Posts by frontiersoundfx

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frontiersoundfx
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Sorry about the outage. I just checked a minute ago and was able to access the site without issue. Can anyone confirm?

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frontiersoundfx
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Hey folks,

Some of you might remember that about a year ago I posted a blog article revealing my experiment in tracking sound effect sales in an effort to solve the debate of exclusive vs non-exclusive.

Original AJ post is here:

http://audiojungle.net/forums/thread/exclusive-vs-nonexclusive-finally-answered/133771

Its been another year of logging sales data, tracking market changes, and posing new questions about this age old question. So whether you’ve read the first article in the past or are new to the scene, I encourage you to take a look at Year 2 of this ongoing experiment and provide your experiences to the process.

Thanks, and happy Jungle…ing.

http://www.frontiersoundfx.com/exclusive-vs-non-exclusive-finally-answered-year-2/

33 posts
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frontiersoundfx
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33 posts
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frontiersoundfx
says

33 posts
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frontiersoundfx
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I still don’t understand what is a point of these “Author2Buyer” invoices if you are responsible for VAT.
I think it is mainly for declaring your INCOME to pay Income Tax.

;) The basic sample of the trick:

BEFORE / ENVATO AS THE COMMISSIONING RE-SELLER – Envato had to be the ‘direct seller’ of 100$ item and had to pay 70$ commission to an exclusive elite author, so Envato needed to declare their income of 100$ and manage to balance those 70$ for their business expenses (commission to the supplier) , while the author was fairly getting and simply declaring these 70$ as regular commission income from Envato…

AFTER / ENVATO AS THE PLATFORM FOR SELLERS – an Author shall be the ‘direct seller’ of the same 100$ item but as a 80$ item and will be paying 10$ to Envato, still getting the same 70$, but now getting puzzled to declare his 10$ (or in fact 12.5%-37,5%) higher income with bunch of confusing micro-invoices and trying to balance some allowed part of it as the business expenses, that will cause some over-estimated ‘income threshold’ problems for many low / middle income freelancers, while Envato will be absolutely happy to declare their income from the 100$ sale only of just $30 as 10$ from the author fee plus 20$ from the buyer fee…

So unfortunately we can’t say that an author will get just the same 70$… while I really appreciate that Collis tried to find a genius solution when ‘Both the wolves have eaten much and the sheep have not been touched’…

;) And… I had a dream… as a precaution of the starting author exodus due all the coming problems of new ‘direct selling’ pseudo-platform mess of incomes, fees, taxes, options, terms and conditions with many obvious and hidden contradictions at Envato 2015:

1/ Most of the low income authors (especially the non-exclusive and newcomers) will rather asap completely remove their portfolios to various more friendly markets, and will be very aggressively tarnishing Envato’s business and community reputation via various public forums and private blogs…

2/ Most of the middle class elite authors (especially the exclusive veterans) will still keep their well-selling portfolios here as long as possible but def will stop active uploading smth new due all the unpredictable risks, moral frustration, and reactive supplying to other major solid stock markets, and will rather focus on promoting them as well…

3/ Most of the elite top achievers will try to play by the new ‘platform’ rules as long as possible being pinned by their existing best-sellers’ and expecting for additional marketing bonuses from Envato and benefits of lowing internal competition at the elite level…

May be Envato experts have taken in account all that, and may be they even would be OK to filter the amount of low-selling authors/items in favour of the elite group exposure, but the overall Envato’s library, traffic, popularity and reputation will inevitably decline during the next year, and overall sales will be dropping consequently… So some of the ‘super hero’ authors will rather prefer to run only their own real ‘direct selling’ services without Envato ‘platform’ expenses and risks in the next years…

4/ Surely it’s impossible to predict behaviour of various regular and occasional Envato buyers, while their money flow anyway will follow their migrating favourite middle and high elite authors, who by the way also often are / were pretty active Envato buyers and promoters as well …

;) Absolutely with all the authors asking to avoid / reverse, revise / optimize the changes asap…

Thanks indeed…

Thanks VideoMagus,

I just want to clarify that, at least in the US, your tax bracket is determined by your Adjusted Gross Income rather than your Gross Income, so as long as you deduct the proper expenses these changes won’t push you into some bracket you didn’t belong in to begin with. Getting those expenses correct though is going to be the challenge for everyone.

I agree though that this change is completely motivated by a potentially tax advantaged system for Envato, and sadly at the expense of its entire author community. I’ve been on that boat for a while.

Whatever the outcome, Envato has done some very serious damage to what I viewed as a previously wonderful reputation. Simple was better and now we all got hosed. I used to log my earnings every day and make blog posts about it. Now it’ll be a full time job just trying to translate the invoices and calculate the actual earnings on a daily basis.

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frontiersoundfx
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Envato,

If I am the direct seller and you plan on reporting my taxes as such, why do you still have a minimum withdrawal amount? I should be allowed access to every dollar you plan on reporting me for.

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frontiersoundfx
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I bet Komplete 10 travels better.

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frontiersoundfx
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We have a a global and a regular sticky. The post was set as regular instead of global sticky, so maybe someone hit the wrong button. Either way, this area is top of mind whether this post is sticky or not. We haven’t forgot about it :)

Just take care and do some reading before jumping the gun on this. Everything I’ve researched about this tells me that companies (like Envato) are not supposed to include third party payments in a form 1099 because it defaults to the responsibility of the payment settlement entity(Paypal). Since all payments are made to authors through third party payment systems, I’m not sure what exactly Envato is planning on reporting. This only makes sense if you had my bank account number for direct deposit, and I don’t see that going over well either.

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I just thought of another extremely important issue with regard to the double reporting with PayPal and Envato: Even if Envato didn’t include the “expenses” in the total earnings on the 1099, the two figures from PayPal and Envato won’t match since PayPal calculates the figure when you receive the money and Envato is calculating it when it was earned.

So, for example, the amount you sell this December will be counted toward 2014’s income, according to Envato, but since you won’t receive it until January 2015, PayPal will count that toward 2015’s income.

This would obviously create a situation where the IRS receives 2 different figures either way, inevitably causing suspicion and an audit for the author, and eventually Envato, I’d imagine.

I’d appreciate it if you could address this issue when you make your statement.

MVPThemes (and any others with this concern),

Not sure if this truly answers your question, but this is the IRS ruling regarding the double 1099 issue, pulled directly from the 1099 instructions:

Form 1099-K.

“Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K.”
http://www.irs.gov/instructions/i1099msc/ar02.html

In real human language, this means that unless Envato is paying you by cash or check (which would trigger a 1099-MISC), they have no purpose sending any 1099 to you or the government, and must rely on the “payment settlement entity” (AKA Paypal) to report the earnings via form 1099-K.

If Envato sends you one anyway, then you have to contact them immediately so that they can send a corrected 1099 back to the government.

It is all a hot mess.

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Instead of Envato claiming 70% of the income and writing off 30%, now they only have to claim 30% and write off the 70%, thus forcing the blunt of the tax liability to be handled on the side of the US authors rather than the company. I suppose its six of one, a half dozen of the other, but it seems like a major disservice to some loyal marketplace authors.
Are you serious? Where is this information? Can the staff please reply to this. I read the tax info and I did not see where it says this. If this is the case, I really do not see how they can get away with this. Its an evasion of taxes on their side. I just don’t believe that. I have a little more trust in Envato.

Notice that I modified my quote later because it was not clear. It is not tax evasion, but somebody has to pay. The responsibility is just becoming greater for the author if Envato goes through with the proposed way of doing the 1099s. The individual author becomes responsible for writing off the expenses against gross sales, rather than just paying taxes on the actual earnings.

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