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UK tax laws and other issues...

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So I''m looking to break into shareware development, and I have a small game nearing completion. If I want to sell this over the internet, what should I know about regarding taxation, distribution and any other laws that might find me being sued or arrested if I don''t comply? What do I have to claim to the tax man in relation to earnings from shareware sales? What about business names? If I release a game saying it was developed by "some-great-name games co." does that name need to be a registered business? Anything else anyone might want to add?

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You dont have to register nothing but make sure you use not-too-good-company-name co. as someone might register your name as a limited company or a trademark.

I think you can also register a trademark under your name and use that trademark.

If you have a brilliant name then trademark it otherwise you dont have to register anything, except maybe a bank account with you trading as company-name (for the cheques to flow in).

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I''m no expert on this stuff (although have run a business in the past and been closely involved with the running of another) so some of the following may be incorrect - always verify any advice like this with a relevent professional if it''s important...

1) The name/company thing.
a. You can release it under your own name if you want.

b. You can release it under a trading name if you want.

c. You don''t need to register any name or business etc, though that means you''ll probably be operating as a sole trader or partnership which have different advantages to say, a limited liability company. It does also mean you might have more trouble proving you were the first to trade under that name if someone else starts using it.

d. AFAIK its illegal to claim your company is something it isn''t. For example to put Ltd/Limited, Plc, Inc etc after your name when you aren''t can get you into trouble. You might also get into trouble for "passing off" etc if you use the name that another company is using, particularly if you''re doing similar products (i.e. they also make software, shareware or not)

e. If this is just for shareware it''s unlikely you''ll want/need to go so far as registering names etc until you start bringing in serious amounts of money (if you''re lucky).

2) The tax situation.
a. If you''re under 16 (or is it 18), then it affects your parents rather than you. You need to discuss it with them in that case.

b. If you''re recieving benefits, then you''re meant to tell them about any other work you''re doing, and anything that''s bringing in money (and how much). If you start making too much, they might stop certain benefits you''re getting. You could choose not to tell them, but if you''re caught you risk a lot of hassle, fines etc.

c. If you''re working and your income tax is payed as PAYE, tell your employer/their accounts department about anything you''re making from your shareware. You may need to fill out a tax return (where you can also claim some stuff back for costs incurred for development).

d. If you''re only making the odd tenner once every few months, it''s unlikely you''ll have to make any changes, or that the tax man will be interested.

e. If you start making more than a certain amount, your business may NEED to become a registered entity, and you''ll also become liable for things like "corporation tax".

f. If you''re making more than another certain amount and/or lots of selling to the public & exporting, you might want to be registered for VAT.

g. If in doubt with this stuff, have a chat with an accountant. Often they''ll give the first consultation for free.

3) General.
a. Keep records of EVERYTHING, proof of the times/dates you were working on the game that''s bringing in money, every transaction that makes you money, any costs incurred solely for developing the game (phone bills for uploading to download sites, blank CDs used for backups etc etc), keep reciepts, keep letters/faxes to/from any organisations (online publishers, credit card/money handling firms etc) who you''ve dealt with regarding the game.
Keeping records makes life much easier if you need to fill out government tax forms, get help from an accountant etc

b. If this starts bringing in real money and you want to tuen it into a serious business, look in the phone book for your local "Business Link". They''ll be able to help with lots of stuff (for free) about running the business, getting grants, dealing with the taxman etc

c. Your bank can offer advice too. Once you move from "a little bit of pocket money on the side" to "a full business", you''ll usually have the money from cheques etc payed into a business account. So the business managers at banks want you to open these accounts (and so make money for their bank) so will give free business advice and inform you of a few options etc too.

d. Finally, your local tax office (again look in the phone book) can offer some advice/leaflets about whether or not you''ll need to fill out a tax return and which taxes you might be liable for.

So to recap:

option A: You aren''t making that much. You declare the higher amounts of income to the relevent people if necessary (employer, local tax office, dole, parents), you don''t set up a company, people pay you personally into your personal bank account. I suspect this is most likely for you at the moment.

option B: You start making significant amounts of money. You set up a company and pass the money through that, it goes into the company bank account, you pay an accountant to sort out your tax forms etc once a quarter/year etc and to claim back any rebates/benefits, you consult with your local business link and similar for advice and to see if there are any government grants & schemes etc available (regeneration grants for being in poor areas, small business loan guarantee scheme, princes youth business trust grants etc).

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