Selling video games on Steam

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.

On every platform where I sell my stuff—it isn't gaming, but it is digital—I am listed as an individual/sole proprietor even though I haven't registered a formal business. If they ask for a tax ID (not a VAT number), I just provide my Social Security number.

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. 😕

redpuma60 said: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.

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. 😕

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.

sole proprietorship = small business

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.

redpuma60 said: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.

Actually, no. An equivalent to a sole proprietorship in America would definitely be a small local business, but that’s irrelevant because Americans don't care about our specific business structures. This isn't about literal translation—it's about what the term means to Steam. Everywhere I sell, there's an extra explanation stating that if you are an "individual" with full copyrights, you should select "sole proprietorship"—because they realize that legal definitions vary globally. They aren't going to demand official business registration papers from some other country; the whole point is simply that you aren't a corporation, the income goes directly to you rather than third parties, and you are responsible for paying taxes in your own country while they handle the sales tax and US tax withholding. On every platform I use—even on US tax withholding forms—the "individual" and "sole proprietor" statuses are treated as identical just to make things easier, not to complicate them.

Read Steam's Terms & Conditions carefully and keep a copy—that is your actual contract. It likely specifies exactly what they require regarding "sole proprietorship" and whether they equate it to an individual status to avoid asking for extra paperwork. In my view, on Steam, the only thing that matters is satisfying their requirements; once the money hits your account, you can deal with the IRS.

I'd love for someone to try and force me to register a formal business just because I checked a box on some foreign website—as if they could even find out what I selected, let alone care. The Terms & Conditions clearly state what is being agreed upon, and having a formal business entity isn't a requirement. 🤣 Furthermore, this is essentially a contract where we aren't even selling products ourselves, but rather the platform is facilitating it; any invoice issued to Steam or similar sites would be technically invalid since no physical goods or services are being delivered—only rights are being transferred. 😵 But fine. Go ahead and research more, but if Steam doesn't ask for additional documentation and clarifies its definition of "sole proprietor," then you can select it without issue regardless of how things work back home. Once the cash arrives, you just report the additional income and everyone is happy. I fail to see the problem here.

redpuma60 said: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! 🙂

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!

Just make up a number. Use a dummy Social Security number if you have to. Half the people in this thread don't even grasp what you're talking about, nor do they care how you plan to stack your cash; all they see is the bottom line (as if Steam is actually going to send your invoices straight to the IRS)

Once you've actually built a brand and there's a real pile of money involved, that's when you go out and register an LLC to get your official tax ID. (Honestly, if you're pulling in less than $300 $0.00 a year, you aren't even playing the game yet)

The perspective on value here is completely skewed. People seem to think a college degree is the only golden ticket to a career, yet the government encourages these solo entrepreneurs—people capable of making a living entirely on their own—to shoulder all the startup costs while receiving absolutely zero help from subsidies or venture capital. Someone like that deserves a medal for the sheer grit required

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.

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. 🙂

I'm actually curious to see where this story goes...

From a legal standpoint, I’d say it's always smarter to steer clear of certain business structures, regardless of what a service provider suggests—things like general partnerships, sole proprietorships, or LLCs without limited liability protection. The problem is you end up personally liable for any debts that pile up. That’s why corporations or LLCs are better; with those capital-based setups, your personal assets stay safe.

On another note, if there are any developers out there who specialize in mobile apps, I’d love to chat. I have an idea for a business model that seems pretty straightforward to me, and I want to talk through how we could build an app around it.