First year of taxes after starting a software business

by alex 17. April 2013 18:07

Everyone says that having a business is a great way to save money on taxes but there are so few real world examples of how it works. This post documents the start up business portion of my tax liability in 2012.

I used 2012 to gradually ramp up on my product, and I finally quit my day job in January of 2013. So, I was employed for the entire duration of 2012, which made taxes not-too-terrible (for taxes, that is).

I'm not going to write about my complete tax profile this year because that would require revealing my previous salary. Though I will make all earnings open next year, my old salary is not on the table =)

Services used in the first year of start up

The following services were purchased or rented for the business:

  • $120.00 - PersonalClass ASP Plan (Domain: nodicerequired.com) Pre-paid For 2 years 
  • $9.95 - Registration of otsix.com for 1 year(s)
  • $9.95 - Registration of release-manager.com for 1 year(s)
  • $9.95 - Registration of release-tracking.com for 1 year(s)
  • $9.95 - Registration of build-tracking.com for 1 year(s)
  • $9.95 - Registration of version-tracking.com for 1 year(s)
  • $9.95 - Registration of release-tracker.com for 1 year(s)
  • $9.95 - Registration of eisenhartsoftware.com for 1 year(s)
  • $25.95 - 1 year SSL Certificate for www.eisenhartsoftware.com
  • $2.00 - Dedicated IP Address Addon
  • $2.00 - Renewal of Dedicated IP Address 
  • $76 - PO Box

Services Total: $295.60

The SSL certificate and dedicated IP address are what allow me to take credit card payments online. The rest is just web space and domain names, and a PO Box.

The PO Box was written off as a rental; the rest were under advertising.

Writing off computer purchases

I purchased a laptop and a desktop with two monitors. From a large number of resources, you must use an item 100% for the business if you are going to write it off on your taxes. With this in mind, I had a hard time justifying writing off both computers. In the end, I wrote off only the laptop and its extended warranty.

Laptop Total: $1341.00

Summary

Due to the business, I had a total of $1636 to write off. Because I have a sole proprietorship, this was a write off against my earned income from my day job; if I had an LLC, I'd have had to carry the losses forward.

All told, before entering the $1636 in write offs, I owed an additional $400 or so on federal taxes; these write offs resulted in a $28 refund.

Next year will surely be more "interesting." =)

If anyone had advice on further items I could have written off, or any more tips, I'd be glad to hear them!

10-Day results on new product exploration

by alex 17. April 2013 17:14

About 10 days ago, I wrote about my plans to see if traffic to one of my old websites, http://www.nodicerequired.com/, was actually interested people or confused robots. In that post, I had 2 signups and 89 unique visitors. Ten days later, I have 2 signups and 95 unique visitors.

Le sigh. I guess you can't just put stuff online and expect people to flock to it, all on their own.

Metrics indicate that my most frequent visitors are bots

The spinning coins on the website are interactive - the user can click on them. Clicking on a coin will play a coin-pickup sound, and increase the coin counter at the top of the screen. The number of coins the user has is stored in a client-side cookie, so I can only grab the value of this cookie whenever the visitor interacts with my web server - by signing up or going to another page, for example.

There were only four people who both 1) understood that the coins could be clicked AND 2) also reloaded the page, went to another page or signed up for the beta.

This implies a few things:

  • The bounce rate on this page is high
  • Bots are a major source of traffic
  • Converting visitors (from visitor to sign up) don't understand that the coins are interactive
  • Non-converting visitors click the coins but don't interact with the site anymore

Actually, all of these could be true.

My bounce rate IS high, because there aren't any other calls to action or content for the visitor to navigate to; the visitor is not pulled into the site.

Bots give me a lot of traffic - there are a large number of hits to pages that were part of the old site but the new. When a visitor tries to request a page from the old site, I show them a "hey, sorry the site's gone, but here's some information, click here for more, click here to sign up" page, and I'm not seeing any traffic from these pages. There are also a few query strings that are obviously not from either the new or old site; this indicates bots trying to sniff out my server.

No converting visitor has clicked on a coin before signing up. This implies that it might not be obvious that coins can be clicked on, so perhaps non-converting visitors are also not aware that they can be clicked on.

However, the coins mean nothing. They were an experiment to see if making the site more interactive would be beneficial to the visitor's interest in the product. Kind of like an A/B test from the start.

I'm going to keep it up an running, but not much coming from (or going into) No Dice Required, for now.

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