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Kicktaxing: The Crazy Complexity of Paying Tax Correctly On Crowdfunding

Unknown Lamer posted about 8 months ago | from the irs-ruins-everything dept.

The Almighty Buck 128

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."

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Medium (-1)

Anonymous Coward | about 8 months ago | (#46271979)

What's with the constant stream of links to medium.com? Is there anything useful there, or are they more or less clickbait?

Re:Medium (1)

i kan reed (749298) | about 8 months ago | (#46271995)

They let people run multiuser blogs, with really terrible ajaxy UIs. So, clickbait is the natural use.

Re:Medium (0)

Anonymous Coward | about 8 months ago | (#46272059)

Thanks for the info.

Re:Medium (1)

ganjadude (952775) | about 8 months ago | (#46273629)

so... its geocities?

Re:Medium (5, Informative)

eggboard (315140) | about 8 months ago | (#46272061)

It's difficult to claim "clickbait" when there are no ads!

I wrote the article in this link, and edit a publication called The Magazine. Medium pays us to write new content and post archived material from our publication to their site while they learn about what people read. They're looking at a lot of data (which anyone who uses the site, even as a blog platform, can see in the stats page) to figure out whether people read entire articles, etc.

I wrote 4,000 words from months of dealing with tax and business issues related to Kickstarter. I didn't realize that would be considered *thrilling clickbait headlines*. Instead, I though Slashdot readers, among others, would be a likely audience working in and around crowdfunding, and might like to get some information before launching one about the tax and accounting side of things.

The "multiuser blog" is a collection of related articles, some of them run by publications like mine.

Context (2)

SuperKendall (25149) | about 8 months ago | (#46272113)

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.

Re:Context (3, Informative)

eggboard (315140) | about 8 months ago | (#46272199)

I completely understand that! But it's difficult to say "clickbait" if you haven't visited the site.

Medium is no panacea, and this is a period when they're spending money to figure stuff out before they plug in a revenue pipe (see public statements by Ev Williams). However, you're seeing a ton of links to Medium because it's got a great front-end for writing and publishing. I've been working with Web-based content-management systems (CMSes) and sadly wrote a few myself for nearly 18 years, since the first formal ones arose. And Medium is pretty fantastic for writers and publishers.

I think it's very good for readers, because it doesn't have cruft. It's words, no ads, photos/video well presented. So people have raced to write there if they don't want to use blogging software because it's just the story.

Yes, there are a lot of SEO marketing types writing stuff at Medium. But there's a lot of good work (not tooting my own horn as I'm about 0.001% of the content of Medium) that's there, too.

Re:Context (1)

Anonymous Coward | about 8 months ago | (#46272869)

It's words, no ads

The entire page itself is an advertisement trying to get people to sign up for a subscription to a different site.

For those who don't want to believe me, make sure you have your script and tracking cookie blockers active, then scroll down to the bottom.

I'm not even complaining about Medium (1)

SuperKendall (25149) | about 8 months ago | (#46272923)

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.

Re:Context (0)

Anonymous Coward | about 8 months ago | (#46272385)

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.

What ads? I don't even have an ad block installed, yet I see no ads on the link provided.

Re:Context (1)

ThatsMyNick (2004126) | about 8 months ago | (#46272759)

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.

Read the first line of the post you are responding to "It's difficult to claim "clickbait" when there are no ads!
"

ADD much? (1)

SuperKendall (25149) | about 8 months ago | (#46272897)

You may want to read the VERY NEXT FUCKING SENTENCE of my post.

Damn!

Re:ADD much? (1)

Anonymous Coward | about 8 months ago | (#46274537)

You may want to read Good Omens by Neil Gaiman and Terry Pratchett. It's pretty good.

Re:Medium (0)

Anonymous Coward | about 8 months ago | (#46272133)

As the creator of the Death Star Kickstarter project I was fairly confident I could re-negotiate my tax burden if it got funding. :D

Re:Medium (1)

Enry (630) | about 8 months ago | (#46272171)

I'll admit I first thought "well duh" as I have my own small business (nothing as large as most Kickstarter campaigns, but I've hired a CPA or two in my time). But the points you bring up are really important ones and can quickly derail a project if there's not enough advance planning. Along with all of the technical and logistical aspects of a successful campaign, there's also the financial ones.

Re:Medium (0)

OzPeter (195038) | about 8 months ago | (#46272185)

I wrote the article in this link, and edit a publication called The Magazine.

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.

Re:Medium (2)

eggboard (315140) | about 8 months ago | (#46272567)

If it's interesting and useful, and I submit it under my name, and it gets posted to the home page by people with full awareness, it seems like you're engaging in meta-moderation within a thread.

I don't post B.S. to Slashdot; I've been using it since it started (not under this ID at the very beginning). The moderators and other tools prevent useless stuff from rising to the top.

So.

Re:Medium (1)

Anonymous Coward | about 8 months ago | (#46272927)

For what it's worth, I thought it was a good article and very informative on a rather confusing topic. Yes, you link to some of your other work at the bottom *the horror!*, but it's well placed and non-intrusive. The article itself doesn't come across as trying to sell anything, merely informative. I think there's just a bunch of angry people out there that need to go rub one out real quick, they'll feel better.

Self Submission (1)

gd2shoe (747932) | about 8 months ago | (#46273665)

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.

Re:Medium (-1)

Anonymous Coward | about 8 months ago | (#46272353)

That website is disgusting and the text is ridiculously huge. I'm not reading that.

Text size (2)

gd2shoe (747932) | about 8 months ago | (#46273677)

That website is disgusting and the text is ridiculously huge. I'm not reading that.

Dude, "Ctrl -". How do you survive on the Internet?

Re:Medium (0)

Anonymous Coward | about 8 months ago | (#46272831)

It's difficult to claim "clickbait" when there are no ads!

No it's not. Ads are one reason for trying to generate clicks, but not the only reason.

Medium pays us to write new content and

aaaaand I'm guessing your compensation is at least partially based on clicks.

I wrote 4,000 words from months of dealing with tax and business issues related to Kickstarter.

That's nice, but you're not a lawyer or a tax attorney so my advice is to stop pretending like you are one before someone in a position of authority takes notice. The only legal advice you should be giving people is "Before you start trying to raise a pile of money you should go talk to a tax attorney to make sure you're in line with whatever laws you have to deal with in whatever country you're in".

Re:Medium (1)

eggboard (315140) | about 8 months ago | (#46273125)

"aaaaand I'm guessing your compensation is at least partially based on clicks.": Our compensation is based on producing new content that people want to read; clickbait doesn't get us anywhere, because it doesn't turn into people reading the articles, but clicking and leaving. It also earns us anger, which doesn't help foster regular readers. Also, a 4,000-word article about tax issues is usually *not* traditional clickbait under any reasonable definition...

"That's nice, but you're not a lawyer or a tax attorney so my advice is to stop pretending like you are one before someone in a position of authority takes notice."

I love how people who didn't read the article out themselves so clearly!

Re:Medium (1)

ganjadude (952775) | about 8 months ago | (#46273637)

Im actually interested as im looking into starting a campaign where i hope to get similar numbers. You been here long enough, dont let the trolls get to you. it seems right now everyone is skeptical about everything

Tax (0)

Anonymous Coward | about 8 months ago | (#46272011)

And spend.

Re:Tax (0)

Anonymous Coward | about 8 months ago | (#46272355)

Render unto Caesar the things that are Caesar's.

Re:Tax (2)

Livius (318358) | about 8 months ago | (#46273011)

Better than borrow and spend.

what about tesla coils? (-1)

Anonymous Coward | about 8 months ago | (#46272033)

homosexuals loooove tesla coils.

stay out of business until 2017 (-1)

Anonymous Coward | about 8 months ago | (#46272079)

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.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272155)

They're driving us out
We're closing up shop
Lonely is the mom and pop
Lonely is the mom and pop

Where are the protesters?
Where are the slogans and signs?
This will be a swift decline
This will be a swift decline

Re:stay out of business until 2017 (4, Insightful)

Ralph Wiggam (22354) | about 8 months ago | (#46272197)

Who do you think is responsible for setting tax policy and spending tax revenues? Hint- it's not Obama. Did you sleep through 9th grade Social Studies? Or have you not gotten to 9th grade yet?

Isn't it a weird coincidence that the Dow Jones Industrial Average has doubled since "anti-business" Obama took office?

Re:stay out of business until 2017 (1, Insightful)

Anonymous Coward | about 8 months ago | (#46272331)

Seeing as Wall Street gave a majority of their contributions to Obama (probably shock number one for you), he made sure to pay them back. That is why he had Bernake print around $3.5 Trillion (not a misprint) and dump it into Wall Street to make sure his donors were taken care of.
Also Solendra owners donated hundreds of thousands to his campaign.
He also invested in Brazil oil with 2 Billion because his buddy Soros was involved.
It goes on and on, but every time Obama has been given a pot of money you can directly and easily trace it going to campaign donors, he doesn't even try and hide it or pretend anymore because those who point it out are called racists now.

So, no it is not weird that the Dow doubled with Obama in charge, its actually expected and some of us have made out like bandits because of it. Enjoy paying taxes for the rest of your life for the money he gave us free and clear.

Re:stay out of business until 2017 (1, Insightful)

Ralph Wiggam (22354) | about 8 months ago | (#46272371)

That is why he had Bernake print around $3.5 Trillion (not a misprint) and dump it into Wall Street to make sure his donors were taken care of.

Oh, and as a small byproduct of that, it kept the US economy functioning.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272877)

> it kept the US economy functioning.

The not-so-subtle-but-definitely-biased implication is that it wouldn't function without it. This is a fairytale that you're perpetuating. We're just going to see a worse correction. It will still function, just not to most people's liking.

Re:stay out of business until 2017 (0)

Ralph Wiggam (22354) | about 8 months ago | (#46273029)

Have you seen Japan's GDP growth over the past 20 years? That would be an optimistic scenario for the US if we hadn't printed all of that money.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46273169)

Except for that whole "Lost Decade" [wikipedia.org] thing.

5th anniversary of stimilus (0)

Anonymous Coward | about 8 months ago | (#46272971)

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.

Re:5th anniversary of stimilus (0)

Ralph Wiggam (22354) | about 8 months ago | (#46273057)

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.

You got me. I would have gotten away with it if it wasn't for you meddling kids.

Re:5th anniversary of stimilus (1)

Bugamn (1769722) | about 8 months ago | (#46274583)

And what about their dog?

Re:5th anniversary of stimilus (1)

Vitriol+Angst (458300) | about 8 months ago | (#46273793)

Well, to be fair, if GOP Governors were not firing so many workers -- we'd have about 6% unemployment right now.

But yes, it seems like the Dems and Republicans have done a great job keeping down wages, job growth and killing the economy with Austerity. They are STILL printing lots of money -- it's just not going to the people at the bottom so it isn't spurring real growth that might offset the deficit.

If we had higher taxes at the top, that would force capital investment rather than profit taking -- and it would reduce the budget shortfall by PAYING FOR THINGS.

Re:5th anniversary of stimilus (2)

DrLang21 (900992) | about 8 months ago | (#46275031)

All the experts are saying it kept the economy down.

All of them? Every single one? When you make a blanket statement like that, you're either lieing or you are personally deciding who is an expert and who isn't. We would have been a lot better off if that cash had gone straight to the citizenry. I could have paid down all of my debt and be ready to actually spend serious money.

Re:stay out of business until 2017 (3, Insightful)

Vitriol+Angst (458300) | about 8 months ago | (#46273783)

I think we could debate the fact that the $3.5 Trillion could have done more for "My economy" had it been spent in public works projects and landed in my pocket.

Bernanke kept "his economy" going -- and that's stocks and record profits. That's 400 families who have more wealth than over 150 million Americans combined.

I'm not some moron who can't understand that we need some bank liquidity to keep paychecks going -- but it would be much better to let a few banks go bankrupt and to redistribute this wealth. It's too depressing to look at the lack of any increase in standard of living since the 70's for the vast majority. And rich people trading paper isn't going to create "demand".

Re:stay out of business until 2017 (3, Insightful)

DrLang21 (900992) | about 8 months ago | (#46275059)

I'm fairly certain that if you put that money into the hands of the average citizen, banks would find themselves with a lot of liquidity as people start dumping their debt.

Re:stay out of business until 2017 (3, Insightful)

LynnwoodRooster (966895) | about 8 months ago | (#46272379)

Isn't it a weird coincidence that the Dow Jones Industrial Average has doubled since "anti-business" Obama took office?

Not really, when you consider literally $4 trillion in new dollars (stimulus and QE 1/2/3) pumped into the economy, mainly via Wall Street. That $4 trillion has to go somewhere, and it ended up in the stock market.

Factor out this extra Governmental spending, and our GDP has barely budged over the last 5 years. The stock market is up because there's a lot more free/easy money to throw/invest, not because the GDP is roaring away.

Re:stay out of business until 2017 (-1, Offtopic)

Ralph Wiggam (22354) | about 8 months ago | (#46272449)

Yeah. So why was every Republican screaming in 2009 about how businesses hated Obama and how his Presidency was going to tank the stock market?

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272623)

Yeah. So why was every Democrat screaming in 2009 about how high stock values were a sign that the middle class was being shredded by big business?
 
Oh, and a direct answer to your question? ObamaCare and the Fed have been causing the stock market to grow. So basically your tax dollars are being injected into the market to keep it alive. This isn't a mystery to anyone paying attention. ObamaCare is a boon to corporations, again, this isn't a mystery to anyone who's been paying attention.

Re:stay out of business until 2017 (1)

Ralph Wiggam (22354) | about 8 months ago | (#46272813)

Yeah. So why was every Democrat screaming in 2009 about how high stock values were a sign that the middle class was being shredded by big business?

The DJIA dropped by 50% between 2007 and 2009. Please cite anyone complaining about "high stock values".

Re:stay out of business until 2017 (3, Insightful)

LynnwoodRooster (966895) | about 8 months ago | (#46273171)

Businesses - those that make stuff - aren't too happy. And they aren't hiring (in case you didn't notice that we've had millions of people drop out of the employment market - due to long-term unemployment). Now, the investors, the financial industry, they don't really care because the Fed's been pumping $85 billion a month into them - and that's made it easy to make money on the stock market. But in general, the business lobbies (outside of the financial and insurance industries - the big winners from the Obama financial moves) aren't happy.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272407)

Perhaps you should study economics instead. It doesn't matter where in the government tax policy originates, what matters to small business owners is customer demand. Small business owners are going out of business and staying out of business because customer demand is lacking so long as the customers lack confidence because of Obama. Without demand, supply decreases if the supplier isn't a idiot. Small business owners are waiting for Obama to go away because their customers aren't willing to spend until Obama goes away.

Re:stay out of business until 2017 (1)

Anonymous Coward | about 8 months ago | (#46272573)

lack confidence because of Obama

I lack confidence because I'm making about as much now, as I was a decade ago. Same for everyone else whose wages haven't kept up with inflation for the last 30 or so years. But hey, that's all Obama's fault retroactively back through Reagan's (blessed be his name) administration. Couldn't possibly be because the CEOs collectively dicked themselves in the ass to pad out their quarterly reports and award themselves giant bonuses while letting the question of "where will next year's customers come from?" be someone else's problem. I hear walmart is thinking of increasing "full time" from 37 hours a week (because Obamacare went back in time and stopped them from employing people a full 40 hours a week in the 80's amirite?)

Don't worry though, the welfare state will be along shortly to bail out capitalism yet again. How about that mincome, folks? Now CEOs won't have to pay workers anything at all, and they'll have plenty of money to spend on being customers!

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272607)

How about that mincome, folks? Now CEOs won't have to pay workers anything at all, and they'll have plenty of money to spend on being customers!

Fine if the mincome comes out of the CEOs pockets via taxes, the CEOs can pretend they're paying the workers nothing at all, while living wages are being paid indirectly.

Re:stay out of business until 2017 (2)

TrollstonButterbeans (2914995) | about 8 months ago | (#46272579)

"Small business owners are waiting for Obama to go away because their customers aren't willing to spend until Obama goes away."

Automation (sometimes via robots) and new technologies and labor strategies are altering the employment landscape.

This is bigger than any single person, and it will get worse. McDonald's, for example, is pursuing automation strategies.

Automation and global cheap labor are the new realities --- and with this comes institutional unemployment (fixed unemployment that is difficult or virtually impossible to eliminate) in the lower end of the employment sector.

Unemployment of those with college degrees is 3% in the USA. Even under your idea that Obama is a job-killer --- maybe / maybe not ---- the sheer job loss in the United States in lower end jobs is a bit too enormous to be attributed alone to one person, especially when many other countries have faced the same.

Re:stay out of business until 2017 (1)

CanadianMacFan (1900244) | about 8 months ago | (#46272787)

Automation and global cheap labour have existed for centuries. The pace of change, it's scope, and the impact of communication and shipping technologies are greater than before.

Re:stay out of business until 2017 (2)

TrollstonButterbeans (2914995) | about 8 months ago | (#46272893)

"Automation and global cheap labour have existed for centuries. The pace of change, it's scope, and the impact of communication and shipping technologies are greater than before."

Disagreeing with what I said by agreeing with it too? Different. But it's cool. I can roll with that.

But the European Union would like assess a VAT on your post --- you know, a value added tax.

And those pesky Europeans are having trouble assessing a tax, because you didn't really add much "value".

To plead your case, you must fill out this form: http://www.revenue.ie/en/tax/v... [revenue.ie] and one of the taxing authorities will get in touch with you and try to sort this all out with you in person.

Re:stay out of business until 2017 (1)

DrLang21 (900992) | about 8 months ago | (#46275105)

McDonald's, for example, is pursuing automation strategies.

McDonald's is way behind on this front. Burger King has been using an automated broiler for decades, eliminating the grill cook completely.

Re:stay out of business until 2017 (1)

Ralph Wiggam (22354) | about 8 months ago | (#46272595)

Small business owners are waiting for Obama to go away because their customers aren't willing to spend until Obama goes away.

So how has the GDP been growing steadily since Obama took office?

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46273859)

So how has the GDP been growing steadily since Obama took office?

Oh yes, quite impressive [forbes.com] . Obama likes to say he came in when the economy was "in freefall" from the Bush era. Okay, let's take that as true. Bush came into office at the peak of a huge boom and GDP growth averaged only 1.7% per year. Pretty bad, huh? Well, he was starting from a pretty high bar so it was hard to improve on that. But hey since Bush did such a shitty job from an already tougher to improve starting point it should be easy for Obama, starting from rock bottom, to move things upwards a bit. Hmm, what's that? Growth under Obama has only averaged 1.6%? What's astonishing is that government spending is designed to crank up GDP, yet despite the fact that the already high spending rate under Bush has been jacked up under Obama to rates not seen since the 90's the economy is still tanking faster than the Obama can spend.

How embarrassing for you. GDP growth probably isn't a number you want to bring up. I mean, unless you include the words "economic failure" in there somewhere. I sure as hell didn't vote for Bush, but even I miss him at this point. Fuck, I miss Jimmy Carter at this point. It's a fucking disaster.

Re:stay out of business until 2017 (0)

The Cat (19816) | about 8 months ago | (#46272599)

Only if you also consider the $3 billion a day being pumped into Wall Street a coincidence.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46273813)

Isn't it a weird coincidence that the Dow Jones Industrial Average has doubled since "anti-business" Obama took office?

Pretty much, yes [nytimes.com] .

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272209)

Obama's days are numbered. He will be replaced in 2017.

Way to go out on a limb there, monkeyboy.

Don't allow him any revenue.

Please feel free to hold your breath and turn blue for three more years. I'm quite sure that the next career politician to take the office will be so very VERY different.

Re:stay out of business until 2017 (0)

Anonymous Coward | about 8 months ago | (#46272459)

Please feel free to hold your breath and turn blue for three more years.

OK, will do. I'm sure all those empty storefronts will remain empty until three years from now when businesses will be busy opening again.

Re:stay out of business until 2017 (1)

DrLang21 (900992) | about 8 months ago | (#46275153)

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.

What kind of idiotic business would just give up until 2017? How the hell am I supposed to eat for the next 3 years? Oh, I suppose that $900 a month should be enough to cover my rent, school loans, utilities, and food. Why I wouldn't even need to give up my caviar!

tl;dr - it's just like a business (1)

Overzeetop (214511) | about 8 months ago | (#46272153)

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.

Re:tl;dr - it's just like a business (-1)

Anonymous Coward | about 8 months ago | (#46272217)

Why the fuck would anyone buy lemonade from somebody's driveway? That shit might be poison. I buy my lemonade at the gas station where the poisonous fuel and the refreshing beverages are clearly separated. Sometimes I walk by a lemonade stand after I've been to the gas station, and I'm like, damn, even if I were still thirsty I wouldn't buy that shit.

Re:tl;dr - it's just like a business (3, Informative)

TheGavster (774657) | about 8 months ago | (#46272471)

I read the article, and he brings up some interesting points that even a business owner might find interesting about crowdfunding. Because your revenues are exponentially larger for a single quarter, your tax situation gets all screwed up and you have to be very careful on your estimated taxes. He also brings up some timing advice: since businesses are allowed to deduct the costs of doing business, you don't want kickstarter to cut your check on December 31st.

It's really the opposite of most business tax situations. Rather than paying for material, wages, and capital expenditure and then waiting for invoices to come back, you're given a huge amount of revenue and then have to try and get it off the books as fast as possible.

Re:tl;dr - it's just like a business (1, Informative)

Overzeetop (214511) | about 8 months ago | (#46272805)

I read the article as well. I also happen to run a business I started ten years ago from scratch. I'm not a business person, and even I knew that taxes mattered. This really is business 101. There are all types of businesses, and 2 hours with an accountant prior to starting any business, much less one in which you know is going to see 5-6 figures of cash flow in a very short period of time, is the first thing you should do. Mine gave me insight into basically everything in the article.

Yeah, I was an asshole about it in my gp post. I'm an asshole about a lot of things - you need look no further than my sig for proof. ;-)

Re:tl;dr - it's just like a business (3, Informative)

eggboard (315140) | about 8 months ago | (#46273817)

I spent many hours and many emails with a good accountant, and he advised me not to launch a Kickstarter late in the year! However, there was no better time, and I had to work around the cash-flow issue, as I describe.

The state taxation issue was my fault. I had, in fact, budgeted to spend *more* on tax than I actually owed. So I wouldn't have come up short. Based on my communication with the state, I expect that I would pay different rates on parts of the Kickstarter, and potentially pay up to about 5% to the state in tax. In the actual event, it was about 1.5%.

However, I should have better understand the issue of destination addresses so that I had properly collected that information from everyone. That's something that I've now heard from many other crowdfunding projects about, too.

Further, at least Washington State requires you pay in-state retail business and occupation tax plus sales tax on all sales for which you cannot account for the destination. That can be a huge tax bill.

Re:tl;dr - it's just like a business (1)

eggboard (315140) | about 8 months ago | (#46273089)

Thanks, TheGavster! For me, I had sufficient cash flow and overall income from the main business relative to the size of the Kickstarter that we could have weathered it if we hadn't had a perfect alignment as we did.

I don't mean to sound totally hapless. I had put a reserve of cash away for taxes and estimated *too high* for the state taxes as it turned out. But I didn't plan as thoroughly as I should have, and I have seen this bite a lot of other people I know, too.

Re:tl;dr - it's just like a business (5, Funny)

The Cat (19816) | about 8 months ago | (#46272685)

Memorandum to the guy who wrote the original story:

Almost everyone on Slashdot in 2014 is a raging, gangrene-infected, pus-spewing asshole. I don't think there's ever been a more sour, mouth-running bunch of twaddle-shoveling fucks in the same place in human history.

You posted a good article with some good information for reasonable people who are doing something productive. The people here are only interested in their bong, porn, Xbox and wandering through their mom's kitchen occasionally to grab a handful of potato salad and wipe their ass on the dishtowel.

Keep writing. The people around here would shit on an orphan's birthday cake.

Re:tl;dr - it's just like a business (3, Insightful)

eggboard (315140) | about 8 months ago | (#46273135)

Thanks, much! Really, I wrote the article in part as a public service, not to be full of myself, because so many people I know have these questions. I have some answers, lots of questions, and lots of places to point people for planning. The commenters here can be awful at times (some are great, thanks!), but they're dwarfed by the number of people who are reading the article.

Re:tl;dr - it's just like a business (5, Insightful)

pla (258480) | about 8 months ago | (#46272891)

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.

Bullshit.

A lot of the folks running Kickstarters have "business plans" that amount to "distribute sweaters to homeless kittens". Should they realize that has tax implications? Well, perhaps, insofar as you can't fart without the IRS taking a sniff. But to blame people who seriously have a business plan of clothing cats, for not understanding cash-vs-accrual accounting? Seriously, go fuck yourself with your framed MBA, dude.


We wonder what has gone "wrong" with this country? TFA gives a pretty damned good example. Have a good idea? Have adequate funding? Ready to ship and create one of those new Small Businesses the talking heads always praise? Oops, FOAD friend! You forgot about your quarterly withholding on money that no sane entity would consider anything but a production expense - Silly bear, considering our government "sane"! What will you think of next?


For anyone seriously wanting to know the "right" answer to this issue - Move to one of America's few remaining unorganized territories (Maine, Florida, and Alaska have a ton of them); that relieves of you 99% of the "bullshit" burden, which rests solely with your most local taxing authority (the city/town/county), and reduces your nightmare to just the state and federal levels. Most states just want a cut of your AGI, so if you have no profit, nothing to report. The feds just want a schedule C and SE, and couldn't care less how else you officially organize your activities.

Now, if you happen to live in a hellhole like NYC where everyone from the city through your Block Captain to your Landlord to your old roommate from 1976 get to fuck you with taxes - Move, or abandon your dream. Seriously.

Re:tl;dr - it's just like a business (1)

eggboard (315140) | about 8 months ago | (#46273081)

It's more like the lottery.

That's what government's for... (2)

Spud Stud (739387) | about 8 months ago | (#46272265)

...to get in a man's way.

Re:That's what government's for... (1)

giorgist (1208992) | about 8 months ago | (#46272617)

Get off my road then, build your own if you want to get around

Deferred Revenue? (1)

Lawrence_Bird (67278) | about 8 months ago | (#46272307)

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.

Re:Deferred Revenue? (2)

eggboard (315140) | about 8 months ago | (#46273101)

I researched this and discussed it with my accountant. My accountant said that switching cash-basis business to accrual for the sole purpose of deferring taxes for something that isn't part of its routine business could be met with scrutiny and penalties —and be disallowed.

And the IRS rules make it clear that you can't simply align revenue and expenses. It has a number of examples in which it's clear that in a Kickstarter, the revenue couldn't all be deferred, although the expenses might be allowed to be taken in 2013 if contracts were signed and other tests made.

Re:Deferred Revenue? (1)

Lawrence_Bird (67278) | about 8 months ago | (#46275349)

I would argue you should have started a new corp just for the kickstarter campaign, the cost is pretty low even if you have someone do the paperwork for you. I think the more important point to be made is planning on many levels is essential.

What country are we talking about? (1)

clockwise_music (594832) | about 8 months ago | (#46272313)

...Paying Tax Correctly for USA citizens on Crowdfunding

Fixed that for ya. Remember guys, the internet is WORLDWIDE.

Re:What country are we talking about? (1)

LynnwoodRooster (966895) | about 8 months ago | (#46272391)

Go ahead and try to do business in the US without paying US taxes. Heck, try to be a US-based business or citizen and do business overseas. Either way - the IRS will get it's chunk of flesh from you. Even when no other developed country would consider it proper, Uncle Sam will take his cut.

Re:What country are we talking about? (1)

PPH (736903) | about 8 months ago | (#46272725)

Microsoft, Apple, Google, IBM, Citigroup, Exxon Mobil, ....

"Only the little people pay taxes." - L. Helmsley

Re:What country are we talking about? (2)

LynnwoodRooster (966895) | about 8 months ago | (#46273259)

They all pay US income taxes. In 2012:

Microsoft: $2.4 billion [marketwatch.com]

Apple: $8.4 billion [marketwatch.com]

Google: $2.5 billion [marketwatch.com]

IBM: $1.5 billion [marketwatch.com]

CItigroup: $229 million [marketwatch.com]

ExxonMobil: $2.5 billion [marketwatch.com]

Seems to me that they all pay income taxes - and quite a bit of it. It's a common fallacy that big companies don't pay taxes. Just take a look at the facts for yourself and find out that they do, in fact, pay income taxes - and a lot of them at that.

Re:What country are we talking about? (2)

CastrTroy (595695) | about 8 months ago | (#46274469)

But looking at Wikipedia, Microsoft had revenues of 77 billion, so only 3% of the money they made went to taxes. I wish it worked that way for me. Oh, they're only taxed on money they don't spend. Their net income was 21.86 billion, again, only paying 10%. Quite a low tax rate if you ask me. not sure why you mentioned Citigroup, with a net income of 13.9 billion, they only paid 1.6% in taxes on net income. All my numbers are from Wikipedia, using your tax numbers.

Re:What country are we talking about? (0)

Anonymous Coward | about 8 months ago | (#46272425)

The Internet belongs to America and eagerly awaits our News.

Re:What country are we talking about? (1)

j-beda (85386) | about 8 months ago | (#46272745)

...Paying Tax Correctly for USA citizens on Crowdfunding

Fixed that for ya. Remember guys, the internet is WORLDWIDE.

The USA manages to stick its tax fingers into a whole lot more than just USA citizens. I suspect that if you use any USA based service (such as Kickstarter or any number of payment systems) you may run afoul of USA tax requirements. Hopefully you won't get hit with a net bill (as there are tax agreements between the USA and a lot of other countries that mostly prevent double taxation), but you can still be hit with non-reporting penalties and the like.

It is not pretty, and it is not limited to USA citizens.

Yoju FAIL 1t (-1)

Anonymous Coward | about 8 months ago | (#46272339)

Survey which ot4ers what to

Business with non-calendar tax year? (0)

Anonymous Coward | about 8 months ago | (#46272433)

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?

Re:Business with non-calendar tax year? (3, Informative)

TheGavster (774657) | about 8 months ago | (#46272485)

He mentions that you can set up a fiscal year which deviates from the calendar year. He was unable to do this because he was already operating under an LLC and changing your fiscal year after you've set it is non-trivial.

Too complex (3, Insightful)

asmkm22 (1902712) | about 8 months ago | (#46272649)

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.

Re:Too complex (2)

ThorGod (456163) | about 8 months ago | (#46272773)

It's definitely costly to business, and that's one added expense no one (government nor business nor employees) really benefits from having.

Re:Too complex (0)

Anonymous Coward | about 8 months ago | (#46273693)

Accountants, lawyers, and tax professionals (as well as IRS agents) certainly benefit from a complicated tax code.

http://watchdog.org/92975/irs-leviathan-expands-to-enforce-obamacare/

Re:Too complex (2)

CodeBuster (516420) | about 8 months ago | (#46273749)

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

The US Federal tax code now tops 80,000 pages or about 8+ times the length of War and Peace. If you don't think that's nuts then you're probably either a tax attorney or a Washington lobbyist. The politicians like to talk about good paying jobs, but they're killing the very small businesses that might create those jobs with over taxation and regulation. There was a time in the United States when people with a grade school education could start a business and be successful without having to worry about the government shutting them down. Now, you can't turn around without some pissant government bureaucrat standing on your shoes or kicking you in the ass while taking your money for the "privilege" of being allowed to operate.

Re:Too complex (2, Insightful)

Anonymous Coward | about 8 months ago | (#46274023)

Thats because its become a system of kickbacks. Congress doesn't want to raise the corporate tax, so they create newer, more specific ones that hit everyone through sheer quantity. But heres the kicker, Congress also knows that corporations (and its largest owners) are their biggest donors, so they give huge subsidies and write-offs to corporations... that can afford accountants/lawyers smart/able/with enough time to find, understand and file all the necessary paperwork before the deadlines.

Re:Too complex (0)

Anonymous Coward | about 8 months ago | (#46274545)

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 forget that CPAs, book-keepers, and tax-preparers are mostly small businesses. Make the law complicated enough and you create an industry around complying with the law. Granted, this is dangerously close to the Broken Window Fallacy, but bureaucrats buy cheeseburgers the same as the rest of us.

Cash vs accrual accounting (4, Interesting)

jonsmirl (114798) | about 8 months ago | (#46273069)

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... [investopedia.com]

Re:Cash vs accrual accounting (3, Informative)

eggboard (315140) | about 8 months ago | (#46273109)

Absolutely correct in one regard, but some very large business also run on cash if don't make stuff that's inventoried.

I did research it (and mention it in the article) and discuss it with my accountant. Because the publication doesn't really qualify for accrual accounting, it would have invited scrutiny (or worse) had I switched to accrual to get advantageous accounting rules for a specific project.

Why is no one talking about this being a donation (0)

Anonymous Coward | about 8 months ago | (#46273335)

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...

Re:Why is no one talking about this being a donati (1)

Aristos Mazer (181252) | about 8 months ago | (#46273731)

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.

Re:Why is no one talking about this being a donati (1)

TheLink (130905) | about 8 months ago | (#46274275)

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?

1099 (0)

Anonymous Coward | about 8 months ago | (#46273873)

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.

Long story short (1)

loufoque (1400831) | about 8 months ago | (#46274091)

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.

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