KickStarter Monomyth - A first person action RPG/dungeon crawler - now available on Early Access

[xuerebx]

And if you have tax outstanding and are also insolvent, you're less likely to pay your tax liability.

 

[Gargaune]

If money's the root of all evil, taxes are the rotting branch that breaks your windshield. They should be banned. Or if that's not an option, at least a symbolic gesture, ban taxalot.

 

[VonHoffenHeimer]

nothing destroys innovation more than government

 

[Child of Malkav]

I don't wanna be a dick or anything but if worse comes to worst just release the game before they take you in or you die or whatever. For posterity, future, science and all that. Ok? Thanks. You're a great dude. You'll forever live in our hearts and we'll speak fondly of you.

 

[RatTower]

I don't wanna be a dick or anything but if worse comes to worst just release the game before they take you in or you die or whatever. For posterity, future, science and all that. Ok? Thanks. You're a great dude. You'll forever live in our hearts and we'll speak fondly of you.

It's probably going to be fine. I might bleed a bit of money or, alternatively, make some people angry but in the end, it should be fine.

Why on earth does The State care if you are solvent? How does an operating loss cause them to threaten you with jail time?

A delayed filing of insolvency is a criminal offense in Germany and Austria (in German it's called "Insolvenzverschleppung" - there is no real equivalent in English and the Austrian version is actually called "Krida", which is a bit more lenient, but nonetheless, you probably want to avoid it).
Of course, with this company there is no insolvency issue cause I owe nobody any money. But then I need to justify the red in my books and I must give the state a good reason why the current situation isn't a solvency problem.
Which is what we did in our little IOU message and that's probably okay for the moment, but I wouldn't push my luck with it.
Once the down payments are activated as revenue there is an actual open bill against the state in the form of VAT. How long can that activation be delayed? Your guess is probably as good as mine.

Why on earth does The State care if you are solvent? How does an operating loss cause them to threaten you with jail time?

If ratman has taken salary/distributions, that looks pretty shady when your company has no revenue and a big liability. It also sounds like he has not invested much of his own money into the company.

Spoiler

"Your honor, as long as the results are, to quote my client, "incline" and "based", I would argue that it is perfectly reasonable for him to invest company funds into cheese-based cryptocurrency."

 

[garren]

Those pitfalls kinda remind me of Legend of Grimrock 1/2, with another explorable area underneath, the see-through bars where you can see other unreachable areas and the teleporters and all.

 

[Jenkem]

shit the dev is g*rman?

can i get my money back?

 

[Nikanuur]

EA is horrible idea in general, it greatly contributes to fracturing and corruption of anything related to gaming world. It brings money, yeah, money's good, no problem there. But how about at least one creator would have paused, taken a breath, and contemplated what the behavior looked like when broad public was considered anywhere, anytime on the internet.

Dude, I still respect your skills and vision, you are one hell of a talent and a passioned being, obviously. If you'd ask me to support you, that you would probably finish this in some time, I'd send a few bucks your way. Should the project fail after that, I'd have been like "Oh well, a time to time one has to believe no matter the outcome." But I won't pay a single dime for EA and I unfriend this thread and unwish the project. Consider me rude or head against the wall for all I care. I won't participate in this modern world fracking, and I thought you better then this.

Closed beta with selected participants that receive some goodies / discounts when the project is finished used to be the correct approach. Or if money is the issue, Kickstarter, albeit not much better in terms of success, at the very least tries to deliver a finished product.

I think I should probably add some context to this:

The reason I am considering (!) EA is not because of payment. Well, technically it is, but probably not the way you think about it.
The reason is the 30k Kickstarter money that the project received. Let me elaborate on that and let me do it in the form of a tragedy in three acts.
So here is Act I:

I may have mentioned this earlier in the thread, but those 30k were booked as down payments. That has one big advantage: If you know you are going to work with that money for longer than a year (or rather, longer than until next January) you won't pay profit tax on that (due at the end of the year). Cause it's a down payment, right? There was no profit. There was no product exchange, so it's 100% legitimate and that's great, cause that's 24% of the money saved for a better purpose.

But: Those down payments are not part of your capital either. So when you close your books at the end of the year you throw that money out. It's like it doesn't exist on paper (it technically does in a very specific way, but for simplicity let's imagine it doesn't)

And here comes the tricky part: Despite the fact that the money does not exist in your capital, everything that you pay with that money still has to be booked as an expense.
Now imagine you spent the entire 30k (which isn't exactly the case for me by the way - again just for simplicity) you are now - on paper - 30k in the red.
Because the expenses you cannot throw out at the end of the year. Contrary to the down payments you have to keep those in the books.

So that's the setup.
Here is Act II:

Being 30k in the red on paper, due to down payments, is not exactly a real-world problem. You got 30k, you spent 30k. That's it.
All those expenses just put weight on the books. In practical terms, you simply have no money. Big deal.
But, you know who doesn't think like that? That's right:

The Taxman

Because the taxman only cares about the books. The taxman takes a look at those and he's like:

"Hey asshole, you are insolvent! Why are you not reporting this? You wanna go to jail motherfucker?"

And at that point, my accountant calls me and says:

"Hey dumbass, where is that game? It's coming right? Like, very soon. Cause I just had the taxman on the phone and he wasn't too happy!" (disclaimer: my accountant is actually much friendlier than that)

So we decide, we add a little "I.O.U." to the books - and that's literally just a little piece of paper, that promises, that we are gonna cough up that money soon. And by soon I actually mean soon. Not next year. Before we close the books this year. In fact, even sooner than that (but technically the state doesn't have any say in that - at least I think so, so take it with a grain of salt).

So that's the problem.
Here comes Act III: How to get out of this.

So, the problem is there are 30k expenses in your books that you wanna get rid of. There is a very simple solution: You just activate the down payments as revenue. Technically that also means you have to fulfill all KS pledges but the taxman doesn't really care about that, so let's ignore that for the moment. The point is: The 30k become a profit that counterbalances all your expenses. Well isn't that swell, now we are out of the woods, right? Nnnnope!
In fact, you kinda made the problem worse. Cause here in Austria (and in many other countries as well) there is VAT. And that is 20% aka 6 grands.
So what you did, was transform the theoretical debt of 30k into real tangible debt of 6k. So you are still in the red, but here comes the real issue:

You now actually owe a hefty sum to the state.
And. That. Is. Bad.

Cause if there is anything in the world the taxman hates more than a company that's in the red on paper, then it's a company that's in the red and owes him cash for real.
So you gotta deliver that money or you are literally going to jail. And they are quick with that too, believe me. There is a reason you gotta report VAT every quarter as opposed to every year.
So if you wait, they're gonna audit you, they're gonna visit you, and then they are going to arrest you.

Not an attractive option. As a little side question in the meantime: Would you care at this point if someone on an RPG hobby website said they'd unfollow a thread? I think we all know the answer to that.

Now, for solutions, there are basically two ways to go about this (both of which are preceded by booking the down payment + VAT):
a) Sell the game in EA, pull the books into the green, and pay the taxman
b) Withdraw private savings that cover the VAT + other costs, invest them in the company, cut down on all expenses (gotta do that anyway), pay the taxman, and carry on developing to the end while bleeding money

The latter option probably comes to around 10 grand in private costs (6 for the VAT plus some pre-KS expenses for establishing the company/equipment/insurance/etc, minus deposits that were made with the tax office in the past). That's a good bit of money. But it's temporary and it's manageable. The costs do not necessarily deter me, because, as others have pointed out, releasing into Early Access isn't all smiles and sunshine either. Not only does it anger some people but it will very likely lower the conversion rate of wishlists to purchases, and possibly (!) hurt the overall success of the game. That's speculative but realistic. On the other hand: It is not said that the full game (developed through option b) would be flawless. That's why the open backer beta is so important: Because we can nail down some major issues regardless of whether or not we have some sort of public early access version.

So, both of these options are on the table (perhaps more if I can think of anything else). I will retain my judgment on which is better for a later date. I will have to see the feedback on the open backer beta and assess how much work still needs to go into the project. Nevertheless, I have to schedule the EA now. The full 30k are not yet spent, but the writing is on the wall, and not planning ahead would be a bad idea. That's why I said in the video that "things are scheduled in a way that an EA is more likely", but that's not a final statement.
I am not writing this to somehow justify an EA. I will do whatever is necessary to finish the project and to keep myself out of legal trouble. That much should be obvious.
I know people don't like Early Access. I don't even like Early Access. But no amount of teeth gnashing is going to change the facts. I am providing this context because I am interested:

Given you were the protagonist of our little three-act drama, what would you do?

tl;dr:

Spoiler

View attachment 35239
"Take this down payment, but beware it carries a terrible curse..."
"Ohh that's bad!"
"You don't have to pay profit tax for it!"
"That's good!"
"Whatever you pay with the money still has to be booked as an expense!"
"That's bad!"
"You can later activate the down payments as revenue and balance out those expenses!"
"That's good!"
"The activation as revenue also activates the inherent VAT!"
"....."
"That's bad."

Solid explanation. I am glad you took your expensive time to form the reaction.
In the light of this new information, I take a pause instead, and will contemplate my own hasty words in cathartic solitude meditation, which I am sure will provide +5 WILL to alleviate my obviously debuffed set of mental skills.

 

[Ysaye]

shit the dev is g*rman?

can i get my money back?

Austrian actually. Being Russian did you even have any money in the first place?

 

[FreshCorpse]

...

I'm really sorry to hear that you are getting assfucked simply for trying to make something good but it does seem to me that you have made some mistakes. It sounds like this is because your accountant has advised you poorly.

Being 30k in the red on paper, due to down payments, is not exactly a real-world problem. You got 30k, you spent 30k. That's it.
All those expenses just put weight on the books. In practical terms, you simply have no money. Big deal.
But, you know who doesn't think like that? That's right:

The Taxman

Because the taxman only cares about the books. The taxman takes a look at those and he's like:

"Hey asshole, you are insolvent! Why are you not reporting this? You wanna go to jail motherfucker?"

You weren't insolvent. You had negative equity. "Insolvent" means unable to pay debts when they fall due. "Negative equity" means that the company owes more money than it owns. They are quite different things.

Being insolvent is a big problem. You have to stop what you are doing when this happens.

Being in negative equity by contrast is fine. Almost any business which is creating something new will be in negative equity for a while.

So, the problem is there are 30k expenses in your books that you wanna get rid of. There is a very simple solution: You just activate the down payments as revenue. Technically that also means you have to fulfill all KS pledges but the taxman doesn't really care about that, so let's ignore that for the moment. The point is: The 30k become a profit that counterbalances all your expenses. Well isn't that swell, now we are out of the woods, right? Nnnnope!
In fact, you kinda made the problem worse. Cause here in Austria (and in many other countries as well) there is VAT. And that is 20% aka 6 grands.
So what you did, was transform the theoretical debt of 30k into real tangible debt of 6k. So you are still in the red, but here comes the real issue:

You now actually owe a hefty sum to the state.
And. That. Is. Bad.

This seems to be the point where where you generated a debt (VAT) that you cannot pay. But it's not clear to me why you took the step of recognising the down payments as revenue to escape the non-problem of negative equity. That seems like a dumb, unforced error, probably on behalf of your accountant.

So you gotta deliver that money or you are literally going to jail. And they are quick with that too, believe me. There is a reason you gotta report VAT every quarter as opposed to every year.

Yes, having the taxman as a creditor you are deliquent on is no fun. This is now a serious problem for you and I can understand why you now want to release the game EA. Now that you are in this situation, barring getting a better accountant who can go back and restate stuff (which you probably cannot afford, I'm guessing, on your pre-release poverty income stream) this is a reasonable course of action.

I was worried you were going to foolishly recognise kickstarter money as revenue, back in 2021:

...

Tax is shitty and depressing but as one "company owner" to another I say: you are probably being pessimistic about what you can achieve. Here are some ideas for you to lessen the blow:

1. Resist recognising KS pledges as revenue. In order to recognise revenue under IFRS accounting standards the customer needs to have received the product (amongst other things). That is not your case. If you do not recognise your revenue then you will not be liable for VAT, simple as. Perhaps you will need to recognise some - people who have paid to get access to discord and so on - but the majority of revenue should be recognised when you ship your product.

2. Do not state a profit. You have received an advance payment, you have not made a profit. Corporation tax should not apply just to cash you are holding on a date but instead sales minus cost of sales minus expenses. You don't have any sales - see above, so you should have nearly no profit. Ideally, you should have a loss which you (depending on Austrian corporation tax law) will be able to carry over into future tax years and net against profit.

3. Use a director's loan, or whatever that is called in Austria, for the period in which it is tax inefficient for you to take a salary. Repay it only when it is tax efficient to take a salary. You are the company owner so you can decide the terms.

4. Make sure you look for tax reliefs and deferrals. Some of these can be significant. For example the 35k EUR turnover threshold which gives you a total exemption from VAT - presumably for some reason you do not qualify for that?

Your accountant hopefully can help you with this but it may be that they are not minded to mention it proactively so they may need a prod. Unfortunately unlike in the movies you cannot rely on your accountant to actually handle your accounts. At your (our) scale of business they are really just present to help with the filings.

It still seems to me that you have a good chance of being completely ineligible for VAT in Austria. Did you ever look into that?

https://www.wko.at/site/mehrsprachige_info/Small_business_exemption_regulation_(sales_tax).html

 

[xuerebx]

Assuming you're a fellow accountant, I don't think a small company would be applying IFRS (and therefore IFRS 15 would not apply). I think his company would apply local GAAP where, generally speaking, the revenue would be accounted for under an IAS 18 equivalent. Having said that, the money he received is simply a prepayment / deferred income like you said, and I cannot see any reason to recognise as revenue just yet. Wouldn't fly by any auditor, if an audit is required for small companies in Austria.

 

[sosmoflux]

RatTower For what it's worth EA really isn't as negatively perceived as some people here are suggesting
It's a fairly common practice and most successful indie games went through / are going through a long EA process
I think you should head into EA as soon as possible and do away with this fantastical idea that you'll be able to ship a fully finished game that everyone's happy with on release
Get some money going, rejuvenate the community around a playable version they can get invested in, allow yourself to settle in for another 1-2 years of dev before 1.0
See: Lunacid

 

[garren]

See: Lunacid

Is it actually any good? I watched a few clips of it, seems like one of those games which go way unnecessarily over the top on the retro aesthetic, including those huge ALLCAPS fonts/shitty looking UI, overly pixelated art direction etc.

 

[sosmoflux]

See: Lunacid

Is it actually any good? I watched a few clips of it, seems like one of those games which go way unnecessarily over the top on the retro aesthetic, including those huge ALLCAPS fonts/shitty looking UI, overly pixelated art direction etc.

Yeah it's decent. It was rough/boring/small on release but has consistently grown in content and ideas since. If you're up for a lo-fi & mysterious dungeon crawl and can get past the trannycore (said w/ love) aesthetic, it's a vibe.

 

[ADL]

Often I'll buy an early access game for the early adopter discount and have it sit until it's done but Lunacid and Dread Delusion are the two that I actually bother playing when they get content releases. No doubt that Monomyth would join good company if it were to become available, though I backed it on Kickstarter so he already has my money.

Anyone who wants to wait for the 1.0 release can wait. In the meantime, why not do an early access release? Feedback, YouTube coverage and additional funding ready for the taking.

 

[RatTower]

...

...

Thanks for the advice! However, let me really quickly reemphasize:
The 30k have not been spent yet. Also, no profit has been booked so far. So the VAT is still inactive. It's just that we are focusing on the matter now, so it doesn't become a problem later. I am glad to say that I am pretty satisfied with my accountant's work so far. He has drawn my attention to the problem when I could technically still pay the VAT from the remaining money.
At the end of the day, however, it probably makes little difference whether I take the rest of the money as a salary for the next few months (0% income tax since it's below the threshold) and pay the VAT out of my own pocket, or whether I pay the VAT from the remaining 30k and cover my private expenses with my savings. It's just money going from one pocket to the other and back again.

The only question that actually concerns me is: "How long can down payments remain down payments in the books?"
Cause the inactivity of the VAT depends on that question and I'd figure that is what's drawing the attention of the eye of Sauron here.
Intuitively I would say those payments can remain there indefinitely, as long as the product exchange hasn't happened (given no other problems occur).
But maybe I am wrong here. Regardless, this feels like one of those cases where the tax office already writes you down for an arbitrary struggle session in the future.
And that's really the problem: Their arbitrary nature. They literally come up with stuff as they go.

To give you an example of this (which luckily didn't happen to me but I know of it and it's a good illustrative example):

Much like dividends or interests on savings, taking profits out of a company is taxed under capital gain tax.
In Austria however, there is mandatory insurance. Your contribution to that system depends on a determination base which, in turn, depends on your personal income.
Now, anything taxed under capital gain tax does not affect the determination base. Otherwise, you'd have to look into all the dividends and interests on everyone's savings account to really get the determination base right and that would be impossible.
But a few years ago one (1!) guy from a tax office around here thought: "Hey let's make an exception for taking company profits and count that into the determination base. Capital gain tax, what is that? Don't care, pay up you crook!"
And now every time you pull profits out of a company you first pay 27.5% in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.
Which is completely incoherent with the rest of the system but who cares? No idea what they are doing with that 27.5%. Maybe they are pocketing it, who can really tell? That's how it's done now, so deal with it!
But here is the real kicker: If I remember correctly this whole issue is not even explicitly stated in the law. Or at least it wasn't for a while. It's one of those cases where the law is supposed to be "flexible" and it's just interpreted in a certain way. Not that it matters, cause you can't look it up anyway. There are four different legal codes for social security depending on your profession. You'd assume this is in the one for business owners, but I certainly couldn't find anything in there cause there are like a million revisions and hundreds of paragraphs on the determination base alone. So who knows? The point is if they want to they will bend the law.

And that, my dear codexers, is why you always gotta watch out for the taxman. Even if nothing is wrong.
He's always trying to put his long boney fingers into your wallet like some sort of money-sucking Nosferatu vampire.

 

[mindx2]

And now every time you pull profits out of a company you first pay 27.5% in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

 

[xuerebx]

And now every time you pull profits out of a company you first pay 27.5% in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

By opening up a company in Malta and then you can claim back a tax refund on dividends

 

[Turn_BASED]

RPGCodex: Come for the incline, stay for the dissertation on Austrian tax law.

 

[RatTower]

And now every time you pull profits out of a company you first pay 27.5% in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

Technically the capital gain tax is the form of income tax that's applied to interests and dividends.
The rationale in the case of the company is that taken profits are basically the same as dividends (similar to stocks you are just getting a bit of the profit for the shares you hold in the company).
However, before you can take any money out of the company you first have to pay 24% revenue tax. That's pretty standard around the world (not the percentage - just the fact that you have to pay that), but with that, the full tax rate comes to ~45%
So in other words, for every 10$ you receive from Steam (or whatever platform you are selling on), 4.5$ go to the state.

Alternatively, you can keep the cash in the company and pay yourself a salary.
Then you can minimize the income tax as it depends on the amount you pay yourself. Also, your salary lowers the company's profits for the current year, meaning a lower revenue tax base.
For example, you can pay yourself up to 11k a year and you won't pay any income tax at all because you are in the lowest income bracket. Additionally, a revenue of let's say 100k is now only 89k, so instead of 24k revenue tax you "only" pay 21.36k (What a steal! Literally.)
This method also has the effect that you will regularly eat lentils from a can.

On the other hand, if you had a windfall profit, you can't pay yourself too much salary within one year either (e.g., you make 100k in January and you pay yourself 90k until the end of the year) because then the state will say " No, no, no! What you are doing is a "hidden profit distribution". You put that back or pay the full 45%!"
That's another one where they slap people on their fingers regularly. Not that I would have to fear it.

In all of this, you have to mind the social security contributions. As I mentioned before, whatever income you receive adds to your determination base so practically the full tax rate for taking profits might go beyond 45%.
Though, I believe that contributions are capped at 6k per month or so.

 

[Jenkem]

And now every time you pull profits out of a company you first pay 27.5% in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

Zelensky's coke isn't going to buy itself, Franz.

 

[Mr. Magniloquent]

If you do EA, I will buy. I'll sit on it until it's done, but this appears to be a worthy endeavor in competent hands. Just make it Linux friendly. Thanks.

 

[Raghar]

And now every time you pull profits out of a company you first pay 27.5%in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

What do you mean make money? I was crippled by criminal, and because I tried to get education and work first, disability papers later, state shit used 10+ years of my disability pension to increase salaries of corrupted majors, town councilors, members of parliament, and other assholes.

That's how they are making money.
Nowadays they are making money by higher energy bills, thus higher taxes. And they are getting theirs share from corruption money they are getting because of war in Ukraine. I think they would end it by getting a big bribe, and then annul sovereignty of the country, and live happily in US where people wouldn't be able to get at them and get revenge.

See? I learned my lesson. Disability papers FIRST, education, and work LATER.

 

[mindx2]

And now every time you pull profits out of a company you first pay 27.5%in capital gain tax AND it cranks up your determination base, leading to a higher contribution in social security payments.

Good God! How does anyone in Europe make money?! Then you pay income tax after that?!!

What do you mean make money? I was crippled by criminal, and because I tried to get education and work first, disability papers later, state shit used 10+ years of my disability pension to increase salaries of corrupted majors, town councilors, members of parliament, and other assholes.

That's how they are making money.
Nowadays they are making money by higher energy bills, thus higher taxes. And they are getting theirs share from corruption money they are getting because of war in Ukraine. I think they would end it by getting a big bribe, and then annul sovereignty of the country, and live happily in US where people wouldn't be able to get at them and get revenge.

See? I learned my lesson. Disability papers FIRST, education, and work LATER.

Crippled?.... Disability?... Yet you were still able to work... for over 10 years?!!

 

[The_Mask]

Man... can I be completely honest? I skipped all over what you posted, mostly because I don't have the time to read all of that. That being said, you can do absolutely anything you want to get money, from extorsion to bribing, begging to Early Access.

The only one point where I would draw the line would be if you were to procure the services of a publisher. Me pledging the money that I did, only to see you bowing to some corporate miscreant would be incredibly unsatisfactory, and I would be forced to call you: sus.

But otherwise feel free to do whatever you want, as long as it is legal, of course.