What kind of projects will Kickstarter Accept?

I have seen Kickstarter reject 1 project out of 26 personally, though I have heard many more people complain about a rejection. It may be more common under certain categories since I mainly work with Video Game Devs and Tech companies, I may not see it as often.

The Basics

First and foremost you must follow their guidelines. Kickstarter has done a fairly good job of detailing their guidelines in their help sections.

http://www.kickstarter.com/help/guidelines

also review this:

http://www.kickstarter.com/blog/kickstarter-is-not-a-store

The majority of the time, when your project follows those guidelines, you should not have any issues. Double check your project before submission and you may save yourself some hassle in the future.

When “The Basics” Fail

If your project is rejected, but the rejection does not fall into a specific factual area of the guidelines, you may be a part of the Kickstarter “Black Hole”. Here are a few (out of many) people who’s projects were rejected without merit:

http://www.highprogrammer.com/alan/rants/kickstarter.html

http://www.linkedin.com/groups/Hello-I-have-posted-project-4325381.S.113149709

Although the list goes on, you get the idea. It seems that Kickstarter editors can freely reject projects based on their opinions and/or loosely tied to the project guidelines. Mainly their excuses are that the projects do not fit in with the “theme” of Kickstarter. Flexing a little power maybe? Who knows their reasoning, but it is obviously geared toward their brand and how they want the public to view that brand.

Of the projects that I have seen rejected, there really was not a basis in their guidelines, they simply told the creators this:

They do not want to be seen as a “Home shopping network”

or

“Its not in the style of Kickstarter, please review other projects in those categories and it will give you an idea of what we are looking for”

The project that was flat out rejected on my time, was a piece of technology that was available everywhere, but it was combined with clothing to make it more accessible. Kickstarter classified it as a “QVC” type item.  My client ended up launching on IndieGoGo:

http://www.indiegogo.com/projects/cynaps-get-yours-now-at-www-maxvirtual-com

It funded at $40,000 with 611 backers. Though that may have been less than what Kickstarter may have produced, it really confused me as to why they would reject this successful project.

You may be asking “what the heck can I do!?”

Since that rejection, I have learned a few things:

I would try to add elements to your campaign that Kickstarter likes to see: DIY elements, Nostalgia projects,  also it helps to be a famous celebrity (haha), or get a celebrity to back your project. I have never seen a project get rejected that was run by, or backed by a celebrity.

If those don’t work, The best way to proceed in my opinion, is to create a new login for Kickstarter, completely rewrite your project the absolute best that you can based on their guidelines, change the title and resubmit it hoping that it goes to a different editor. They currently have 37 editors, of all of the editors, I would guess that one of them would be a bit more lenient. This way there is a 95% chance you will get a different editor. Make sure you take the time to review the guidelines and eliminate anything from the project that may seem like it won’t pass.

Truthfully, I don’t think that this practice from Kickstarter is as prevalent now than it was in the past. Kickstarter is in the media’s eye now more than ever and if any potentially high profile that gets rejected, it would definitely create some controversy for them.

Best of Luck!!

That’s a great question, and there is no easy answer. This may clarify it a little:

As individual taxpayers Romney and Buffet pay so little in taxes because of two sources of income:

1. They take qualified dividends from their corporations that they own or are investors in.
2. They take Capital Gains distributions from investments they have created

For qualified dividends, between 2001 and 2012 they were taxed at 15% (now its 20%), regardless of what tax bracket you were in. Although it seems like a relatively small amount of tax, before any shareholder is able to receive and pay tax on those dividends, the corporation had to pay a tax on that as well (somewhere in the ballpark of 35-40% usually). This is where double taxation occurs. If the company is a foreign company, lets use the Netherlands as an example, they only charge 3-4% taxes on that income, then it gets distributed to Mr Buffet, and he only pays 15%. Heck of a deal.

For capital gains, the maximum rate from 2001-2012 was 15% (now its 23.8%). For investments in a “small business” (a company that has less than 50 million in assets), sale of any stock provides a tax deduction of 50% of that sale, this means that sale is now only taxed at 7.5%… wow. This is why there are so many venture capital firms.

In addition to this, they can also take advantage of investments made in countries with favorable tax laws. Both store a good chunk of their money in overseas, tax favorable bank accounts and investments. Though a slipperly slope for US tax law, many ultra rich investors have many advisors that make it legal. To explain fully would require a whole other blog post.

So as you can see, using those two methods, Buffet and Romney were able to keep their upper tax limit to around 15%, then using deductions, like donations, property taxes, etc, they dropped their tax rates to around 11-12%.

That is only for their individual rates, below is how they win with their corporations:

Huge corporations use a combination of tactics to keep tax low, but the latest and greatest is setting up shop overseas in a “tax haven” country. For example, Ireland made a deal with apple so that they would only charge 3% in taxes on ALL of their worldwide appstore sales. That’s almost a billion dollars in sales a year that they only pay 3% tax on. In comparison, the US would charge 35%.

The research and development credit allows for a very good option too. An example of the extraordinary benefits of the R&S Credit includes the fact that Boeing reported a $20 billion dollar pre-tax income, yet they received a refund from the government of $110 million. Also the new Domestic Production Activity deduction allows a very large deductions as well, most US based companies can access that.

I’ve researched this stuff a lot, mainly because I want to be in the business of offering these options to small businesses and startups, as well as people who may not be as wealthy as Mitt Romney.

The JOBS act (Jumpstart Our Business Startups Act) was spearheaded by the Whitehouse in an effort to boost the economy and make it easier for startups to acquire capital for growth. It is slated to become active in January of 2013 (pending the SEC’s final guidelines).

Before the JOBS act, and according to recent studies, startups requesting capital have a high chance of being rejected by VCs. The JOBS act creates a streamlined process to advertise and trade equity for capital from anyone available to do so, including the amateur investor.

The Key aspects of the JOBS act:

• Startups with less the $1 million in revenues qualify and are considered an “emerging growth company”
• Startups can offer equity via a crowdfunding portal up to $1 million dollars, the requirements by the company are gradually increased with a target over$100k. According to the JOBS code, this can be repeated once every 12 months.
• The crowdfunding portal must meet certain minimum disclosure requirements, and educate investors of the risks associated.
• The maximum dollar amount people are able to invest will be limited to 5 percent for individuals with annual income of less than $100,000 and 10 percent for those who make over $100,000. Anyone, regardless of income level, can invest up to $2,000 according to the JOBS code.

What this could mean to Startups:

• A large influx of capital and growth in many different industries
• Easier access to money
• Increased competition by limiting barriers of entry
• The public, and potential customers of the startup get to determine the value of the startup rather than VCs and SEC approved public investors

Issues with the JOBS act

The SEC still has yet to approve their final regulations which are due in January of 2013, and may not have them approved for a  long while. For reference, the Dodd-Frank act was supposed to be completed by the SEC on 4/15/2011  and still has not been finalized.

As expected, the regulations are said to include the requirement of full disclosure of company information within the crowdfunding portal. This includes financials, articles, current equity positions, officers and directors, tax returns and descriptions of business and use of funds.

The JOBS code also requires a full review of financials if the start up is seeking between $100k-$500k.

A full audit of financials is required if the startup is seeking over $500k.

For most companies, this may be an issue because Reviews and Audits can be quite pricey. For very small companies, this may be fairly simple, as they may not even have sales or expenses yet, but even then, it requires the signature of a CPA and that still costs a fair amount. Regardless, startups will have to alter their Articles, stock term sheets, investor rights agreement, etc. All of which require a CPA or Attorney to do. I would guess that a start-up company who is seeking $1 million in capital could pay on average $3-10k just to get everything set up.

There are also some regulations for the investors themselves, mainly to protect people from investing their life savings.

Once the target capital is reached within the crowdfunding portal, the investors still have a chance to backout, so if the percentage of equity (or any other reason) was not what they were expecting, they have a chance to say no. This may lead to under-valuation or under-funding.

Any advertising that the startup does for the project must be disclosed, including who is providing the service, how much was paid whether in the past or present.

Regardless of any issues, these changes should inspire some really interesting events in the startup world. All we have to do is wait for the SEC to make their final regulations, which may take a while.

I wanted to create a post to give taxpayers a better look into what tax increases occurred and who was affected by them. Without further ado:

Adjusted Gross Income of less than $200k (single) $250k (married)

• Increase on payroll and self employment taxes of 2% up to $113,700 per wage earner
  • A two income household that makes $250k could see a tax increase of up to $4,548

Adjusted Gross Income of between $200k and $400k (single), $250k and $450k (married)

• Increase on payroll and self employment taxes of 2% up to $113,700 per wage earner
  • A two income household that makes $250k could see a tax increase of up to $4,548
• Phase out personal exemptions – typically $3800 per member of the household
  • 2 percent reduction for every $2,500 in adjusted gross income over $250k (single) and $300k (married)
  • For example:  if you file Single, and make $260,000 in adjusted gross income. The value of the personal exemption for the 2012 tax year is $3,800. Because this filer is $10,000 over the income threshold, the value of his personal exemption would fall 8 percent, or $304
    • Once the taxpayer reaches $375k single and $425k married, the will completely lose their personal exemptions
• Phase out of Itemized deductions
  • Itemized deductions are reduced by 3 percent of the actual adjusted gross income above the threshold – $250k (single) and $300k (married)
  • Using the example above of a single taxpayer with adjusted gross income of $260,000, being $10,000 over the threshold means his itemized deductions would be reduced by $300, or 3 percent of $10,000.
  • It’s important to note that the reduction would be capped at 80 percent of total itemized deductions.
• Increased Capital Gains of 3.8% (18.8% total)

Adjusted Gross Income higher than $400k (single) and $450k (married)

• ALL of the above.. plus:
• Increased Capital gains rates of 8.8% (23.8% total)
• Increased Qualified Dividends rate of 5% (20% total)
• Increased Ordinary tax rate above thresholds of 4.6% (39.6% total)

Additional Tax Increases

• Estate tax increase of 5% (to 40% total)
  • Note: The estate tax exemption will remain the same at $5,120,000 (adjusted for inflation)

Unfortunately there is no easy answer here, every state is different as far as their requirements. Hopefully I can clarify a lot of misconceptions though:

Sales tax has been around for many many years. It was originally designed to tax retail stores for locally sold products. Originally it was a simple system because everyone would buy from their local store.

Interstate sales started occurring more regular with mail order, then it exploded when eCommerce started making its mark.

Since that time states STILL do not have a solution for interstate commerce, which means sales made to someone who lives outside of the state where you live is not subject to paying sales tax on their purchase.

With that historical background out of the way, the simplest answer I could give is that most likely your state only requires sales tax to be paid if you ship a kickstarter reward to someone WITHIN your state. With that being said, your state may have specific rules that may need to be followed, that’s why it is important to talk to a professional who can look up those rules for you.

Here in California, you are only required to pay sales tax on products shipped inside the state. In addition to that, there is also a district tax for specific areas within California. For Example, if you live in Sacramento, and you ship a kickstarter reward inside Sacramento, then you will have to pay a district tax on that item as well as the state sales tax.

The absolute best way that you can approach this is to incorporate your business in a state that does not have sales tax, such as Delaware,  then distribute (ship) your kickstarter rewards and products from a state that ALSO does not have sales tax. This way you can typically avoid that altogether. This would only be necessary if you feel a lot of your backers will happen from the state that you live in.

Typically, if you do conduct a successful kickstarter, and you do ship products inside a state that has sales tax laws, you must pay sales tax on those items. The same goes with intangibles, such as video game sales.

Again, these rules vary state by state, so you may need to consult a professional.

Again, this article is only meant as informational, many individuals and companies have unique situations, I recommend you consult a professional before applying any of the above information.

I have watched quite a few companies, including a few of my own launch and succeed, or launch and fail. I believe I have learned a fair amount from each, and I hope to pass that onto others.

I have read the Kickstarter Bible and a few other articles and feel that they miss some of the main points. I hope to clarify a lot of what has been said already.

Although this is geared toward Video Game Developers, it can be applied to any type of Kickstarter, and product launches in general.

The Power of the Launch:

One of the biggest mistakes I see with Kickstarter Projects is the assumption that everyone will immediately know about their fantastic idea, that media companies are simply trolling Kickstarter to promote every good idea they see. This is a fatal flaw for most projects. What they need to understand is that the media and potential backers find out by word of mouth, hype, articles, and direct contact. The days of hype surrounding Kickstarter have gone to the dodo, too many projects are being launched now for that to occur. Hard work is now necessary to make a successful campaign.

Another common misunderstanding is the way momentum works in the Kickstarter world. Momentum, to me,  is defined as the pace of backers contributing in order to reach your goal. Momentum is what drives backers. Casual backers that are just scanning through Kickstarter, or who click on a link from a news site, simply will not back a project that does not have significant momentum or excitement. Creating a powerful momentum on the inception of the project is very important in capturing casual backers. There is a reason people flock to a Kickstarter project once full funding has been received, papers have been written about this behaviour. When the goal is reached, backers now know that it is a sure thing and that there is very little risk to them.

There is also what I call the X factor. That X factor is directly related to having a really kickass project, word of mouth drives these projects, and they deserve their own post, I could probably write 1000 words on them. The best way for you to view this X factor is to assume your project does NOT have it, and proceed as if you will not have that added benefit. Hard work will be required for you to reach backers. The world where Kickstarter provides easy money is not around anymore.

One other important item I need to point out is the value of your current fan base. If you have made a game previously, you most definitely have fans that want to see your next project come to fruition. Tap into this if you can.

Friends, Family, Peers are very very important

This one is simple. Tell your friends and family to back your project, tell them to tell their friends, recruit them as your initial drive to establish backers. This will help build that initial momentum. Create an early bird backer category where they get a few extra rewards for helping right away. People get busy, so remind them a few times, this is important to you and they should recognize this. Be honest and sincere in telling them that their backing matters a lot, anything they can do, even $1 will help. Potential backers will respond if they see immediately that 20 people are already backing the project.

Provide the right kind of details on launch:

People want the details! For video games, people want to hear plans for story, music, graphics, engine, characters, features, etc. Talk about that stuff, if possible put it into a video with examples of previous work. A walkthrough of an alpha build has worked on many occasions, where the developer gave comments on what new features will be added.

Explain to potential backers how your project will be different then all of the other projects that are listed on Kickstarter. Although there is nothing wrong with 15 shooters, people will pick the best one with the most credentials, they will also pick the one that offers something that they cant get from the video game store.

Make sure to discuss your previous work! I have noticed that most video game projects do not gain traction because they are unproven. Make it a point to discuss your previous successes.

Be honest and real, people like that, tell people that this is your dream and that you have been waiting your whole life to do something like this and that if they back, they can share in that reality.

Funny and off the wall videos can make your project viral, but I would recommend being professional and say every essential detail in the video before (or after) being funny.

Write a good press release (or simply an email), then submit it properly

It is important to attract the right media outlets, the only way that you will get their attention is to be UNIQUE, HONEST and SINCERE:

In order to create momentum, it is important to capture your fans as quickly as possible. Writing a press release before or right after the launch of the Kickstarter is extremely important for building momentum. Hitting up media outlets that may contain early adopters and your audience is very important in this regard. A large publication like IGN may not be your best course for this, but RPS or PC gamer, among many others may provide coverage for your niche. Once they pick it up, then you have some clout to bring some exclusive content to the big guys, once you reach funding you are 70% more likely to be featured.

Here is a quote from the article that Ben Kuchera wrote over at Penny Arcade:

“..stick to the sites you read, and only contact the writers you know would be interested in the game. Explain why you want to see the game covered, and why it deserves to be funded. Talk from your own experiences and passion, to the outlets you enjoy reading, and they’re going to listen to you.”

When pitching these media people, concentrate on what you are bringing to the table that is different than everyone else. No media outlet will pick up on it unless there is something unique to your project, give people something to talk about,  emphasize this in your email. Also, when you email these bloggers, include a bit of exclusive information for your project, this will make it seem less like a pitch and provide them with something that their competitor may not bring to the table. Be honest and sincere with them, they receive enough email spam from people wanting something from them to last them a lifetime. If you come out the gate offering something to them, you are one step ahead.

Concentrate on why your project is and should be interesting to their specific audience.

In Summary:

Do

• Talk about what the game will have and how it is unique
• Tell people about your successes in the past
• Tell people about why you will be able to succeed on this project, but that the uncertainty of the project is the need to reach your goal of funding.
• Include a FAQ of information relating to the game, project, things you discuss in the video.
• Tell your family, friends and peers that this project is important to you and that even if they do not contribute, that maybe their friends on twitter or facebook might.
• Update your backers with information and answers to questions, implore them to support you by sharing with their friends.

Do Not:

• Tell us your life story
• Say “maybe if we get enough funding we will” – be direct, the project will have this if successful.
• Make it about the money, this  should be about your life’s dream. Your dreams motivate people.

It was recently brought to my attention that Xbox Live Indie Game Developers who are considered to be “non-resident aliens”, in other words foreigners living in another country without US citizenship, have been having trouble getting paid for their royalties through Microsoft.

After reviewing the site, I can see why, Microsoft provides no legal advice to game devs, and strictly forbids it in their forums. Being able to wrap your head around getting an ITIN, applying for zero withholding due to tax treaty status, and dealing with the IRS can be very challenging.

I hope to clear this up for those people.

In order to get paid from Microsoft and you are a non-resident without US citizenship, you must:

1)      Have or get an ITIN (W7) or EIN (SS-4)

2)      Submit a form W8-BEN

Seems simple, right? Well there is a lot of tricky information on these forms. Also, I read in a couple areas of the Forum that people simply got an EIN number. That would be impossible without an ITIN or SS#, so I am not sure how they were able to do that. My advice is to not listen to them, and proceed with an ITIN.

First I have filled out a W7 based on the way that most people would use them:

W7 Form Example

The assumption in that form is that your country falls into a “tax treaty” zone. See this page Table 1, Column 12 – Copyright Royalties, Other, and Footnotes). If your country has a 0 in that field you are in a tax treaty country. If you are not in a tax treaty country, the US will unfortunately withhold your money and you must file a US tax return. I can touch on that in a later post.

IRS Publication 901 (All Countries) – http://www.irs.gov/pub/irs-pdf/p901.pdf

For the section of the W7 (section H) that requires your country’s article number. You can find that here:

http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties—A-to-Z

Search for your country, click on it, find “income tax treaty”, click on it, find “Royalties”, notate the article number on the W7

You must include identification with the W7 when you mail it in. Ideally send in a Properly Notarized color copy of your passport, the notary MUST be properly licensed or from a United States Consulate. If you can’t find a notary, you will have to mail in the original passport. I would recommend using a courier so they do not lose the passport. You will get the passport back, the US is pretty good about that.

Alternatively, the IRS will accept other forms of identity. You must submit two forms of ID from the list. One must have your picture on it. If you submit notarized copies and not the originals they must be copies showing the front and back of the card.

• Birth Certificate
• Drivers License
• Military ID Card
• Foreign Voter Card

In addition to the ID, you must include the letter from Microsoft. I have not seen this letter, but the requirement are:

“A signed letter or document from the withholding agent, on official letterhead, showing your name and verifying that an ITIN is required to make distributions to you during the current tax year that are subject to IRS information reporting or federal tax withholding.”

Next is the W8-Ben. Almost every one of you will submit this version. If you question this, see a tax professional.

W8-BEN

Follow the instructions that I put on the form. This one is pretty simple, pretty much every one of you will use the same information.

A couple of notes:

• Make sure you use the exact same name for your Microsoft account that you use with your W7 and W8.
• If you are confused with the information that I provide, you must seek the help of a tax professional. This information is set up to be a guide and not meant to be specific to you and your situation. It is not meant as direct legal advice and I cannot be held responsible for the use of this information.
• I realize this process is difficult, but look at the bright side, once you are done with it, you never have to do it again!
• I will keep brainstorming alternatives, but it seems right now that this way is the least expensive way of doing it. Email if you are willing to bypass all of this and are willing to pay $500 to set up a corporation in the US. I may add to this post if enough people are interested.

A question that I get a lot is what I have actually saved companies for providing my three favorite tax incentives.

I will use a mid-sized company as an example. This is a company that makes between 1- 6 million in revenue each year.

Items to be Included: Typical wages and contractor expenses. If the company takes my advice for computer leasing and internal software use. Use of supplies, and segregation of administration duties.

NOTE: (If none of the above makes sense, please let me know, I will write a post on it if enough people want to know).

I can usually save a  ~3 million dollar per year (revenue) company:

• $200,000-300,000  in R&D credits (based on wages, patents, trademarks,  supplies, etc)
• $9,000-18,000 in Domestic Production Activities
• $200,000 in California Enterprise Zone (other states have enterprise zones too at different rates of course: NY, VA, FL are just a few)

Total: $409,000 in taxes… not too bad. and all of that is carried forward to future years if not used in that particular year.

In addition to that, I LOVE tracking IP (intellectual Property). Video Game Devs and Tech start-ups create their business around them. They fall into very similar rules to depreciation (not quite the same). This can be a TREMENDOUS
tax deduction if used properly.

Contact me if you would like to learn more, I provide free advice for start-ups and video game devs!

I have been getting this question more and more. Indie video game devs have one thing in mind, and that is making a great game. The last thing they want to think about is financials and taxes. But in this age of Kickstarter and Pre-order sales, they find themselves in a position where they do have to worry a lot earlier then expected.

My advice for Indie Devs:

1. Don’t sweat the entity

Don’t worry about starting an LLC or Corp until you are or about to make money on your game(s). It is something that can be set up easily and efficiently. Also, many game devs get the wrong entity. For most devs, I highly recommend an S-corp, they are flexible, have common shares (for shareholders), and provide a great tax benefit. An LLC can actually act like and S-corp, so dont sweat it if you already set one up.

If you have investors, even just family members this may get a little bit complicated. Legally, and technically you need to stipulate this in your bylaws or articles, if you are eventually going to have a corporation (or LLC). The good news is, that you can have a written agreement with them to have a convertible note (loan), that will allow them to turn their loan into stock or membership rights, regardless if you change entities. I will think about this more, I may be able to post a legal agreement template if enough people want one, email me if you do.

2. Keep track of your expenses

Open a separate bank account, they are usually free, it will completely separate your business related expenses to your personal ones. This way, you wont need to save every darn receipt that you get, you can simply refer to the bank statement. Remember, it is important that you track your expenses, every payment that is business related should come from your business account. This can pay off for you in the future if you ever choose to use tax incentives. It is also good practice.

3. Software (a video game) is an asset

If you are building a game with multiple partners, keep an eye on the time you spend on your software, it doesnt need to be exact just a rough idea, because when you eventually pay yourself for that work, you will want to include that payment as part of the “value” of that asset. This has tremendous benefits for an indie dev, not only can it be deducted all at once, but it raises your company’s net worth and net income. It is a complex tactic that makes a powerful tool to smaller businesses. In Summary, the main reason for this is that it looks good for publishers and banks when you show them your financials.

4. If you have “partners” get a partnership agreement (or by-laws for an S-corp)

I cant stress this one enough. Just a simple agreement saying who is entitled to what profits at what percentages. As long as it is in writing, there is no argument against it. Establishing a basis in a partnership (or S-corporation) is important as well, this is a value that is due to you if you are kicked out or the partnership (or S-corp) is sold. If you put your own personal money into the business, this increases your basis.

I have to note that most of the time you are working with close friends, this may not be required, I just always feel it is good practice then there are no questions as to who is owed what.

5. Once the cash is rolling in, get a professional *not all professionals are good

This is the kicker, hire a good CPA. Hopefully one that has experience in the gaming industry. They should know about the Reseach Credit, any local credits, and the Domestic Production Activity Deduction. If they dont know about those simple things, then find another. Just those simple tax incentives can save you thousands if your game ever takes off. They should also be able to provide you with strategies that translate to you personally (to better your financial situation far into the future).

Not all professionals are good, there are a lot of them who really just dont care and are only in the business for the money, I know because I run into them everyday. Try your best to spot those types. Ask a lot of questions, because if they really care and they will be truly interested in growing with your company. Find CPAs that give free consultations  meet with a few of them, it will pay off for you and your Indie Dev Team.

Best of Luck!!!

Note: This list may expand – I am constantly getting asked this question, and I think of new important issues all the time.

How can a foreign person, not living in (or near) the united states, start and run a Kickstarter Campaign?

These questions always get me excited because they are not the norm, and require a lot of thought and creativity to accomplish. So far so good, I have been helping quite a few foreigners set up Kickstarters. Here are the basics of how I did it:

There are many requirements to start a Kickstarter Campaign. Two big ones are to have a US Entity (LLC or Corp) or Social Security number, and a US bank account. These two requirements alone would deter quite a few foreigners from trying, you would need someone you knew and trusted in the US to handle that for you. Even then, that person could face tax consequences for running that bank account for you if it is not properly planned (I will cover this in a later post). This leaves very few options to set one up.

The way that I have accomplished this is unique but very time consuming, consider this OPTION 1:

1. First things first, I had to start a corporation so that the foreigner(s) would be the sole shareholder(s):

A Delaware Corp is a great idea, they are cheap, provide excellent legal protection, and have a small Franchise Fee for share holders (Typically $225). I can set these up for $550 with a 48 hour rush ($500 without), highly recommended for time constraints of setting up Amazon Payments. I highly recommend you DONT use any of the silly websites that charge you to set up the corporation, they typically charge a mark-up and sometimes yearly fee, most of them do not allow the rush either.

2. Second, I apply for an EIN number - This one is pretty simple and can be done once the Corporation is in place.

If you already have a SS# or ITIN you can get an EIN here

3. Next step is to Get a US helper.

This is the tough part. If you are trying to run a Kickstarter campaign, you need to have one.

Amazon Payments needs to confirm that your name is associated with the US address that you live at. Kickstarter also requires this in their own version of verification. The US helper must be available to use their name for Amazon.com and Kickstarter. They must be considered a key role in your team. Giving them the title “CFO” will be enough to accomplish this.

You, as the foreigner can still hold signer privileges on the bank account, but it may be difficult – see below

4. After you get a helper, you need a US based Checking Account

To set up a bank account without my help, you need:

• A tax ID number registered with the IRS. You can get one by filling out and mailing in this form: http://www.irs.gov/pub/irs-pdf/fw7.pdf You will need to provide a Notarized copy of your passport.
• Once you get that, find a bank that is located in the US, that has a branch in your country. You must be able to go there in person to set up your signature account. Use your ITIN and EIN number to open the account. Your helper in the US may need to provide documentation supporting this information to a local location. You MUST have a US address on the bank statement, but it can be managed online by you as a foreign person.

Or

• You can have a friend or family member that you trust who lives in the USA (with a SS#) open up a checking account and be an authorized signer on the account.

5. After this process, you may ask: Can I get taxed in the USA for Kickstarter Funds?

The easiest answer is a small portion of your funds will need to be taxed in the US order to legally run the Kickstarter Campaign. Your foreign company must eventually “pay” the US company for providing the service to run the Kickstarter Campaign for them. I would say a good safe number would be 1-3% of the Kickstarter proceeds for services. They must reflect the market value of the work that it took to complete the whole process.

That 1-3% will be taxed in the US at the corporate income tax rate, then whatever is left over can be issued as a liquidating dividend to your foreign company, and taxed in your country appropriately.

The amount that your company eventually received from the Kickstarter Campaign should be taxed in your country depending upon your countries tax laws.

6. Large balance international wire transfers – I swear I am not a terrorist!

You can request the US bank to pre-screen the wire transfer so the department of homeland security will not come and break down your door. It will take a few days, but it is by far in your best interest to do it this way.

—I do offer the above service (for option 1), but due to the complexity, it comes with a pretty hefty price tag. Over $2000 for an initial fee for all of the consulting and set up necessary.

Now for OPTION 2

My company will handle the amazon payments account, taxes on the fees to me, and transfer of funds. All of this would be done 100% legally. Most of the time countries have a tax treaty in place to eliminate double taxation, if not I have ways to greatly reduce that taxes enough to where it is a small enough amount that it wont be noticeable. We would have a contract in place that outlines everything that will occur. I have many clients currently, as well as 2 successful Kickstarters that can attest to my services. It would make absolutely zero sense for me to commit fraud.

—I provide this unique service (option 2) for companies or individuals who may not have a person in the US that can help them, but it comes with a price, and I do pre-screen companies. There has been a very high demand for this since I started, and for many reasons, I decided to start doing it this way.

• $1000 fee to set everything up and verify your Amazon Payments and Kickstarter – This fee establishes us as a client as well as covers my time commitment to the project.
• Whatever is more: $1,500 or 1% of the successfully funded amounts *ONLY if the kickstarter is successful, this is to cover my legal costs and bank account management services.

You will have to be willing to give up control of your funds (and bank account) and allow me to transfer the money to you in a foreign country. I would handle all of the tax consequences here in the US, you would be responsible for any taxes in your country of origin. I would also provide consulting as needed, and would be a huge advocate to promote your project. The set up fee is refundable if you decide not to use my services and as long as I have not started working on the project.

I only work with Video Game Devs right now, but I may consider another type of company depending on the circumstances. You must include what you plan to do in your email if you think you are the exception.

If you wish for consulting regarding taxes and your project, I do offer that at my standard consulting rates of $200 per hour.

Note: Kickstarter must approve the project itself, they look at the content of your Kickstarter and it must meet their guidelines.