Launching Envato USA Inc

I call “my earnings” the money left after all deductions. For that $7 item I’m paying $2.1 of taxes and my earnings are only $1.05. So yes, taxes are higher than earnings.

Fair enough. It’s just that no country in the world calculates taxes on money left after tax has been deducted, so I assumed you were saying that taxes before deductions were higher than your earnings.

No, just passionate about the subject!

Whats there to be passionate about? Envato rewarded us by taking 30% from usa sales, which is in my case around 80% of buyers and I have to refigure my monthly expenses. In the end, It is my fault that I became depended only on Envato, but thats about to change. And I know a lot of other authors think simmarely, and I dont know whether envato is aware they will loose a lot of good authors with this move.

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@Danga12

Hi

could you tell me if the Item sales value I see as author in my portfolio (so how much I’ve earned from each particular item after Envato’s cut) is before or after the US Royalty Withholding Tax? That’s important for my calculation with partners. Thanks

While you put forth a straw man argument about a theoretical “1000 authors” wanting refunds “six months, a year, two years” from now , I’m talking about one author, one sale, whose W-9 was filed, technically, during 2015.

Just to keep the discussion reality-based.

That was an example. Whether it’s 1000 authors, 100,000 authors or just one author… if there is a process for getting refunds then Envato will have to follow that process and you’ll get your money back. However, I’ve not seen anything to indicate that people can get a refund on tax withheld due to people not submitting the required documents… so making an exception and giving one author a refund would make it problematic if Envato have to tell ‘refund requester’ number 2 that they can’t have a refund. Or number 3, 4, 40, 400 etc etc.

If you want to keep it reality based, then I’d suggest requesting a refund of any tax you’ve had withheld. If Envato are obligated to give it to you, or they’re allowed to give it to you and they want to do so… then you’ll get it back. If they’re not obligated to, then you probably won’t.

@Danga12

I do see a different looking invoice for my first few sales of 2016. When a customer buys a $19 track, I am being credited with $15.20 in earnings, yet I really am only literally being paid $10.14 because I am paying envato 4.96 in an “author fee”. The net effect is that I pay tax on $15,20 in earnings, even though I really will only be paid $10.14 by Envato?

Can you confirm that this is the way we need to comprehend and deal with all transactions?

We will pay tax on $15.20, but we REALLY WILL ONLY RECEIVE $10.14 in revenue? IS this Correct Danga12? and is this legal under US tax laws?

Wow! 80% is a lot! I have 27% buyers from US, but also looking for alternative. If it is not hard for you, may you suggest (in private message, or email) some alternatives. Right now I’m thinking only about my own site, but it’s rather complicated and expensive.

You’re obviously passionate about it. Dozens of others are as well, based on the number of posts in the forum.

The main question here is what we are gaining by envato being in US? It’s kind of hurtful that payment methods will be implemented later on, so covering of the losses by taxes until then is not possible.

And even with implementing the payment methods, somehow I don’t see sufficient incentive for buyers to buy more.
I maybe wrong but as I am seeing with last 2 years updates there is no growth, on the contrary we have quite a fall even the almighty Avada cannot get over the mark it got.

Meaning either over saturation of the marketplace, competition eating away some slices or something else. And you always have to ask why is competition gaining?

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For first days of 2016 I have 60% of my sales from USA, past year it was 30-40%. So maybe something changes after all or it just coincidence - time will show

That’s the million dollar question! If sales stay the same or decrease then it will have turned out to be a bit of a waste of time. But I like to think that this wasn’t some spur of the moment decision after somebody at HQ watched some documentary on the US and just thought “That looks pretty cool, lets go there!”.

I mean if you look at the list of staff on the about pages, you’ve got business development people, business intelligence people, legal counsel, financial analysts, customer insight people, customer acquisition people and so on and so forth. As a result, I like to think that the best and the brightest have got together, analysed everything to death, did ‘the math’, and the computer said ‘yes’. One can hope.

Maybe my faith is misguided. I hope not. Time will tell.

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There is big difference between envato and authors. What is good for envato is not always good for their authors. Especially when we pay almost all taxes.
As I understand envato pay taxes only for buyers fee. So we may calculate:

For example, we have $100 item, And you are a simple author, not elite, not a new one, some one in the middle with 60% rate.

So what envato get:
100 - 60 (author part) - 20 (buyer fee) = 20,
20 (buyer fee) * 0.7 ( - 30% of us fee) = 14,
20 + 14 = $34 - envato gets from 60% rate author if the buyer is from usa.

Now what author get:
100 - 20 (buyer fee) - 20 (author fee) = 60,
(60 + 20 (author fee)) * 0.3 (30% of us fee) = 24,
60 - 24 = $36 - author with 60% rate gets if the buyer is from usa.

I’m not an economist, but I think for envato it’s a good decision to move to usa. Of course, they pay only 6 extra dollars for each $100 item that was sold to usa citizen. While authors pay $24 extra dollars.
Think about that…

You’ve completely lost me with those calculations! But either way, the amount that Envato gets from each sale is (or should be) exactly the same. Authors may get less, but that money goes to the IRS, no to Envato. So if a $100 item sold by a 50% author made Envato $50 in December, it’s still making them $50 in January.

As for Envato paying taxes just on the buyers fee… I don’t think they’ve ever communicated exactly what they pay tax on, or at what rate etc, but I’d be very surprised if the IRS aren’t going to be asking questions if they’re only declaring $20 from every $100 sale, if $50 is going into their bank. I could be wrong, as I say, I’ve no idea what Envato pay tax, what they should be paying tax on and whether it’s even possible for income tax paid by authors to offset corporation tax due by Envato. I wouldn’t have thought so.

I made a mistake, it’s not 80%, but around 55%, so we can safely say, half of the sales are US based. Still, that’s a lot when you give away 30% on all US sales.

You know how NOKIA failed?

I just think if we pay US taxes, envato do the same. So we pay this taxes from our earnings + author fee. It’s $24 (30% from $80) if item price is $100. And envato pays $6 (30% from buyer fee). In total we have $30 taxes from $100 item, and for IRS and for every other person who don’t look inside, it will be like Envato pays 30% usa taxes. Nobody will ask questions.

Well the authors pay income tax and Envato will pay corporation tax. That’s 35% for start, and they might have to pay some kind of sales tax as well on top of that. But I’m not sure what they have to pay that on… just the buyers fee, or the buyers fee and the authors fee. Who knows!

I’m not sure exactly. There’s probably a lot reasons, most of which I’m probably not aware of. The N-Gage was probably a contributing factor though.