Selling a Website Design

[Ben-BSH]

Hi again all, advice needed please

 

Well, after my previous post, here : >click< i have made my first website for a customer, and they have decided they would like it, and have asked me to bill them, this is for a friend from work, and although i do not think for a minute anything would turn nasty, SHOULD i miss something, i want to be covered in the sale, as much as practically possible that is! (mainly for future sales which i may not trust the buyers as much as i do for this one, but its still good practice.)

 

So, considering i am going to bill them, and then just file a copy of the invoice, and then sort out my extra earnings at the end of the year via the self assessment form thingamujiggy (discussed in previous thread) what do i need to put on the invoice? in terms of tax, etc.

 

and should i place any wording on there, to cover me for the sale? no "maintenance" agreement has been agreed, and as of now, i am simply selling them the designed site, with their content in it.

 

annnddd...just for ease of my teeeeny brain, lets say i sell it for £100 (makes my % workings out easier )

 

do i then need to add 20% on, and say the total is £120? and then pay the 20 tax at the end of the year, and 100 "profit" or say it is £100 and then pay 20 at the end of the year, giving me 80 "profit"

 

I really have no clue when it comes to all of this, i just want to stay relatively covered, and more importantly, keep the taxman happy, so he gets his fair share, and the people buying the site arn't getting fleeced.

 

oh, and just incase you dont want to skim through the previous thread, i am in full time employment, and have started doing odd jobs IT wise, for extra pocket money, which i declare at the end of the year, via the form thing, i am NOT a company, so do not have VAT numbers, business numbers, or any of that jazz, and i hope i dont need it either

 

Thanks in advance

Edited May 25, 2010 by Ben-BSH

[glennda]

AFAIK as you are not regisitered to VAT you have to charge 100% then pay 20% tax and 80% profit as such.

 

Its only VAT as such to have shown as companys will need to claim this back. And also state you are not registered for vat. i think.

[Guest theeldergeek]

If you start adding "terms of business" to your invoices, then you have entered into the realms of serious business and I would therefore take some serious advice from a specialist or enterprise agency, much of which will be free. You absolutely have to make sure your TOB's are watertight and fair.

 

If you are just going to do the odd one or two sites per year and make a couple of hundred quid on the side, then just give them an invoice detailing clearly the service you have provided. In my early days of self-employment, I used to add entries to the invoice like "maintenance plan declined" or "support contract not required" which clearly showed that they were paying for what was on the invoice and nothing else. In your case you could put something like "ongoing maintenance/development or updates will be charged at prevailing rates" as a 'disclaimer' towards the bottom of the invoice.

 

Terms of Business are a good idea however (and I moved to using them early on) as they provide a clear and precise contract under which you trade, but it depends on what sort of client you intend dealing with and what sort of 'business' you are. At the moment, you aren't a business, so I'm actually unsure as to whether you can invoice anyone per se, I think you just give them a receipt?

Edited May 25, 2010 by theeldergeek

[Ben-BSH]

oh, ok, awesome guys, so i should be simply giving them a receipt, for 1 x website design & coding. charging £100, and then telling Mr TAX man i earned an extra £100, and pay him his "£20?" i owe him? (i think it is 20%)

 

Now, as per the wording of my service provided, and the item i am selling, should i be very simple? or go into more depth?

 

for example.

 

1 x website design, all coding, images and PSD files included.

 

or:

1 x Website design

including : coding, design, images, PSD files.

permission to modify design in any way, aslong as "link" to ben'sdomain.com remains

fully CSS and XHTML validated at point of sale, no support/maintenance agreement included.

 

Thanks in advance

[jamesreedersmith]

Option 2

[Ben-BSH]

Sorry to get back to the previous thread again. but after explaining how happy i am to of sold my first website, my mothers partner has questioned why i would even be considering paying tax at this stage, and mentioned even declaring an extra £100 is going to be A LOT of hassle, and the whole self assessment form thing is not that easy, as i have to declare i am selling a service, 3 months after doing so max, registering etc etc.

 

is this true? i mean, i only wanna keep my extra pocket money, which might not amount to any more than £200 a year, on the level. surely it can't be that time consuming to just pay the taxman what i owe and be done with?

[Guest theeldergeek]

oh, ok, awesome guys, so i should be simply giving them a receipt, for 1 x website design & coding. charging £100, and then telling Mr TAX man i earned an extra £100, and pay him his "£20?" i owe him? (i think it is 20%)

 

Now, as per the wording of my service provided, and the item i am selling, should i be very simple? or go into more depth?

 

for example.

 

1 x website design, all coding, images and PSD files included.

 

or:

1 x Website design

including : coding, design, images, PSD files.

permission to modify design in any way, aslong as "link" to ben'sdomain.com remains

fully CSS and XHTML validated at point of sale, no support/maintenance agreement included.

 

Thanks in advance

 

As James has said, option 2 is definitely preferred.

 

However...

 

I would change the word "including" to "inclusive" as they are elements of the site that are inclusive to the deal (built into the site), not extras you are 'including'. Nit picking I know, but you have to get it right because if you don't, you can bet your life someone will query it, no matter how friendly your relationship is at the start. Fee is inclusive of blah blah blah.

 

In respect of your copyright - You are now starting to get into the realms of business terms and conditions - you are stipulating a term attached to the sale. What would you do if someone changed one of your designs but removed your link? Sue them?

 

You either waive copyright, or you don't. If you are happy to let them re-design the site, you could say that "whilst there is a full waiver of copyright in the design of the site, the would appreciate the continued inclusion of a link to in any future version". This isn't a term as such, it's a polite request.

 

It's uncomplicated to waiver copyright because then if they do interfere with your design in any way, it's not an issue. You are denying yourself repeat business however, so it might be wise to have a little think about this. I'm no expert in the copyright field, so I'd take some proper advice if you do want to retain your design.

 

I know it all sounds overcomplicated, but not all your clients will be fluffy bunnies who want to hug you and keep you warm on cold winter nights! Some will undoubtedly try it on, some will not, some will let you go so far, put several hours in, and then drop you like a hot potato. Others will be happy with a basic page that says "hello" on it!

 

There is no simple in business. You are taking money for a service provided, pocket money or not.

[Guest theeldergeek]

Sorry to get back to the previous thread again. but after explaining how happy i am to of sold my first website, my mothers partner has questioned why i would even be considering paying tax at this stage, and mentioned even declaring an extra £100 is going to be A LOT of hassle, and the whole self assessment form thing is not that easy, as i have to declare i am selling a service, 3 months after doing so max, registering etc etc.

 

is this true? i mean, i only wanna keep my extra pocket money, which might not amount to any more than £200 a year, on the level. surely it can't be that time consuming to just pay the taxman what i owe and be done with?

 

If you were selling a few bits and bobs down the boot fair a couple of weekends a year, then I'd say keep the lot and put it towards a holiday. However, you are taking money to provide a service, a service which will probably involve businesses at some point. Those businesses will be submitting any invoices/receipts you issue to their books/accountants for tax return purposes. Take from that what you will.

[Ben-BSH]

well, the first website i have designed is for a Charity, so i guess a phone call to the taxman is in order tomorrow.

 

don't get me wrong, im not wanting to get out of paying, im just not knowledgeable on any of this, and really hate the sound of all these forms, and other hassle.

[Guest theeldergeek]

well, the first website i have designed is for a Charity, so i guess a phone call to the taxman is in order tomorrow.

 

don't get me wrong, im not wanting to get out of paying, im just not knowledgeable on any of this, and really hate the sound of all these forms, and other hassle.

 

That's why running your own business is 80% paperwork, and 20% doing what you are actually paid to do! OK, statistically that may be wholly inaccurate, but it sure as hell feels that way sometimes!

[jsnetman]

Are you kidding, the taxman at the office would probably fall of his chair if you declared 20% tax retwurn on 100 quid. I know it's not clever to be a tax evader but come on get real 100 quid is nowt. If you start churning out loads of websites and make thousands then by all means declare some for tax. My mate who ran a barber shop never paid tax at all, it was all cash sales and he claimed to the tax man he was not covering his expenses.

[powdarrmonkey]

So, considering i am going to bill them, and then just file a copy of the invoice, and then sort out my extra earnings at the end of the year via the self assessment form thingamujiggy (discussed in previous thread) what do i need to put on the invoice? in terms of tax, etc.

 

Mention nothing. Tax is your affair, it's nothing to do with the client.

 

and should i place any wording on there, to cover me for the sale? no "maintenance" agreement has been agreed, and as of now, i am simply selling them the designed site, with their content in it.

 

Add a note: "Note: no maintenance arrangement included, please contact me for per-page alteration costs."

 

do i then need to add 20% on, and say the total is £120? and then pay the 20 tax at the end of the year, and 100 "profit" or say it is £100 and then pay 20 at the end of the year, giving me 80 "profit"

 

Again, the tax is nothing to do with them. You take a price, and then sort out the tax as a net amount later on. (Besides, 20% of £120 is £24.)

 

AFAIK as you are not regisitered to VAT you have to charge 100% then pay 20% tax and 80% profit as such.

 

Its only VAT as such to have shown as companys will need to claim this back. And also state you are not registered for vat. i think.

 

VAT is totally irrelevant in this context. And again, don't even mention it.

 

If you start adding "terms of business" to your invoices, then you have entered into the realms of serious business

 

For once, I find myself agreeing with you Having a supplementary income (assuming there is no provision in your other contract(s)) is perfectly valid and fair, but if you're going to be informal about it I'd keep it that way.

 

At the moment, you aren't a business, so I'm actually unsure as to whether you can invoice anyone per se, I think you just give them a receipt?

 

He's a sole trader. There is no legislation on who's allowed to invoice who (I'll send you from me if you like )

 

oh, ok, awesome guys, so i should be simply giving them a receipt, for 1 x website design & coding. charging £100, and then telling Mr TAX man i earned an extra £100, and pay him his "£20?" i owe him? (i think it is 20%)

 

You supply an invoice, and you declare your net earnings at the end of the year to the IR.

 

Disclaimer: not legal, financial or moral advice: you may end up within the threshold for non-taxable supplementary earning, in which case you may not end up with a tax bill anyway. However, ring the IR and find out at the end of the year.

 

Actually filling in the form in April is a piece of cake.

 

Now, as per the wording of my service provided, and the item i am selling, should i be very simple? or go into more depth?

 

That's up to you.

 

Sorry to get back to the previous thread again. but after explaining how happy i am to of sold my first website, my mothers partner has questioned why i would even be considering paying tax at this stage, and mentioned even declaring an extra £100 is going to be A LOT of hassle, and the whole self assessment form thing is not that easy, as i have to declare i am selling a service, 3 months after doing so max, registering etc etc.

 

Again, ask the inland revenue. You'll pay a far higher price if you're caught and found to be evading tax, though.

 

It's uncomplicated to waiver copyright because then if they do interfere with your design in any way, it's not an issue. You are denying yourself repeat business however, so it might be wise to have a little think about this. I'm no expert in the copyright field, so I'd take some proper advice if you do want to retain your design.

 

Fortunately I do have some limited experience.

 

Under no circumstances assign copyright to the client unless they stipulate it as a term of the contract. It's your work, and you retain it. You are licensing the client to use the design in perpetuity (unless you agree otherwise), and you can sell it to other clients (unless you agree otherwise - spotting the pattern yet?).

 

On the other hand if you ever commission a design, make sure you do stipulate copyright assignment to stop other people making their site look just like yours, legitimately.

 

I know it all sounds overcomplicated, but not all your clients will be fluffy bunnies who want to hug you and keep you warm on cold winter nights! Some will undoubtedly try it on, some will not, some will let you go so far, put several hours in, and then drop you like a hot potato. Others will be happy with a basic page that says "hello" on it!

 

Somehow I find myself agreeing with you again..... I think I should go and lie down.

[powdarrmonkey]

Are you kidding, the taxman at the office would probably fall of his chair if you declared 20% tax retwurn on 100 quid. I know it's not clever to be a tax evader but come on get real 100 quid is nowt.

 

You are doing the kidding. Have you seen the fines for tax dodging?

 

If you start churning out loads of websites and make thousands then by all means declare some for tax. My mate who ran a barber shop never paid tax at all, it was all cash sales and he claimed to the tax man he was not covering his expenses.

 

You're still obliged to declare it, even if you make a net loss... and of course if you're found to be covering them after all, the fines for fraud are even worse.

[jsnetman]

You're still obliged to declare it, even if you make a net loss...

 

I know it is illegal to not declare earnings and I applaud the guy for wanting to do it right, but selling one website for 100 is like you say not even putting him in a taxable situation. Lets face it companies big and small will do anything to evade tax legally and sometimes illegally. Ask for cash and tell the the person to keep their gob shut

Edited May 25, 2010 by jsnetman

[glennda]

Its only VAT as such to have shown as companys will need to claim this back. And also state you are not registered for vat. i think.

 

I only mentioned this as an example of a tax that you would put on a invoice

[powdarrmonkey]

I know it is illegal to not declare earnings and I applaud the guy for wanting to do it right, but selling one website for 100 is like you say not even putting him in a taxable situation. Lets face it companies big and small will do anything to evade tax legally and sometimes illegally.

 

The revenue have been pursuing small (£100-£1000) dodgers extremely aggressively in the last 18 months.

[jsnetman]

The revenue have been pursuing small (£100-£1000) dodgers extremely aggressively in the last 18 months.

 

Can you substantiate this comment.

[powdarrmonkey]

Can you substantiate this comment.

 

Yes. I come from accounting stock, and I understand the level of formal enquiries into the lower brackets has increased substantially in that period. However, I don't have precise figures to hand (so I suppose you could call this anecdotal).

[jsnetman]

Another angle to take especially if they are a friend is just for them to give you £100 as a gift, gifts are not taxable (unless you are trying to avoid death duties and are in great amounts), you can still draw up some sort of contract but don't bill the friend for the website. Fair enough later when you are doing it for clients then by all means declare it. Edited May 25, 2010 by jsnetman

[RingOfFlame]

The revenue have been pursuing small (£100-£1000) dodgers extremely aggressively in the last 18 months.

 

Citation needed.

[jsnetman]

I suppose being from bean counter stock you adopt some sort of need to declare anything you earn, but as it happens two fairly close acquaitances both of bean counter fraternity have been struck off for tax evasion, or as it is better known cooking the books. Edited May 25, 2010 by jsnetman

[powdarrmonkey]

I don't understand what you're trying to say. Struck off what?

[jsnetman]

Not allowed to be a practitioner in accountancy, thats what I mean. Similar to this:

 

http://news.bbc.co.uk/1/hi/england/london/8308685.stm

Edited May 25, 2010 by jsnetman

[powdarrmonkey]

I still don't understand what you're saying. I'd have thought that would make you more cautious, not less.

[jsnetman]

All I am saying is that 100 quid declaration to the taxman is laughable, it would probaly cost more in man hours and paperwork to process it, I am not in favour, especially of politicians and big businesses of evading tax and we are talking big sums here. Joe Bloggs making an earner here or there does not come into the equation.

 

And ever since tax collection came about there has been a black market economy where people will deal without the taxman knowing. For someone to use their skills to earn an extra few quid is hardly a major crime. Granted if this grows into a regular and substantive income it should be declared, or else they risk the wrath of the taxman.

 

Just one more point, my technician offered to do the school disco and charged £120, the school paid out of petty cash. Being a good citizen he phoned the tax office they told him not to bother unless it was a regular income.

Edited May 25, 2010 by jsnetman