I have a Ltd company which produces apps and currently I have produced 4 apps. They are selling worldwide although not in any great volume yet any advice on how to value and account for these?
Hi Jay
we do not have enough information for this and its one where you absolutely need specialist advice - not only on the accounts side but potentially for tax and VAT issues outwith the UK.
Also - I do need to add this for anyone else reading this post - its worth noting that no-one on this site can provide you as a business owner with 'advice' - we can only do that for clients with whom we have agreements to do so and even then such advice can be restricted to what level of PII held and where people stand with their professional bodies (eg students cannot give this sort of advice).
Do you have patents? How have you protected your intellectual property rights? How do you sell the apps? Are there any free to download apps or are they all paid for?
Do you sell your app direct to google or direct to the end user? Do you have data which indicates in which country that end user 'resides'? Are they apps sold to businesses as well as individuals?
Loads more Qs!!!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
This is not the Useless Stupidity of America! In the UK (and EU) we don't have software patents - and rightly so. Software is covered by copyright, and that is an automatic right.
But apart from that the rest of the questions are valid - though my guess would be "apps" for mobile phones and tablets, so probably either iOS or Android (or both) and sold to the public through either the App Store or Google Play (or both). Apple and Google take a commission and pay the balance, subject to whatever terms they have.
I assume Apple and Google handle the place of supply issues, and the 'sale' from the developer's POV is to Apple and Google for the balance - but I'd be very interested in the full details.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Patents are not valid for most apps, and getting a patent in the UK is MUCH harder than in the US where they think they cant patent air, but we dont know anything about this app, so its something that should have been considered at the outset if the app is doing something unique in its interactivity with something outside of the app itself. So whilst mostly the idea can probably be written off as its potentially just another piece of software, it shouldnt always be dismissed. There have certainly been some interesting patents granted in this area. You can of course also consider design registration. Like I said - I have a ton more Qs, too many for right now though, although some of my Qs I also added to play devils advocate and to also show that the initial question is not enough!
-- Edited by Cheshire on Saturday 21st of May 2016 11:39:48 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
"if the app is doing something unique in its interactivity with something outside of the app itself"
That would mean the app isn't just an app, but includes hardware. In which case it's the hardware that would potentially be patentable.
If it's just software, it can only interact with something outside of the app (the hardware in the device, or information found on it, or other software) through the APIs provided by the OS*.
* Or possibly using some hackery to directly access (say) a memory buffer and bypass the API - but that is frowned upon generally, can limit your software to specific hardware, and can break in OS updates. (And I'd be surprised if either Google or Apple would let anything that does that onto their platforms - assuming their OS level security doesn't prevent that sort of thing in the first place).
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
The apps are sold on Itunes, Google Play and Amazon via online stores.
The majority are paid but there is a free version of one of the apps that generate revenue via mobile adds.
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Q) Do you have data which indicates in which country that end user 'resides'? Are they apps sold to businesses as well as individuals?
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A) Yes - I have data and they are sold to individuals rather than businesses.
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Q) Do you sell your app direct to google or direct to the end user?
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A) 2.1 This agreement ("Agreement") forms a legally binding contract between you and Google in relation to your use of the Store to distribute Products. You acknowledge that Google will, solely on your behalf, and not on Googles behalf, display and make Products available for download and purchase by users.
So I am selling to the customer I would imagine this is the same for the other stores.
One is weight loss related based on a cognitive behavioural approach as opposed to calorie counting and the other is to do with Mindset and Law of Attraction.
Jo raised a good point on tax and I have now looked in to it a little further....google play store handles VAT for the EU and some other random countries but anywhere else in the world is my responsibility. I suspect this would be the same for Amazon and Itunes. This freaked me out at first as there is a lot to consider here. But I have since researched the various rates of GST/VAT and updated all my reports to track it all and ring fence any money that I would be responsible for remitting to the various authorities. I need to do a lot more here to understand the intricacies of it all. When I first saw this I did consider taking the apps off the market in those countries where google doesn't handle all that stuff for you and then I thought better of it. Currently sales to those countries are very immaterial so it's a good opportunity to get the infrastructure right. If I suddenly sell 1 million apps in Australia then worrying about the tax would be a good worry to have if you see what I mean so on that basis it's better to leave the apps on sale.
I will get some professional advice though following on from what Shamus / Jo and Johnny said but I want to do it in a way where I could be mentored through everything so I can understand it all myself. I need to set myself up with PAYE potentially for the 16/17 accounts submission.
I have till the 30 June to get the 14/15 accounts in so currently working on those.
What is a worry is that you weren't aware of what is in the contracts you have signed, but certainly worth going over these now with a fine tooth comb.
Are you up to speed with the relevant accounting standards you need to use?
You mentioned in another thread you are an employee so if you are pulling in a wage from that then the last thing you should be doing is setting up a payroll for yourself in the limited, unless of course this will be your sole income provider.
I deal with many foreign tax authorities and some take an age to deal with so don't delay in getting the specialist advice and input you absolutely need, but when you do you need to give them more than the one line extract from the contract given above as that tells us very little. Any good Accountant will need to review the contracts of all of them as you cannot take one clause of a contract in isolation. Plus you may need someone with international experience. I wouldn't delay, you do actually have time to get a professional involved in this years if you don't delay any further, plus I'm sure you can persuade them to do it at a cheaper rate based on your past comments, plus maybe even spread the fees to help with the cost and potentially save you from breaking all manor of regs and incurring fines, as well as getting the actual accounting wrong.
.
-- Edited by Cheshire on Monday 23rd of May 2016 12:06:52 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Yes, I agree my approach has been a little Gung-ho in some areas, bizarrely mainly the accounting! I have sought legal advice and drawn up terms and conditions from a personal/business liability perspective. I will review all the T&C's of the app stores fully over the next couple of days (yawn -but I know this is important!)
No I am not up to speed with the relevant accounting standards yet, definitely need to brush up on these!
I am an employee so thanks for the advice I had thought that I didn't want to interfere with WFTC plus end up getting taxed at a higher rate. It's different to the other scenario I was looking at with Shamus the other day as in that example the Ltd was the sole source of income. I was thinking of increasing the losses to potentially save on corp tax in future years but if I were to draw a salary then I would be taxed at the higher rate of income tax anyway....duh!
I will get some advice possibly from a local firm although a firm from London replied to an add on freelancer and they seem quite reasonable with relevant experience.
With regards to this point -
"Any good Accountant will need to review the contracts of all of them as you cannot take one clause of a contract in isolation"
I am aware of this but I thought it was the most pertinent term in order to attempt to answer one of your earlier questions without pasting reams of info that I would not expect you to read.
Thanks for the valuable advice, it's very much appreciated. Jay
-- Edited by Jay3 on Monday 23rd of May 2016 09:15:12 AM
Jay Its Joanne, not Jo! Plus Shaun not Shamus. So yours - is it Jay or John as you seem to sign off with one or the other?
Re Any good Accountant will need to review the contracts of all of them as you cannot take one clause of a contract in isolation"
I am aware of this but I thought it was the most pertinent term in order to attempt to answer one of your earlier questions without pasting reams of info that I would not expect you to read.
I wouldnt and couldnt answer based on that one line, not saying that Im a 'good Accountant' but I do wouldnt do it without reviewing it and with several years of experience in law and reviewing contracts behind me. Plus no obviously I wouldnt be reading reams on here and making comment because you are not paying me to But my questions were to make YOU think about it and yes sorry read the boring stuff, so thats a result
-- Edited by Cheshire on Monday 23rd of May 2016 09:24:23 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I had already edited the post to amend you name! Just read your other post so apologies for that! You can call me Jay. Not sure where I got Shamus from either....apologies Shaun!
I did say it was an 'attempt' to answer your question I didn't think it would be enough but it's hard to strike the right balance on a forum. All of these posts give me food for thought and believe me I am thinking about it.... a lot! and I will read the boring stuff ;)
I could do with that weight loss app lol, went past my highest ever weight last year and although I've managed to lose about 5lb since I'm still over that point. I have absolutely no willpower and will swoon at the mention of cake and chocolate.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I have decided to really go for it now as it's something which I have struggled with for a long time but I have now lost 1 1/2 stone in the last 12 months and I have signed up to run the Amsterdam half marathon for Worldwide Cancer Support in October....I'm not a runner so it's proving very challenging! It's for a good cause though. I never made it as far as morbidly obese, I have always been quite jolly about it ;o)
Anyway....meeting up with an accountant on my lunch break to talk business feel quite excited about it actually.
Thanks to everyone for the advice and help...
Much appreciated,
Jay
I have a weight loss app. It's called Photoshop, and it works wonders! :p
I've found this little wheel thing on the back of the scales that takes stones off you with virtually no effort and no dieting.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
But my questions were to make YOU think about it and yes sorry read the boring stuff, so thats a result
