be sent out to you).
If your business arrangements are quite simple (sounds like it is at the moment), it's not THAT much more reporting to have a pty ltd company registered - in fact it may work out to be virtually the same. As mentioned, the advantages of this is you become eligible for government grants and programs, as well as tax rebates (all of which can potentially be hugely beneficial for start-ups). There will be an initial cost to registering the company, though - unless you want to do all the paperwork and filing yourself.
The key thing in all of this, though, is the arrangements you have with the people you are going to pay, and the nature of those relationships. If you get audited, or there is a dispute, it's all going to come down to the language in your agreements with them. That doesn't mean you need to spend a fortune on legals, but make sure the agreement clearly defines their arrangement with you or your company. Sounds like you intend to revenue share from a project, and that is probably simplest, as you will not have to worry about PAYG or super. Sometimes we forget that these agreements are as much to protect us from the ATO as they other people/companies.
Good luck with it!
No Business Name required for an ABN.
It's free to sign up.
I'd recommend setting up a company myself.
It gives you some legal protections especially if more than one person involved.
I did all the paperwork myself, basically the form is actually pretty simple, the only complex bit is the shares. Just remember you want ORD shared (ordinary). Basically fill in the form on the ASIC website, then go to the ASIC office and pay $400 and they'll give you the company registration on the spot.
Then just register the company with the ATO for an ABN.
All that will happen without the business name, is the sole trader will be registered under your own name. When you get the business name with the business name registration for the state, the ATO in the Australian Business Registrar will just associate that business name with the sole trader. You can run as a sole trader if you trade under your own name without having to pay an fee.
In terms of registering your own company, before the changes to the corporation act 2001, it was almost mandatory you get a company started with a accountant/legal firm due to the fact the company needed an document that documented the procedures that the company followed for changing office holders and things like that. The corporations act added a set of guidelines in law http://www.asic.gov.au/asic/asic.nsf/byheadline/Replaceable+rules+outli…
You also most likely want to register as a Pty Ltd company, meaning that its owned by the owners (not the public) and is limited by the number of shares.
The share ownership governs who owns what. For example a 100 shares at $1 each, you could assign 50 to each owner if you had 2 owners. The number of shares is really arbitrary in terms of its just a decision how you want to structure your company.
Useful website about company and registrations http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Starting%20a%20company%…