Posts by collis

1614 posts
  • Has been part of the Envato Community for over 8 years
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collis Envato team says

Hi guys,

Thanks for all the questions. I’m going to start working on a follow-up post which is a little broader than this current US Author W-9 announcement. It will talk more about the model and the approach we take on a variety of related issues that people have been asking about – ranging from tax information questions to the relationship between author and buyer. It’ll be up towards the end of October.

In the meantime, a little more clarity on my post from last night. Our terms and conditions that users agree to when using the site, have always described Envato as facilitating a platform. You can go back in time and read them via the internet archive. However we had a variety of language on the site that made this not so clear – in particular the word ‘commission’ which we used at times to describe everything from author earnings to affiliate fees to Envato’s fee. Moreover the financial tools we’ve had on site, could be a lot better and haven’t in all cases reflected correctly the transaction flow and our terms and conditions.

Again, this model of author-buyer transaction has always been in our terms and has always been the way the marketplaces operated. Our audited financial reports follow this structure and financial flow.

We’re working hard to give authors better tools for the future. This first release (W-9’s and 1099’s commencing Jan 1, 2015) is the first step in this direction. And as I’ve mentioned earlier, I think the next release around statements and documentation will help a lot.

I understand authors have lots of concerns. We will continue to support authors as we have in the past, where a specific situation has arisen, by providing remittance advice and other documentation for their earnings and income. Where and when other taxes might apply, we’ll be working to give authors notice and the tools they need to charge them.

I know a few people have asked about 1099’s from PayPal. Most online payment providers issue these, I believe Skrill does as well for example. As always it’s a good idea to talk to your tax advisor about how your online income is attributed.

Overall, I’d like to say that I and Envato are committed to working through the many author situations, with our community values in mind. It’s a very complex project, made more complex by how Envato started, the global nature of the marketplace and how we’ve grown over the years.

On the broader question of our business model and related issues like VAT, I’ll leave it at this forum post, until I put together a bigger blog post. If you have questions about the W-9 form and US Author information however, please continue to ask away in this thread.

I know this post doesn’t answer all of your questions and sorry for any concerns still unanswered, but we’re aiming to get better details to you in the future, starting with my next post later this month.

1614 posts
  • Has been part of the Envato Community for over 8 years
  • Has referred 10+ members
  • Located in Australia
  • Has sold $40,000+ on Envato Market
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collis Envato team says

Hey all, it’s closing in on the middle of the night over here in Australia, so I’m going to sign off for the night. I don’t have the all-night stamina that I once had for these things!! :-/

I’ll be back in the morning to answer whatever questions I can!

1614 posts
  • Has been part of the Envato Community for over 8 years
  • Has referred 10+ members
  • Located in Australia
  • Has sold $40,000+ on Envato Market
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collis Envato team says

Hi guys,

I feel like there’s some misunderstanding that we’ve changed the core model behind these marketplaces. That’s not correct. To be clear, our business model has always been this way, it seems it may not have been clear enough, unfortunately. That is something we’re working to change in a variety of ways, including updating language so its easier to understand, and product releases to improve how we do information reporting.

For clarity though, there’s no upside or change for Envato itself as our financials filed here in Australia have always followed this structure.

We’re working to make things clearer and to provide better tools for authors. As we do, I’ll be able to provide more information for specific groups of authors for their situations. Our next set of releases is around statements and documentation, which I think will help a lot!

I’m sorry there’s been confusion. And we are working hard on this.

1614 posts
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collis Envato team says



With the new fee setup, our author fee is 12.5% and this is currently represented in the statement as follows:
"Date","Order ID","Type","Detail","Item ID","Amount","Site" 
"2014-10-08 18:12:21 +1100","","Sale"," item name ","2621629","44.80","CodeCanyon"
So now we would report our total revenue/turnover as $51.20 44.8/(1-12.5%) and our total expenses as $6.40

Spot on!

What’s missing from the statement is the gross number (which you’ve extrapolated backwards to get). It’s a bit complicated to explain, but that set of changes on the statement touches a bunch of bigger things at the back. So we’re busy working up the revised Statement page which will list it as well. Shouldn’t be too long!

Thank you ! :) this finally makes sense to me.

Please put a sticky note on a dev’s machine to make sure past statements reflect the old rates (so we can see a history of all our fees etc..). Current CSV statements make it impossible to detemine what rates you were on (and hence, impossible to calculate your total revenue/turnover for accurate tax office reporting).

Looking forward to the new statement changes.

Cheers, Dave

:-) Will do!

1614 posts
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  • Located in Australia
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collis Envato team says



The license for the item is directly from Author to Buyer.
EDIT: As far as my accountant is concerned, Envato sell my item and pay me a commission of it, if this is not the case then this should be made much more obvious. Perhaps you should switch to the model that all the other micro stock sites use as you mention, otherwise quite a few UK authors are about to lose a lot of money..
Not just UK, it will be all EU authors (which there are a lot).

Hey guys,

We’re receiving advice on the treatment of VAT and related tax issues, and will be making sure that our treatment in the system works correctly for authors/buyers.

1614 posts
  • Has been part of the Envato Community for over 8 years
  • Has referred 10+ members
  • Located in Australia
  • Has sold $40,000+ on Envato Market
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collis Envato team says


This is how it’s always worked on Envato Market:

1. Buyer buys item from Author

2. Author pays Envato an Author Fee

The license for the item is directly from Author to Buyer. The amount paid from Buyer to Author is the total income the Author made. Against that you would expense our Author Fee to you.

Recently we upgraded our structure to charge a Buyer Fee directly from Envato to the Buyer. This amount is not part of Author income (because it’s a fee from Envato to the Buyer, for services).

This has really confused me, I thought we got paid a commission for each item sold, not sold the item directly to the buyer. I’m sure the word commission was used on Envato official pages.

How can we be selling something directly to buyers if we don’t handle any payments or have access to any of their personal data? In Europe, if you sell something and the buyer is based in the EU, you have to charge VAT on top of the cost. Please clarify all this for me.

Hey Cubell, you raise a very good point, we misused the word commission over the years and have been slowly stamping it out – though our terms reflected the model that I’ve described. For a while I started just describing ‘author rates’, and finally the more accurate ‘fee’.

In regards to VAT/GST, this is something we’re working on adding to the system as part of our project to improve the financial tooling.

:-/ It’s a big project sigh

1614 posts
  • Has been part of the Envato Community for over 8 years
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  • Located in Australia
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collis Envato team says

Thanks Collis for taking the time to explain all of this to the community. Hang in there! :)

Ok so prior to Sep 1st our author fee was 30% and it was represented in the statement as follows:

"Date","Type","Detail","Item ID","Amount","Rate","Price","Site" 
"2014-08-31 02:38:07 +1000","Sale"," item name ","2621629","44.80","70","64.00","CodeCanyon"

So prior to Sep 1st we would report our total revenue/turnover as $64.00 to the tax office, and our expenses as $19.20 ( 30% author fee ).

With the new fee setup, our author fee is 12.5% and this is currently represented in the statement as follows:

"Date","Order ID","Type","Detail","Item ID","Amount","Site" 
"2014-10-08 18:12:21 +1100","","Sale"," item name ","2621629","44.80","CodeCanyon"

So now we would report our total revenue/turnover as $51.20 44.8/(1-12.5%) and our total expenses as $6.40

Hopefully I’ve understood this, and without asking for financial advice, is this how we should be reporting to the tax office?

Spot on!

What’s missing from the statement is the gross number (which you’ve extrapolated backwards to get). It’s a bit complicated to explain, but that set of changes on the statement touches a bunch of bigger things at the back. So we’re busy working up the revised Statement page which will list it as well. Shouldn’t be too long!

1614 posts
  • Has been part of the Envato Community for over 8 years
  • Has referred 10+ members
  • Located in Australia
  • Has sold $40,000+ on Envato Market
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collis Envato team says

This is no good, I definitely dont want to deal with IRS like this. I guess it will be the end of the road for my before 2015 and I will hate to have my account closed because of the tax thing :(

Sorry to hear it BayChaser! Hope you have a change of heart!

1614 posts
  • Has been part of the Envato Community for over 8 years
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  • Located in Australia
  • Has sold $40,000+ on Envato Market
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collis Envato team says


This is how it’s always worked on Envato Market:

1. Buyer buys item from Author

2. Author pays Envato an Author Fee

The license for the item is directly from Author to Buyer. The amount paid from Buyer to Author is the total income the Author made. Against that you would expense our Author Fee to you.
How in the world is this possible when you never tell me who my buyers are? If I am selling directly then I would like to know who I am selling to so I can provide support and yes, market directly to them!

Hey Leatherwing,

At the moment buyers have anonymity unless they choose otherwise (asking a question, registering on a support question, etc). But we’ve been talking about ideas internally to build tools for authors to market to their buyers. Not sure what time horizon, but I agree – it makes sense to do more to connect beyond just the licensing transaction.

In relation to your prior question, the amount we would report is the gross sales (which is the total item price inclusive of any Author Fees, but exclusive of Buyer Fees).

It should be a little easier to follow with our upcoming changes to the Statement. We put out yesterday’s release ahead of the Statement changes to give more lead up to Jan 1st.

Hope that helps answer the question!

1614 posts
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collis Envato team says

I think a bunch of people have asked about the question of what we will begin reporting, and when. So thought I’d put it all into a single answer.

We’re going to begin reporting (and when required withholding backup WH tax) as of January 1st, 2015. So your first 1099 will be for that date forward.

How Envato Market Works

Envato Market operates on a different model to many stock marketplaces, and I think that may have caused some confusion. I think we could have done more in the past to explain to authors how they should have been looking at their sales and earnings too.

This is how it’s always worked on Envato Market:

1. Buyer buys item from Author

2. Author pays Envato an Author Fee

The license for the item is directly from Author to Buyer. The amount paid from Buyer to Author is the total income the Author made. Against that you would expense our Author Fee to you.

Recently we upgraded our structure to charge a Buyer Fee directly from Envato to the Buyer. This amount is not part of Author income (because it’s a fee from Envato to the Buyer, for services).

How Some Other Stock Marketplaces Work

Many stock marketplaces operate on a different model where the stock marketplace is in the middle. This is how they work:

1. Buyer buys item from Other Marketplace (not the Author)

2. Other Marketplace pays Author a fee

In this model the seller’s income is only the second transaction (the one between the marketplace and the author).

From this forum thread, I can see there’s a lot of confusion that we operate in this way (which we don’t). I think in the past we haven’t been clear enough around this.

Why do we use the model we use?

You have to remember that for many stock marketplaces, especially in the photos space, and including some of the largest sites, contributors earn as little as 15% off a sale. This model is derived from the old offline stock library / royalty model.

On Envato Market the numbers are essentially inversed. Envato’s revenue < Author Revenue (by quite a bit). You have to remember that 95% of our sales are from exclusives, and much of that is from elite exclusives.

We use a more web native ‘marketplace’ or ‘platform’ model where the buyer and seller directly transact and we charge a fee.

What does this all mean for your taxes / reporting

Our Statements are actually in the process of getting more upgrades, but rest assured they will provide all the detail you need, including total income, expenses, and documentation for those expenses.

To Gravitydept’s point, we’re working on a massively better paper trail.

This year in our roadmap we planned to improve the financial tools we provide authors for understanding and filing their taxes (amongst other things). This is a big set of work, which we’re ploughing through.

I hope this helps give more context and explain that this isn’t a new way of reporting your income, I think actually we should have been doing a better job of explaining it in the past, for which I apologise.

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