Taxes and hiring help..

Discussion in 'Developer Services and Trade' started by dangerz, May 11, 2009.

  1. dangerz

    dangerz Well-Known Member

    Apr 23, 2009
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    Question for the devs on here. If I want to hire a graphic designer and we've both agreed to a 50/50 split, how is that going to work with taxes? Am I going to have to pay taxes on 100% of the income?

    I don't have an LLC or anything because it was just me. I could use the extra help though and I found someone willing so now I'm just trying to figure out the logistics.

    Thanks,
    Roy
     
  2. Grumps

    Grumps Well-Known Member
    Patreon Indie

    Feb 2, 2009
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    iOS Game Developer
    I think we can cut the 50% from the revenue and mark it as Royalties payment and only record the other 50% as profit. You should consult a professional on this!
     
  3. dangerz

    dangerz Well-Known Member

    Apr 23, 2009
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    Ya I will be.. I was just curious how other people did it.

    I'd imagine Apple sends us a W2 or something, so the IRS might question why we're only claiming 50% of the income.
     
  4. nattylux

    nattylux Well-Known Member

    Sep 17, 2008
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    Washington, DC

    Apple isn't going to send you any tax forms. You will need to figure out taxes on your own.

    And yes, business expenses are tax-deductible, and paying your artist is a business expense. You really should consult with an accountant just to make sure you're doing everything right.
     
  5. WellSpentYouth

    WellSpentYouth Well-Known Member

    Jan 11, 2009
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    iPhone programmer
    App Tech Studios, USA
    Yes, that sounds more like it. WHEN do they pay you though? In April, I earned over $250 in the US, so how long does it take for a monthly sales report in iTunes connect/a check to appear?


    Thanks!
     
  6. nattylux

    nattylux Well-Known Member

    Sep 17, 2008
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    According to your contract, they have 45 days after the end of the month to pay you. You should expect a financial report at the end of May/beginning of June, and payment in the beginning/middle of June.
     
  7. WellSpentYouth

    WellSpentYouth Well-Known Member

    Jan 11, 2009
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    App Tech Studios, USA
    My b-day is June 3rd, so it sounds like I may get a nice present. A REALLY nice present. In fact, I should buy a car ;)


    Thank you!

    BTW: A VERY reliable source informed that they have recieved there April check, but no t the report. So apparently they come early sometimes.
     
  8. nattylux

    nattylux Well-Known Member

    Sep 17, 2008
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    That's so funny! July 3 is also Keith's birthday (my husband/Imangi Studios guru)! Hopefully we'll get a nice present too.

    Are you sure your source got their April check, and not their March check? Everyone is receiving their March checks right now.
     
  9. nattylux

    nattylux Well-Known Member

    Sep 17, 2008
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    I need to learn how to read... You said JUNE 3, not JULY 3 :) Yes, hope you get a great present then.
     
  10. WellSpentYouth

    WellSpentYouth Well-Known Member

    Jan 11, 2009
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    App Tech Studios, USA

    It might have been a mistake, I don't know. Well, I guess I will have to wait. Every time I want to check my bank account, I have to ask my mom to check it :( The monthly sales report (in iTunes connect) should show around the same time that the moneys arrives, correct?


    Yes, my birthday is June 3rd. My sisters is July 19th. I am sure that I will get a MUCH bigger present from my Grandpa than from the Apple, but it will be nice to have my work pay off.


    Best wishes!

    Robert
    CEO, App Tech Studios
     
  11. sdragon

    sdragon Active Member

    Jul 16, 2008
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    I'm not a CPA and have no professional training in accounting, but I think I can tell you what you want to know.

    First, W2s are only for employees. If Apple were to send you a form, it'd be a 1099, but they have not been sending those so far. Either way, you claim this income on 1040 Schedule C (self-employment). There, you can deduct any expenses (including hired help), and only the profit gets carried over to your income tax return.

    If you're the one paying half to the other guy, make sure he fills out a Form W9 (http://www.irs.gov/pub/irs-pdf/fw9.pdf) and gives it to you. Depending on how much he makes, you may need to issue him a 1099 and you'll need his taxpayer ID (usually SSN) for that... if you don't do that, and he doesn't include that money on his tax return, then you could be on the hook!

    You may be able to form a partnership or LLC; whether this is simple or difficult, cheap or expense, depends on the state you're in.
     
  12. WellSpentYouth

    WellSpentYouth Well-Known Member

    Jan 11, 2009
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    App Tech Studios, USA
    Does that mean that mean that I can get an iMac and deduct it off of mine (well, my dads) taxes?
     
  13. dangerz

    dangerz Well-Known Member

    Apr 23, 2009
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    Yaa that's pretty much exactly what I'm looking for.

    I'll be contacting an accountant when it comes closer to tax time so I don't mess it up. I just wanted to make sure I wasn't screwing myself over by being taxed for 100% when I give away 50%.

    Thanks!
    Roy
     
  14. sdragon

    sdragon Active Member

    Jul 16, 2008
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    I believe if most of the iMac's use is for business. (If it's your only computer, the IRS will assume it's primarily for personal use.) Note that you might be limited to deducting up to the amount you made, I don't remember the precise rules on this.

    Also, who is the dev, you or your dad, or both of you? FYI, you might get a lower rate if you filed yourself rather than having him include it.
     
  15. WellSpentYouth

    WellSpentYouth Well-Known Member

    Jan 11, 2009
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    iPhone programmer
    App Tech Studios, USA
    I am the dev. My can't program, he is a manager for a cool company. I also have a macbook aluminum, so it isn't my only computer. I will only buy it after I earn the money to get it (my dad tells me that it is important that I save and earn some money and I agree), so it will be less the amount that I earn.


    Thanks!
     

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