Home Forums Money matters To sell software myself or through wife’s business?

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  • #999900
    brownbag
    Member
    • Total posts: 37

    I have some software that I built for my wife’s shop that I’m planning to start selling. I earn a decent living and my wife’s shop (she’s a sole trader) is still generating a lower income. So we’re better off if any income is in her name. I’m trying to work out my options for structuring this ‘business’ that may make a decent income, may become huge, but also may also just make some pocket money. Given that my wife technically owns the software (it was built for her business), can I work for her for ‘free’ and generate income from the software for her shop (until I quit my job and do this full time)? Or given that I’m doing the bulk of the work, do I have to receive income directly and declare it as my income?

    #1221802
    Paul – FS Concierge
    Moderator
    • Total posts: 3,121

    You might need to clarify your post.

    Do you mean you would like to take equity in the business in Lieu of payment?

    I am assuming you would create a new entity (Company/trust/partnership) for the software sales is that correct?

    BTW, that may mean your wife would need to sell the software or code or license same to the new entity.

    Just some things to think about.

    #1221803
    brownbag
    Member
    • Total posts: 37
    Paul – FS Concierge, post: 267938, member: 78928 wrote:
    You might need to clarify your post.

    Do you mean you would like to take equity in the business in Lieu of payment?

    I am assuming you would create a new entity (Company/trust/partnership) for the software sales is that correct?

    BTW, that may mean your wife would need to sell the software or code or license same to the new entity.

    Just some things to think about.

    I don’t really want to take equity in the business. I just know that I may make some money from the software but want to know who legally can declare the money as income.
    Option 1: It is my wife’s income as she owns the software (it was built for her shop) and I’m nice enough to do all this work for her in my spare time ( :) ).
    Option 2: Me, as I’m doing the work and I’m legally required to declare the income in my name.

    The software has no business entity and no structure at the moment, so we can go either way. Option 1 is probably better but not not be compliant with tax rules – I just don’t know.

    In terms of creating a new entiry, yes, probably eventually but for now, while we don’t know if it will gain any traction, that seems unnecessary. I’d want to know if I’ll make any money from it (at least two customers) before I go into the effort of getting a company/trust structure.

    My wife selling the software or code is not really an issue – I’m sure she’s allowed to sell it for 1 cent.

    #1221804
    businesstrade
    Participant
    • Total posts: 210
    brownbag, post: 267936, member: 112769 wrote:
    Given that my wife technically owns the software (it was built for her business), can I work for her for ‘free’ and generate income from the software for her shop (until I quit my job and do this full time)?

    What type of software is it? Software isn’t always owned by the end user and sometimes it is licenced through a vendor for you to use.

    Eg. Office 365 remains owned by Microsoft and the end user is just a licensee.

    You really need to check to ensure that you can legally sell this software, just because you paid for it doesn’t mean you own the rights to redistribute it.

    You can get into a lot of legal trouble if you resell software that you only hold a licence to use it.

    #1221805
    brownbag
    Member
    • Total posts: 37
    BusinessTrade, post: 267956, member: 113709 wrote:
    What type of software is it? Software isn’t always owned by the end user and sometimes it is licenced through a vendor for you to use.

    Eg. Office 365 remains owned by Microsoft and the end user is just a licensee.

    You really need to check to ensure that you can legally sell this software, just because you paid for it doesn’t mean you own the rights to redistribute it.

    You can get into a lot of legal trouble if you resell software that you only hold a licence to use it.

    The software is customised software designed by myself and built for my wife’s business. We definitely own it. There’s no other entity that even knows about the software, let alone that would sue us for it.

    #1221806
    businesstrade
    Participant
    • Total posts: 210
    brownbag, post: 267958, member: 112769 wrote:
    The software is customised software designed by myself and built for my wife’s business. We definitely own it. There’s no other entity that even knows about the software, let alone that would sue us for it.

    Perfect, that’s good.

    brownbag, post: 267936, member: 112769 wrote:
    ICan I work for her for ‘free’ and generate income from the software for her shop (until I quit my job and do this full time)? Or given that I’m doing the bulk of the work, do I have to receive income directly and declare it as my income?

    You sure can work for free, no-ones going to stop you. Income that is generated can also be attributed to her company/herself and no-one would be any wiser.

    At the end of the day, it is up to you.

    Speak to your accountant, these views are just my opinion only.

    #1221807
    JamesMillar
    Participant
    • Total posts: 1,675
    brownbag, post: 267951, member: 112769 wrote:
    In terms of creating a new entiry, yes, probably eventually but for now, while we don’t know if it will gain any traction, that seems unnecessary. I’d want to know if I’ll make any money from it (at least two customers) before I go into the effort of getting a company/trust structure

    In terms of optimising the tax structure, unfortunately you may need to take an educated punt on the prospects of the software being sold to third parties. You really need to park it in the right entity before you make your first sale and it may make a very big difference at a later stage if you don’t.

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