Well folks, after much sour-graping and wishing and hoping, I finally went ahead and bought Unity Pro today. Time for a celebration!
Part of the reason I went for it after all this time, apart from its awesomeness, is that I had a discussion with my accountant. I asked about whether software counts as a business expense. He said yes. If I am using Unity for 100% business use (and I am an official LLC business in the USA), I can claim 100% of the price of the software in the next tax year. An alternative is that if you use Unity only partly for business and partly for other purposes, you can claim at least a portion of its price on your taxes deprecated over 5 years (thats what I did with the price of my computer). So basically, and I wish I did this in December so I could have this happen already, when the next tax year rolls around I get a $1500 refund because Unity is a business expense.
Now obviously you gotta have the money up-front to pay for it. If you are thinking about taking this approach also, you could e.g. get a loan near to the end of the tax year, buy Unity, claim it on your taxes the next Spring, and get refunded within a few months to pay the loan back.
So anyway, I had $1500 available (thanks to all you asset store purchasers) so decided to invest. Getting my money back later is an added bonus, but I feel Unity Pro is a really powerful piece of software and worth the price. I also feel that owning it is a motivation in itself to do something great with it.
Anyway… still celebrating this sudden shift from Free territory to Pro territory. It’s like a whole new way of thinking!
Wow, sadly many indie game developers in other countries are in a big disavantage compared with EEUU developers, if you think that in many countries the Per Capita Income is a fraction of the income of the EEUU people then for this developers pay Unity Pro is near to imposible (and in almost of this countries not exist the taxes refund figure). Well, we will continue work with Unity Free or maybe a “us$19 option”.
Wait… Wait wait wait wait wait… do you need to have an LLC to do that? Oh… Oh Sweet Jesus.
$#%@ing TurboTax!
Ah, I think I’m gonna barf and pass out now.
Do I not understand taxes or something? My understanding of business tax write-offs is that legitimate expenses can be deducted from your taxable income, but it’s not as if you’re getting reimbursed for that amount.
So let’s say I make $100,000 a year (I don’t). If I have $10,000 worth of business expenses, including a new computer, Unity, whatever, my taxable income is $90,000 for the year. This may put me in a lower tax bracket, reducing the amount of taxes I owe, and depending on how much my employer has already deducted from my paycheck, could increase the amount I receive on my tax return.
This is more accurate it’s not really free unless you cross a tax bracket which would drop your taxable % for your entire income for the year (i.e. if it lowers your income from a 25% tax bracket to a 15% tax bracket on your whole income). When you don’t cross a tax bracket you are only saving the percentage of the tax bracket your in (ex. 15% for that tax bracket).
This would also apply for an S corporation with the disclaimer above that it’s not really free unless you cross a tax bracket (and depending on which you cross it might actually make you money obviously the 25% to 15% border is quite large). Another thing to note is it’s not the only vehicle for reducing income (you can take distributions also) so it’s not always necessary to buy an expense to cross a tax bracket. Obviously, this is for U.S. tax jurisdictions.
I am NOT an accountant and there are many rules to follow so unless your willing to put in a lot of research its always prudent to consult with an accountant in your area.
So since my work is not in any way incorporated, very bad things are coming… The forms I went through mentioned nothing at all about that.
Can, uh… can I somehow… fix that?
The main reason for indie developers to form a corporation or LLC is the liability protection. If you get sued and lose you don’t want them to take your house, car, etc. Obviously it costs money to create a company, usually a couple hundred dollars depending on the state and then around a hundred dollars a year for the annual report.
As far as if you weren’t a company and want to become a company you can always create one but it won’t have any bearing on the past tax year if that’s what your asking. In general though the main purpose of creating a company is the liability not the taxes for indie developers.
Congratulation on Unity Pro - it’s good to invest in yourself and your business.
To be on the safe side i would research the 100% off thing. Its usually what these guys said, so if you make 35000$ next year in business, you’d pay income tax on 35000$ - 1500$ for unity, so a percentage of 33500$. not trying to throw cold water on your excitement, but i worked my way out of debt and its better to be safe than sorry.
My experience (California) is you get to write off the same being an S-Corp, LLC, Sole Proprietorship, or Partnership. Incorporating has more legal protections and you can do things like pay yourself a smaller (reasonable) wage and pay out the rest in bonuses (which don’t pay payroll taxes). There are other differences of course, but you should be able to deduct business expenses pretty much the same way. Sucky thing about California is it almost $1000 dollars a year to incorporate so, you need to have steady income from it for it to make sense (or need the legal protection).
Depends on where you live. I spoke to my accountant and he says as long as you are an individual paying taxes on the income it generates you can in deed deduct the price of the software and even the hardware if that’s all you use it for. Pretty much anything you put into making a little money will be deductible. At least in my state and/or city.
You’re right, actually… it removed a certain chunk from my taxable income, it’s not really a 1500 refund. However, since my income right now, for a business, is very small, this is quite a large percentage. It maybe will save me a few hundred in taxes overall. I was mistaken to say it was a total refund, or to lead you on to think you can do the same… my misunderstanding of what my tax guy meant, lol … anyway… that was only part of the reason for the purchase, I am still glad to have spent the money. Now I have lots of new features to learn about!
Yeah I love pro for everything else much, much more. People doing games on free don’t understand the extra value. Because their projects are usually tiny and don’t make use of the extended goodies unity provides in pro. One of which is the almighty profiler. That thing is so useful it’s not even funny.
Not to mention extended features for loads of other stuff which I use, substantial time savings for medium to large projects, plus dll plugins for unicorns and butterflies.
Also, I have no idea about the feature split for 5. I’m just winding you up because you need it after going pro
I don’t think that’s correct either. That’s definitely not how it works in Canada and I’d be surprised if that’s how it works in the US. Your entire income is not taxed at a single rate if you cross a tax bracket. If the bracket threshold is, say $100,000, and you make $150,000 then using your example tax rates, your first $100,000 gets taxed at 15% and your remaining $50,000 gets taxed at 25%. That’s how personal taxes work. Corporate tax has more complicated adjustments, deductions and rules but it follow the same basic idea that the first X dollars are taxed at one rate and the rest is taxed at another rate. You don’t cross a threshold by a dollar and end up paying a whole bunch more tax because of it.
Are they really gonna be in Unity Indie? Or was that just a figure of speech just to piss some people off LOL?
That’s a big reason I decided to get Pro was the Image Effects. (I think their the same thing?)