(Petition to Envato) Partnership Tools

Envato Authors Author Hangout
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For those who haven’t read the main announcement, Envato will implement changes on how authors receive the payments, Changes To How Authors Receive Earnings Payouts From Envato and they will greatly affect all teams and partnerships,

Having in mind that a big part of the marketplace consists on partnerships and teams, the payment changes will affect all of them and will make people incur in new transactions fees, having to find new ways to split earnings (because regarding transactions it’s not the same for every country of the world) and provoke lots of headaches, we thought of a way that Envato could help make this change a little less painful and that is implementing a long overdue partnership tool.

Just as they implemented the Author Team tools to help teams and partnerships with the support aspect, we are asking the Envato team to make something similar but for partnerships and teams.

It would basically work like this:

On the settings page, just like the Author Team page, you’ll find the “Author Partners” tab. As an author, you can add other Envato Marketplace users to your partners list. Once you add an author to your team you’ll be able to split a percentage of the profits (after fees and taxes), with your partner. To do this, you’ll need to chose the author, item from which you want to split the earnings and the percentage that the author will receive. and then click the “Add Partner” button. Having in mind that Envato wants all authors to have all tax info neat and updated, the author that receives the split will need to have completed all tax and personal information.

The system would work really similar to the current referral system, where an author receives a split of the amount other user spent or charged, but in this case it would be a split between authors. Here’s a mockup we made of the page and how the earnings will be shown in the statement page.

Author Partner Tool 01
Author Partner Tool 01.jpg1054×703 201 KB

Author Partner Tool 02
Author Partner Tool 02.jpg1054×473 50.7 KB

To answer some concerns that were raised in the announcement, this won’t be a system to freely transfer earnings to other accounts, this would just be a tool to help authors split the earnings. This way, the partners will receive their split on their accounts and be able to withdraw it to their personal and verified account without having to incur in new fees or pay for other transaction methods.

We’d love to hear from all of you about what you think of this, specially from the authors that are currently in teams and/or partnerships!

@jamesgiroux @scottwills @collis
We’d also like to hear the opinion of the team and if anyone from the team or forum moderator could pin this so it doesn’t get lost would be really helpful!

38 Likes
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Really like this idea, would like to work with my best friend. But so far, it’s not possible really. Great idea!

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That’s definitely a great idea! Hopefully this will be implemented.

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Good idea!

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Hi,
Awesome idea!

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Hello

Very good idea, envato must apply this :slight_smile:

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Hi :slightly_smiling_face:

It’s a very interesting idea!

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Question (not denying it’s a good idea - simply trying to understand)…

The idea is to split the profits ‘after fees and taxes’ - What happens if tax values are different for each member of a team? What happens if they are from countries with different US treaties?

If for example I had to pay 10% tax but another author had to pay 5% - how do you determine which rate is applied initially before splitting it?

Logic would suggest that it should be based on the owner of the account under which an item is submitted but that couldn’t work because:

  1. as you said it’s not a way for authors to share profits themselves

  2. Envato can’t send withdrawal to person 2 without accurate taxes applied based on the info that they provide, nor can they base that amount on person 1’s rate.

With that in mind, wouldn’t it mean that an other team members would need to be taxed twice? I.e. once initially when the withdrawal is made and then again when their actual % income reaches them?

Ideally each the system would need to auto split the amount and apply relevant individual tax rates for each account, but that would become a dramatically more complicated process and this would require Envato involvement in team agreements which is currently not available.

Now it’s all about author team responsibility - Envato are not officially involved in splitting profit or applying different taxes for different team members. (probably precisely for reasons like this). The suggested method would fundamentally change that and in reality is probably quite complex.

Again the idea sounds good, and maybe we are missing something. It’s awesome to see people proposing solutions and the more potential obstacles can be shown to not be a problem then the better.

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Great and correct idea!

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Hi @charlie4282
What you are saying about different tax treaties is exactly the same that happens now without the system we suggested. Today, if someone is in a partnership, they have to split the earnings after taxes and fees, (the tax rate applied is the one based on the owner of the account under which an item is submitted). But instead of dividing the earnings splitting the Envato monthly withdrawals sending the earnings to different accounts (which would be impossible now) Envato would give authors tools to automatically split them. As you can see, we read your comment in the other topic, and addressed that in our main post…this won’t be a system to freely transfer earnings to other accounts, which could result in shady movements, this would just be an automated tool to help authors split the earnings.

With the suggested system, the tax need to be applied only one time, when the sale is made. the split only occurs after that (Envato would only be splitting the author’s earnings after tax and fee obligations). That means that they would be doing this with the authors own earnings, not the sale amount that they are obligated to tax) which, as we mentioned, would be similar to the referral system currently in place! (that we know of, people don’t have to pay US royalty taxes or fees for referrals as they pay for sales from US buyers).

Anyway, this is just a suggestion, and as we said in the first post, we are more than open to new ways or other options that Envato could give us!. What we really need after this changes on how authors receive earnings is a way to stop them from killing teams and partnerships and/or stop them from incurring in new transaction fees. For example one of our partners will lose 6% in transfer fees just for this change, add that to US tax and his own country taxes and the situation becomes really awful. You just have to look at the reactions from the main announcement, the community is not happy with the new changes because most of them will loose big time with new fees and charges.

2 Likes
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This is one of many important missing features on Envato.
Unfortunately is by many years that Envato is not updating the marketplace so this feature will never be implemented.

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I think a similar feature would be a lifesaver for many authors.

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great idea:muscle::ok_hand::+1:

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I think as a suggestion it’s great and completely understand your concerns and reaosning.

I am not still not entirely convinced by the potential complexity of developing that automation and more about Envato being able to/being involved by ‘giving the tools’ on their platform to transfer funds to a team member without requiring them to pay their own tax.

I understand your points about

  1. the submitting author paying tax on initial income
    and
  2. that it is all automated to prevent authors being able to transfer manually and therefore perhaps behave badly,

but, unlike the current process envato, would be very much involved by owning the automation and I strongly doubt that they would be able to transfer/split profits to an author/team member without them paying their own tax, as this would open numerous opportunities for naughty behaviour.

Again I think that it is great to see people making recommendations and passing on ideas. Perhaps somehting could be created as an adapted version

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We get what you’re saying, but our point was that it’s not that people could use this to cheat taxes, because the taxes will already be payed by the Item holder author. The other thing would only be a split after that obligations. Why would the partner would have to pay another tax just for receiving the split after taxes? It would be like saying that you need to pay taxes for the referral money you earn if that money comes from a US author.

And this would only be an issue for sales to US buyers, for every other one would be easy as there are no added taxes, only Envato fees. People would be able to withdraw what they earn including partners share to their already confirmed account (seeing that with the new changes you can only withdraw to an account to your name and with tax information validated) so this will prevent the risk of naughty behaviour.

Anyway, as we said before, we are more than open to new ideas from the Envato Team, we just want them to provide a solution for this new changes and help the community to not lose money.

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Hi Charlie,
I m thinking like this
Let s say i have other partner from usa, and i m from spain. Both are in the same team, account named x.
Accout is under my name.
All taxes to be calculated at the end of month, and example, from all earnings from December, let s say 500 usd, after tax to irs usa, our part is 250usd…

In my panel i have added person with name y as partner and choose procent like 50%. So on 15 he will receive 225usd.

Is not possible? Or not partner, you can say employee
What i want to say is, because using my account, taxes will be under my name and procent of tax vat etc…

Cheers

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That is a good example however it rather highlights by concerns.

For person y to get his cut would mean that either:

  1. you need to be able to transfer funds between you and that is a much bigger change than it may appear

or

  1. envato get involved again post your initial withdrawal, to send the % of that 250 to person y.

This would be a much bigger and complex workload for envato.

Plus I am almost certain that Envato (as a business) couldn’t send/transfer/withdraw funds (regardless of them being direct from the sale or from another author’s pot) which is based on another individual’s taxation.

There are also so many ways in which that could be used to evade tax or fix numbers.

Imagine as an example:

  • You are a freelancer and you work with an agency to help build a website for a brand
  • The agency gets paid and pay tax
  • BUT you still have to pay your own separate tax on what you get paid by them

As withdrawals have to go to the individual named on the account, unless that is you, there is no way that as another individual memember of the team you could class that initial tax payment as your own.

I suppose you could create a Ltd business that all of the team members are shareholders, and then get paid to business account. Once out of envato’s hands you could split proceeds among yourselves.

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Sorry, but this example is wrong. We believe you are confusing sales tax with earnings tax. Of course Partner A and Partner B will have to pay taxes, just like what happens now, but Envato doesn’t intervene on that, each author pays their own taxes to their respective countries agencies. What’s in discussion here is the US sales tax that Envato has to pay when a US person buys an item from an author from another country. That’s a sale tax, and would be payed by the item’s account author. As we told before, after the split, with the new system, the author will have to withdraw the totality of the earnings to his respective account (which will need to have all tax details confirmed) so it will prevent that naughty behavior. You won’t have to class that US tax payment as your own because you shouldn’t! you are not making the sale, you’ll just be receiving a small earning because of your work. Your example would be like saying that WalMart employees (to give an example) would have to pay taxes for all the supermarket taxes obligations when they receive their wages checks. WalMart makes the sales, and then a split or wage goes to the employees (in this case the partners) and yes, they will then pay their own taxes, but not also pay the taxes of the ones that make the sale.
As we said before, this would only be an issue for sales to US buyers, for every other one would be easy as there are no added taxes, only Envato fees.

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We desperately need a tool like this, otherwise authors operating in a partnership will leave the market sooner or later. This includes us, we’re currently exploring our options if this won’t be resolved. We’re sure there are much more authors having concerns than Envato might assume. They might just don’t want to speak out or wait for developments on this situation. Creating an Ltd is not always a possibility if members are from different parts of the world and it’s not always an ideal solution even if it’s possible. We have the feeling that on the long term this will hurt not just authors but Envato as well.

The idea proposed by @Odin_Design is very much the way to do it. Other stores (e.g. Steam) and payment processors (e.g. FastSpring) all have similar solutions.

In our opinion where you get it wrong is the “after taxes” part. It should be before taxes, so each of the individual accounts in the split system can be treated separately with their own tax treaties and rates applied. Why would you want to account for the full income when it’s split among parties and you will never posses the full amount? There is no need for a primary “sale” account.

It wouldn’t interfere with Envato’s requirements. Each party in a partnership should have their own individual account. Each of them would be required to submit tax forms and identify themselves. There would be no open room to transfer funds to strange places that Envato or the government cannot track/validate. There would be no option to transfer funds between Envato accounts, the system would split the sale amount dynamically.

Envato already applies different tax rates and others to accounts from different parts of the world. This would not complicate the process. A system like this would just make the same checks in multiple times. The exact same happens when 2 customer purchases 2 separate items. They would just need to split the purchase itself and perform the same checks.

PS: We’re obviously not an expert in the area. But since other high profile stores and payment processors could solve this problem, the question is not about how can it be done but rather if Envato is willing to do it or not.

Kreatura Team

1 Like
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@Odin_Design Thanks for sharing the detail. Actually I read Post already but I didn’t go through the complete post. Now after reading your post and came to know that it is a good feature for authors. :+1: