Tag Archives: uk

My new ‘Start your own software business’ training course

Things have been a little quiet on this blog as I have been busy on some new projects as well as continuing to work on PerfectTablePlan. I am announcing one of those new projects today.

Start your own software business

A two day intensive training course on how to create a profitable business selling your own software product

22/23 November 2013

Swindon, England

There is a lot more to running a software business than knowing how to program. The last 8 years of running my own software business have been a huge learning experience for me. In this course I am going share as much as I can to help others succeed with their businesses. This is the course I wish had been available when I started out. I am looking forward to getting out from behind my computer and meeting aspiring software entrepreneurs.

There is a £50 discount if you book before the end of September and the course is limited to just 10 attendees. If you have ever dreamed of escaping your cubicle and becoming your own boss, what are you waiting for?

Click this link for more details

I am just beginning to publicise the course and I would really appreciate a mention on Twitter, Facebook, LinkedIn, blogs, social news sites etc.

VAT basics for software vendors

The dreaded VAT. Ugh. Value Added Tax (VAT) is the European equivalent of sales tax and it is a Royal Pain In The Arse. However, if you are running a business that makes sales in Europe you need to understand VAT. In particular it has important implications for your choice of payment processor, even if you are based outside the EU or below VAT registration thresholds. I have put together a few pointers here in the hope that it will help someone grappling with the complexities of VAT. But please note:

  • I am not an accountant. If you need proper advice, talk to a proper accountant.
  • The VAT rules are complex and may be interpreted differently by different people.
  • The rules may be different in different countries.
  • The rules change over time.

Only VAT registered businesses have to charge VAT. You have to register for VAT once your sales reach a certain threshold. At the time of writing,  UK-based businesses have to register for VAT if their EU sales exceed £77k in a 12 month period (technically it is UK sales, but the ‘place of supply’ for EU consumers is classified as the country of the seller). You can also choose to register for VAT before you reach the threshold. But it usually isn’t worth it, unless perhaps you think having a VAT number is essential for your credibility. Personally I waited until I couldn’t avoid it any longer.

Even if your business is not based in the EU, the EU still expect you to pay VAT on any sales inside the EU once you reach a threshold. This is controversial and it isn’t clear to me exactly what the EU can do to enforce this if you are based outside the EU. Talk to your accountant.

The VAT rate varies between countries. At the time of writing it is 20% in the UK and 19% in the Netherlands. It also varies over time, it used to be 17.5% in the UK.

The UK also has a simplified flat rate VAT scheme with a lower VAT rate. But you can’t claim back VAT on purchases. Worse still, it appears that you will effectively be paying VAT on sales outside the EU. So that doesn’t seem at all attractive.

The VAT rules are complex and depend on:

  • where you are based
  • where your customer is based
  • whether your customer is a business or a consumer
  • whether you are selling goods or services

Technically you do not have to charge VAT to an EU business, even if they aren’t registered for VAT. Apparently they are then responsible for “self-charging” the VAT. However the burden of proof is on you to show that the customer is a business. So most vendors require a VAT number as proof of business status.

There also seem to be disagreements over whether software is goods or services. What if you ship a CD?

Here is a simplified summary in pseudo-code of whether a seller needs to charge VAT on software as I understand it:

paysVAT()
{
    if ( seller registered for VAT)
        if ( customer in EU )
            if ( customer is a business )
                if ( customer in same country as you )
                    return TRUE;
                else
                    return FALSE;
            else
                return TRUE;
        else
            return FALSE;
    else
        return FALSE;
}

Except that people in Norway and Switzerland (which aren’t in the EU) pay VAT in some circumstances. Don’t ask me why. Also you don’t pay VAT on some items, e.g. postage. And outside the scope of VAT (O), not rated for VAT (N) and zero rated for VAT (Z) are all different VAT codes meaning no VAT is payable. As I said, it’s complicated. Not complicated and interesting like quantum mechanics or the love lives of celebrities. Just complicated.

The only upside of being registered for VAT is that you can claim back the VAT you pay on any purchases you have made (make sure you get a VAT receipt). Or, if you are buying from another EU country, you can tell them your VAT ID and they shouldn’t charge VAT (see above). So any equipment you buy in the EU is now 20% cheaper. This is small recompense for the giving 20% of your sales in the EU to the VAT man. Try not to think about that. Instead give yourself a pat on the back for having reached the VAT threshold. A lot of businesses never do.

Note that when you register for VAT you may be able to claim back the VAT of products purchased before you registered. When I registered I could claim back VAT paid on goods purchased within the last 3 years and services purchases within the last 6 months. So keep your VAT receipts.

Congratulations on making it this far. Here is the important bit. How you process payments has important implications for VAT. When someone pays you via a payment processor, such as PayPal, legally they are buying from you and the payment processor is just handling the payment on your behalf (like a bank cashing a cheque). So you are responsible for collecting what VAT is due and paying it to the appropriate government. This can be a major headache if you are selling hundreds or thousands of licences per month.

When you use a reseller, such as Avangate or Fastspring, legally you are selling your licence to the reseller and the reseller is then reselling it to the customer. The reseller is then responsible for deciding what VAT is due, collecting the VAT and doing the paperwork. They then pay you net of the VAT and their commission. Leaving you to sort out the VAT for their one payment to you per month.

Using a reseller is a big win if you are registered for VAT. I am registered for VAT and use Avangate as my payment processor. They do the heavy lifting in terms of calculating, collecting and paying the VAT on my sales. But if you aren’t registered for VAT be wary of using a VAT registered reseller – approximately 20% of your sales will be disappearing in VAT (which the VAT registered reseller has to charge) which you could be keeping if the customer bought from you direct. So if you aren’t registered for VAT, a reseller such as Avangate or Fastspring may not be the best solution for you. Check out e-junkie.

VAT admin is fairly straightforward. To keep the VAT man happy I have to file:

  • an EC sales list every month
  • a VAT return every quarter

My Quickbooks accounting package generates the numbers for these. It only takes a few minutes to file reports online once all the transactions and VAT codes are entered correctly into QuickBooks. The VAT man then debits (or credits) the appropriate amount from my business account each quarter. It is not too bad, as long as I don’t think about the wheelbarrow loads of cash Avangate keeps to pay the VAT man. Maybe they roll around naked in it on the last day of every quarter. I probably would.

When I first registered for VAT I tried adding the VAT onto my existing prices. But I found that sales dropped more than 20%. So I ended up keeping the gross price (including VAT) the same, whether the customer pays VAT or not (Avangate gives you this option). Whatever you do, make sure it is clear whether any prices you quote include VAT. EU consumer expect to be quoted prices inclusive of VAT and won’t appreciate it if you try to sneak on an extra 20% at the end of the purchase process. You may be legally required to quote the price including VAT in some countries.

A final note of warning. The VAT man has a lot of powers. I understand the UK VAT man can kick your door in and seize your equipment without needing even a warrant. He might not be impressed to find out that the computer you reclaimed the VAT for is an XBox. Do not mess with the VAT man.

If I have made any mistakes, missed anything out or if the rules are substantially different in your country, please add a comment.

Thanks to Marcus Tettmar of Macro Scheduler automation software for checking this through and advising me on some of the finer points.

Buying a lean, mean, compiling machine

Nearly two years ago I wrote an article about speccing my ultimate development PC. Somehow there was always something more pressing to do. But I finally took delivery of my shiny new PC this week, partly spurred on by the fact that I wanted tried and trusted Windows 7 for the OS. Also my current development PC is getting increasingly crufty after 5 years of continual use.

I emailed my requirements to the top 3 custom PC companies in the UK as rated by PC Pro magazine : Chillblast, Cyberpower and CCL:

Hi,

I’m looking for a PC for developing software. Prime requirements in order of decreasing importance:

1. reliability
2. cpu + disk speed
3. quiet
4. value for money

Here is my wishlist of components:

-i5-3570K CPU
-an SSD (at least 128 GB) + 2 fast and reliable HDDs (7200 rpm, at least 1 TB each)
-ASUS, Gigabyte or EVGA motherboard supporting USB 3.0 and SATA/600.
-16 GB of fast RAM
-Windows 7 64 bit professional
-quiet is good, open to suggestions on sound insulation, fans and/or passive cooling
-AMD Radeon HD 6850 graphics card
-at least 2 USB ports on the front and 2 USB ports on the back (ideally more, ideally including USB 3.0)
-DVD drive
-Gigabit ethernet
-full size case
-kensington security slot, so I can lock it to the ground
-I don’t need a monitor, keyboard, mouse etc
-I don’t need WiFi
-It has to be *super reliable* – I want reliable SSD + HDDs, good quality motherboard, good quality branded power supply etc.
-target price, not more than 1,500 inc VAT, less is better obviously

Can you build something to meet this spec or get close? Please send me the spec and your price (including UK delivery).

Both Chillblast and Cyberpower sent me quotes for a system fairly close to what I wanted within 1 working day. I then spoke to their sales people and went online to tweak their suggested systems using their web based system ‘configurators’. In the end I chose Chillblast over Cyberpower due to:

  • higher rating from PC Pro readers
  • cheaper for a comparable system
  • better warranty
  • better online configurator (I found the number of choices on the Cyberpower online configurator a bit overwhelming)

However there really wasn’t a lot in it. CCL took nearly 2 whole working days to respond to my initial email,  so I discounted them as insufficiently responsive.

Following some suggestions made by the sales people I spoke to, this is the spec I ended up with:

  • Chillblast Fusion Longbow
  • Windows 7 Professional 64 bit
  • Onboard High Definition Audio
  • Corsair CX 750W 80 PLUS Bronze Certified PSU
  • Sony 24x DVD-RW Drive
  • Seagate Barrcuda 2TB 7200RPM Hard Disk
  • AMD Radeon HD 6850 1024MB Graphics Card
  • Intel 120GB 520 Series Solid State Drive
  • 16GB Corsair PC3-12800 1600MHz DDR3 Memory
  • Asus P8Z77-V LX Motherboard
  • Akasa Venom Voodoo Ultra Quiet CPU Cooler
  • Intel Core i5 3570K Processor 3.40 GHz (No Overclocking)
  • Fractal Design Define R3 Low Noise Case – Black Pearl – USB 3.0 Edition
  • Total price: £1089.80 + VAT (inc MSOffice Home Edition)

I take security fairly seriously. I have a motorbike style ground anchor in my office and I want my shiny new box physically locked to it. But I was told that almost no PC tower cases have a Kensington lock slot. This seems crazy to me. My current Dell tower has one and the cost of one tiny little extra slot in the chassis must be pennies. So I had to buy a lock adaptor kit. It’s not the most elegant solution, but it works fine.

I ordered the system on 02-Oct and it arrived on 22-Oct. Here are a couple of photos of the new system with the side panels off.

The PC took a few days longer than the originally advertised time to arrive. This wasn’t a big issue in my case. But I only found out it was going to be late when I emailed them after the expected completion date. It would have been a lot better if they had been more pro-active and emailed me first. Other than that I am fairly satisified with the service from Chillblast so far.

There are a few issues with the case, which aren’t really Chillblast’s fault. It looks rather lovely in its big, black, minimalist sort of way, a bit like an obelisk from ’2001 a space Odyssey’. But the case scratches rather easily if you lay it down to change a component on my laminate floor. The side panels are also a bit fiddly to get on and off (my old Dell PC is better in this regard). Worst of all, it has rubber grommets (is that the right word?) that fall out into the case (and potentially into the fan or heat sink) if you even look at them funny. This means lying the case down to retrieve them, struggling with the side panels and more scratches. I have had to do this at least 4 times so far. It seems that they have made them of rubber that is far too soft for the job. Grrr.

How fast is the new PC? It certainly feels very snappy. I benchmarked it against my old Dell development PC (Dual Core 2.13 Ghz, 4GB RAM) building my event table planner software from scratch. This is 83k executable lines of C++ according to SourceMonitor:

Build time Old PC New PC
Debug build 6 minutes 56 seconds 1 minute 32 seconds
Release build 6 minutes 23 seconds 1 minute 28 seconds

So it is more than 4 times faster than the old PC at its key task – building software. Admittedly it isn’t a ‘fair’ comparison of the hardware. The older machine has a different version of Visual Studio, a different OS and probably some unnecessary services running in the background. But it is the best I can do in the circumstances and I doubt a ‘fair’ test would be much different. Despite the fact that I only went for a mid-range graphics card, the new PC can also handle playing Half-Life 2 on full 1920 x 1200 resolution without any noticeable issues. Hopefully the faster build times will give a significant boost to my productivity (as long as I don’t play too much Half-Life 2).

The new PC is also eerily quiet. I would guess more than 4 times quieter than my old PC. Even when it is doing a build, all you can hear is the faint whir of a fan.

Only time will tell how reliable it is.

Nearly all UK business websites now technically illegal (EU sites to follow)

On the 26th May the rules on the use of cookies changed for UK businesses. You now have to explicitly ask every visitor to your website if they want to opt-in to ‘non-essential’ cookies. This includes tracking and analytics cookies. The penalty for not doing so is a fine of up to £500,000.

No, I’m not joking (unfortunately). You can read some rather vague official guidance about it from the Information Commissioner’s Office here:

Changes to the rules on using cookies and similar technologies for storing information

You can also see the ICO’s implementation of this policy on their own website with the ghastly pop-up shown below (click to enlarge):

So it seems that we are going to have to show a hideous and scary pop-up to every visitor that comes to our site. Nearly all of these visitors will inevitably choose the less scary sounding default and opt-out (why would they opt-in?) which means that our precious tracking and analytic data will suddenly become a lot less useful. So a less pleasant user experience for customers and a huge reduction in useful data for vendors. And to what benefit? I really don’t mind if vendors collect aggregated data about how I arrived at their site or what pages I visit while I am there. The more I read about the new rules the less workable and useful they sound. It looks like the sort of monumental, fur-lined, ocean-going, balls-up that only governments are capable of.

The situation remains fluid at present. The introduction of this new law has been so shambolic that the UK government is giving businesses 12 months grace before they start enforcing it. I don’t even know if the ruling applies to businesses based in the UK, web servers based in the UK or any website with UK visitors (if you do know, please comment below). Perhaps Google et al will dream up a technical solution that keeps the EU happy without me having to make any changes to my website. Maybe pressure from businesses will force the government to back down. Perhaps someone will find a loophole (e.g. setting up a company outside the EU to host your website). Or maybe so many businesses will ignore this ridiculous law that it will be unenforceable. I am going to wait a few months to see how things play out.

This change in the law comes from an EU directive, so any of you reading this in EU countries other than the UK can stop smirking – it is coming your way as well.

For more information see:

(Photo by Delfi Jingles, some rights reserved)

Mobile Internet access

3-mobile-broadband.pngI try to check my sales and support emails at least twice a day, every day. I managed this 362 days in 2007 (I took a break for Christmas day and 2 days I was in Germany at a conference). But providing this level of service can prove to be a problem for a one-man software company when it comes to taking holidays. Last year I restricted holidays to places with broadband Internet access. But finding child-friendly accommodation with broadband access proved to be quite a headache.

I have considered getting a Blackberry, but I really need something that can run my application to do proper support.

After some dithering I have now finally got mobile Internet access for my laptop through 3 Networks at £10/month. This provides 1GB per month of free data in the UK. You can get a higher data allowance with a more expensive contract, or a pay-as-you-go contract. But 1GB/month will hopefully be sufficient for my needs. Data costs outside the UK are a frightening £6/MB, so I will probably have to look for alternative arrangements if I take a holiday abroad. Vodaphone offer contracts with more reasonable roaming rates, but the contracts are much more expensive (£25 – £99/month).

Installation of the USB mobile modem and software was very easy – it took me about 5 minutes from opening the packaging to being connected. Only time will tell how good the coverage and service are. Watch this space.

Having mobile Internet access could also be a useful back-up if I lose my landline broadband connection. This is quite reassuring after several website outages and a failed harddisk in the last couple of weeks.