Posts by redpuma60

Quick little update.

I just hopped off the phone with my accountant, and she basically confirmed what most of you were saying.

The absolute first step is checking exactly what Steam requires from me. If there's an option for "soliti Proprietorship"—meaning I can operate as an individual without needing to incorporate a full LLC or business—then we're in business. Once I have a valid contract signed with them, I can just handle the tax side of things here in the States later on.

Regarding the Tax ID situation, which is our version of a VAT ID, it needs to be legitimate. You can get one through the IRS, though that process might put you on certain registries, but she mentioned that isn't a huge deal in the grand scheme of things.

For now, my main focus is polishing the game to make sure it's top-tier before I even worry about sales. I'm aiming to launch sometime early this summer.

If I dig up any more useful info, I'll post it here. And once the game is officially live and selling, I'll definitely put together a proper guide for everyone on these forums. 🙂

silentnomad7 said:When it comes to software, this is likely what the math looks like, because otherwise, nobody would ever bother making or selling it:
1) You start with 100% of the retail price,
2) The storefront (Steam, App Store, etc.) takes 30%,
3) That leaves 70% hitting your account after the bank takes its small fee,
4) Then you pay your American taxes on that remaining amount,
5) And you're left with roughly 45% to 50% of that original price as your actual profit.

Like it was mentioned before, if you aren't bringing in massive revenue yet, it's probably best to just sell as an individual first.

Once the numbers start getting significant, it definitely pays to set up an LLC or a corporation. A good accountant will know how to manage that tax hit in step 4) much more efficiently, which might bump your net profit up to 55% or even higher... it's worth it eventually!

Steam mentions that you have to pay US taxes too—around 30%—since we don't have a specific tax treaty in place.

Based on most of the feedback here, my plan is definitely to start out as an individual and enter "placeholder" info for now. If the earnings become significant, then I'll look into forming a business.

Thanks to everyone for the advice! 🙂 I'm going to follow up with an accountant just to make sure everything is crystal clear.

Tyler Gonzalez6 said:Well, you can just operate as an individual. You select sole proprietorship, and if they ask for a tax ID, you provide your SSN—you don't need a business tax ID if you aren't incorporated (at least no American company ever asked me for one when I listed myself as a sole proprietor). Now, it all depends on your projected earnings. Starting a full LLC or corporation comes with overhead—you have to deal with various fees and payroll taxes even if you aren't making a dime—and you might risk losing certain student benefits. However, if you're expecting significant revenue right out of the gate, then forming a legal entity actually makes sense. If you report this as secondary income, it might qualify under certain freelance deductions—you should verify exactly what qualifies—which allows for a standard deduction to lower your taxable base; plus, you avoid the risk of paying massive self-employment taxes if your earnings end up being negligible (and you likely won't lose your student status).

The smartest move is to weigh every option against your expected income to see which leaves you with the most take-home pay. Besides, you can always change your mind—start as an individual first, then incorporate once things actually take off. There are plenty of online calculators for freelance income, so just run the numbers—there should be similar spreadsheets for LLCs and corporations to account for taxes and social security contributions.

Alex Foster6 said:sole proprietorship = small business

I beg to differ!
🙂
I really like what
Tyler Gonzalez6 is suggesting, but I'm honestly terrified of doing anything outside the law—especially since my top priority is maintaining my status as a full-time student. I want this to feel more like a side hobby that brings in a little extra cash rather than becoming a full-blown businessman. If things actually start picking up, maybe my parents could set something up under their names so I can sell through them instead...

If all else fails, I'll just hang in there until I finish college (only about 3.5 years left 🙂) and then look into more serious options. Who knows? Maybe things will improve by then.

Tyler Gonzalez6 said:It’s all useless when the intermediaries are this incompetent. Why on earth doesn't Steam give you the option to select "individual" or "sole proprietorship" during setup? It seems incredibly suspicious that they're insisting on business status. 🤔

Steam also offers the option to register as a sole proprietorship, and I'm curious about the easiest way to get that set up here in the States.

Carol Price4 said:In the States, a soliti Proprietorship is basically just being a freelancer—that's why they're asking for a taxpayer ID, which is essentially your SSN or business tax number.
Since you're still a student, you don't have many options other than operating as an individual, but honestly, the taxes and payroll hits are brutal—you'll end up handing over about 50% of everything you make straight to the government.

When I stopped by the IRS and my notary, everyone kept pushing me toward either a sole proprietorship or an LLC, even after I explicitly mentioned I wanted to operate as a private individual. It makes me wonder—is it just part of their job description to pressure us into forming a business entity?

So, what are my options here? I could try selling as an individual—though that doesn't seem particularly lucrative—wait around for things to turn around (maybe?), or just finish my degree, pack my bags, and move abroad to sell there instead. 😕

Tyler Gonzalez6 said:Have you looked into whether there's a distributor or middleman available for Steam? It’s true they’d take a cut of the earnings—but if they handle the Steam upload for you, you wouldn't need to register a business or deal with an SSN upfront. They could just pay you out as foreign income—maybe even through a royalty agreement—meaning you'd only pay taxes on what you actually earn. If things really take off, then you can worry about setting up a corporation or whatever else is necessary.

I’ve actually thought about that route, but I’m not a huge fan of using distributors or publishers. To be honest, so many of them seem unreliable. I hear stories from indie devs all over the world about getting burned by publishers—getting cheated out of money or having their vision completely ignored. Plus, it’s always been a dream of mine to have my own website, my own logo, and eventually my own company if that's what it takes.

And then, of course, there's the issue of how little is actually left.
Steam takes its cut (30%).
After that, the US takes its share (around 30% since we don't have a specific tax treaty to prevent double taxation).
Then the publisher takes their slice (usually another 30%).
The IRS takes their portion (whatever the current rate is).
The bank takes a fee for currency conversion (?%).
And by the time I'm done, I'm paying sales tax on whatever tiny amount is left! 🙂

cosmicsailor10 said:Maybe check things out here; it's basically a specialized academy for people looking to break into the US game dev scene.

From what I can tell, their tuition isn't exactly cheap, but they’d likely be competent enough to offer some solid advice. They even have an incubation program—business coaching, industry networking, and all that. Sounds interesting, at least on paper...

I haven't heard of them before, but they look legit. Thanks for the link; I'll reach out to them. 🙂

I just swung by my university to ask about student rights. They told me that, specifically at my college, if I take a job at another company, I'd definitely lose my status as a full-time student. Apparently, that rule applies to starting your own business too, though I know a few students who managed to pull off both working and staying enrolled.

Well, I just finished another trip to the IRS. I went in to ask about operating as a sole proprietor and how the tax implications would work. They ended up sending me over to a different building that handles small businesses and freelancers. Once I got there, they made it clear that I can't just earn money "on the side" and then settle up with my taxes once a year. They suggested I see a notary if I wanted more specifics regarding forming a corporation. At the notary's office, they confirmed that must either set up a sole proprietorship or go the LLC route if I want to get into selling video games.

The final piece of advice was to go talk to an accountant, but honestly, I’m pretty wiped out from all this running around. I have a feeling that if I go down the LLC or sole proprietor route, I might lose my status as a full-time student...

Kevin Cox said:Don't let Nadan get to you. I haven't run into any issues so far. Don't let it intimidate you; it’s really not that scary or complicated.

Just a heads up
Don't forget, after a year passes, right before you have to deal with any corporate income tax, you can list the software you bought as a business expense and deduct it from what you owe. Don't spend a single cent more than you absolutely have to.😉

Oh, one more thing
If you end up releasing your game on Steam, make sure to drop the link here!

Regarding software costs, the toolset I picked up was part of a bundle three years ago, so it was way cheaper than its current price. I assume I can't really use that to my advantage? Anyway, I'm mostly sticking to open-source tools now (Godot, Blender, LMMS), except for Windows (I'm assuming that doesn't count towards the same thing?).

If I actually launch a game on Steam, dinner is on me! 🙂

Kevin Cox said:Honestly, your best bet is to just head down to the IRS and ask them directly. My assumption is that you'll eventually be looking at an income tax rate (around 12%) plus some additional local surcharges (maybe 15% on top of that 12%). So, you're probably looking at roughly 14-15% total tax on your earnings by the end of the year.

The main perk of operating as an individual is that you don't have any overhead costs or mandatory payroll taxes and contributions to worry about.
You shouldn't lose any student benefits or perks, because you aren't technically an employee (since you don't have a formal LLC or corporation). Besides, given how inefficient the government can be sometimes, the Department of Education probably won't even realize you're selling a game on Steam. And even if they did find out, you still wouldn't lose your rights, I'm telling you.

If you operate as an individual, you are personally liable rather than a business entity. If you had an LLC, for example, the company would be responsible for any issues, not you personally.
You won't run into debt issues since you don't have any business expenses, but the only real risk is if you were to infringe on someone else's intellectual property. But if this is your own product—meaning you didn't use stolen code or rip off someone else's ideas—you should be fine.

It’s a good thing that you used free or purchased tools to build the game. Even though Steam won't (or can't) verify that, you should always make sure to use licensed software for commercial purposes.
That's really the bare minimum we all need to follow.

ps
Don't forget, once the year is up and before you pay your income tax, make sure to list any software you bought as a business expense to deduct it from your taxable income. Don't give them a single cent more than you absolutely have to. 😉

Thanks so much for clearing that up! I'll head over to the IRS as soon as I can and hopefully get some good news. I'm currently studying in Miami, so I'm hoping the local IRS office is pretty helpful. 🙂

Kevin Cox said:Haha 😁

If you're working with Steam, you aren't operating under American laws, and this poor country doesn't have any say over your business anyway. Isn't the internet a wonderful thing? 😁
Your only obligation is paying taxes at the end of the year. And if you ask me, that’s way too much, considering the government has absolutely nothing to do with your work.

Are you certain that a legal entity has to be a corporation? Here in the States, we have individuals and companies. So the question is, what actually qualifies as a legal entity?
Why couldn't it just be an individual? The main thing is that the person is real, so Steam can verify and confirm your details—not just some fake name or a random account.
Besides, Google says a legal entity is:
an individual, company, or organization that has legal rights and obligations.

Based on what you wrote, it looks like they're asking for a Social Security Number. You probably don't even need to register anything. Maybe you can just sell the game. Then, at the end of the year, you just pay your taxes on the earnings.
If Steam confirms that you can sell the game using your own personal information without needing a full-blown company, you should check with the IRS on how to handle the payments. It would likely just be standard income tax.

If I recall correctly, Steam offers an option for a "soliti Proprietor," which is what I was planning to select. They asked me for my Social Security Number along with some basic banking details. I ended up pausing at the Social Security Number field because I thought that was a specific number you only receive once you officially register a business.

I didn't realize an individual could earn income "just like that" without having to set up a formal business entity. I feel a bit out of the loop on this one, as I haven't been able to find much information anywhere!

It might be best to just head down to the local IRS office and ask them about filing as an individual.

I also read that if you sell things as an individual, you could run into trouble if someone decides to sue you, since you're personally liable. Since all the game content I create is original and made using free or purchased tools, I assume I won't have any issues? 🙂

Hey everyone, I could really use some help here if you have a moment. I really don't want to make the wrong call and end up wasting a ton of time and money fixing a mistake later on...

Alex Foster6 said:You can perform any activity allowed under a standard business structure through a sole proprietorship, provided you have those specific activities officially registered. You essentially set up the business first, and then notify the IRS that you wish to be taxed on a presumptive basis.
Some regulations have recently shifted, but previously it was roughly $384 per month in contributions plus an annual tax of approximately $517 at minimum. The exact figure depends entirely on your gross revenue and which tax bracket you fall into; what I mentioned above represents the lowest bracket, totaling no more than $28333 annually.

Wait a second—before (or maybe still, if things haven't changed) did you have to pay $384 every single month? Even if you didn't make a dime? If that's the case, I think I can forget about this idea immediately. 😵

One more question—I know I'm asking a lot, but I don't want to start a hundred different threads... Would I lose any rights or benefits as a full-time student if I opened a small business? My plan was to just live a normal student life, study, and work through a campus job, while keeping game development as a side hobby to earn a little extra cash. Or is that just a pipe dream? 😵

Dennis Williams40 said:Maybe just go with a sole proprietorship? It’d definitely be the path of least resistance for you.

Are you absolutely certain that selling digital media is a permitted business activity? I’ve been searching online, but I can't find an official list of approved activities for sole proprietorships (assuming such a thing exists—I assume there must be some restrictions on what you can actually do).

Also, how much actual work goes into maintaining a setup like that, and what are the overhead costs even if there's zero revenue? Basically, what does it cost just to keep a sole proprietorship active?

Hi everyone! This is my first time posting here, so please bear with me. 🙂

I'm an indie game developer, and I’m currently looking into how to actually sell my work. Right now, the best way to reach a wide audience (meaning, actual customers) would be to publish on Steam, which is pretty much the go-to platform for gaming. The setup process itself seems straightforward—and even easier lately—since you just pay a $100 fee, fill out some paperwork, and you're ready to go. The catch is that they require you to have a "legal entity," basically meaning you need to be registered as a business. Specifically, they ask for a Taxpayer Identification Number, a bank account, and various other tax details, while they handle the rest. I assume that to receive any revenue, I'll need to set up some kind of business structure, even though I'm not expecting a massive windfall right away—though fingers crossed that happens 🙂!

I actually ran into this exact same wall about two years ago. I spent ages scouring the internet and forums, researching LLCs and sole proprietorships, visiting the local IRS office, and talking to people, but I couldn't find anything that truly addressed my specific situation. I think it's because not many people specialize in the nuances of selling video games (selling software licenses, if I'm being technical). After a few weeks of hitting dead ends, I gave up on it, but now I'm circling back to the idea, hoping I might find better answers here.

Does anyone here have experience with this, or perhaps some practical advice? As a student who is already pretty busy with classes, what kind of legal structure could I set up to sell digital games without it becoming a massive time sink or costing me a fortune?

Maybe things have changed since I last looked into this two years ago, but since there aren't many threads dedicated specifically to selling through Steam, I'm hoping that whatever answers I get will help others down the road too.