Envato, you need to consider this. Don’t cause double reporting of income for U.S. people by filing 1099-MISC forms when not required. A lot of US business have been doing this incorrectly since 1099-K was introduced a couple years back.
Prior to the implementation of the 1099-K, many businesses were required to provide a 1099-MISC form to many of their suppliers if they did more than $600 in business together annually. If the transactions occurred through credit card or third-party processors, there is a possibility of these transactions being reported on both forms. The IRS has directed that any 1099-MISC payments that are reported on a 1099-K should be reported on the latter form only, and that a 1099-MISC need not be produced. However, in practice, many companies are still providing 1099-MISC forms…https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/What-Online-Business-Owners-Should-Know-About-IRS-Form-1099-K/INF23095.html
Many Envato authors and affiliates are paid exclusively by PayPal, which is a third-party processor and reports sales on 1099-K forms. Therefore, US authors and affiliates earning more than $600 that are paid only via PayPal should not have their earnings reported on 1099-MISC. If you do that, you’re creating a double-reporting issue.
I didn’t believe this myself last year until a US-based theme shop explained it to me and another US-based company acknowledged that they had reported my income incorrectly. The Intuit article explains it pretty clearly but you can see this on the 1099-MISC instructions too.
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-Khttp://www.irs.gov/pub/irs-pdf/i1099msc.pdf
Be very careful that you do things absolutely perfectly if somehow you actually are required to involve yourselves with the tax laws of other countries.
dnp_theme saidThey’re probably getting a US office and or moving some of the payment systems to the US…..
Is Australia a colony of the US? Why should Envato care about IRS anyway?
Did Collis confirm this? It’s the only sane reason I could see for a foreign company voluntarily dealing with the IRS when they are absolutely under no obligation to do so.
I’d love to see the whole of Envato move to the U.S.
If being based on Australia is steeping into the business maybe they should re-locate, don’t you think? If a company like Facebook were facing problems because of the country they are based in they would most likely move.
Envato might not see author controlled pricing as an advantage. I don’t know. That’s one of the things I’m wondering. It’d be nice to have insight from Collis or someone of Envato authority on this.
Let the free market decide what is valued.
This was my thought too. I see very little faith in a free market here.
If one author sets their price to $20 and another to $80 for two themes of similar quality, it’s true that the cheaper theme has an advantage as far as price. It will sell more copies. But the guy pricing at $80 can keep up with only one-fourth of the sales. And their support burden will be four times less while doing so. Perhaps they can use that time to release more themes faster or add features their cheaper competitors don’t have.
Is there not one in four on ThemeForest that would prefer and pay for a theme that doesn’t have a rock-bottom price? Maybe it costs $500 to build a site for a client. If the client likes the $80 theme’s design or features better, are they really likely to opt for the $20 theme in order to pay $520 instead of $580? Price is not the only factor. Preference for design, necessity of features, and desire for a certain level of support are factors too.
Some people purposely avoid the cheapest option. Some people pay $300 for purses that are arguably no better than others. I’m not picking on ultra-low pricing though. I can see how that might work for some authors in certain places. That’s great. But higher pricing can work too. Not everyone buys the cheapest item on the rack. Walmart hasn’t put Target out of business. ThemeForest hasn’t put $75 and $100 shops out of business. The market is bigger than ThemeForest alone. Buyers for higher priced themes exist.
Nobody can be said to be right without testing it though. I suppose the whole conversation is null if it’s true that there’s no way for Envato to let authors set their own prices under Australian law.
Any thoughts on WordPress.com? It’s a place where theme authors set their prices. A lot of money is being made there.
I’m curious, what is the reason for authors not being able to set their own prices?
I remember reading somewhere that the reason has to do with Australian law? And/or is it Envato’s idea that controlling 100% of prices is the most efficient approach? I recall a couple years ago that Elite authors had some ability to adjust their prices but that was quickly removed.
I stopped selling new themes on ThemeForest because of lack of control (pricing being one area). ThemeForest would me more interesting to me as an author if pricing was ever handed to the author.
I’m not under the delusion that raising prices will produce more profit but some theme authors prefer to sell at a higher price in order to dedicate more resources to fewer customers. That’s not an option on ThemeForest right now.