He had over a $100,000 in revenue, which is pretty cool for 6 months. He says he's started paying himself a bit, but all that money is his, so its all income as I see it. Other than a bit of server space, what are the costs? Obviously he's going to use some of it to pay for server space for his future prospects, but thats a pretty penny nonetheless.
Hi Maximilian, here's a breakdown of my top expenses:
- Salary: 13,500 (46%)
- Equipment: 5,400 (18%) I bought an iPhone and a 23'' Cinema Display this year
- Contractors: 3,500 (12%) I hired 2 devs for 2 different small projects
- Lawyers: 2,780 (9%) I hired a lawyer to help me incorporate and with the EULA
The rest is small stuff.
Yes all the money is technically mine, but I have started paying myself because I want to keep the rest for taxes and to re-invest in the company.
Next step: get an awesome accountant and start using that money to purchase anything and everything you could possibly write off. All that excess revenue will get raped by taxes.
No accountant can be awesome enough to write off much more than what is truly a business expense. The ultimate rule is that everything written off must have business purpose.
Now, you'll only get in trouble if you get audited, but writing off things that shouldn't be written off will stand out.
The best way to shelter yourself from taxes is to invest the money and then pay taxes on a long term capital gain (which have historically been lower than ordinary tax rates).
