How to sell my software online and deal with VAT?

Question

I have just developed a javascript which I am planning to start selling online through my website. However, all the legal procedures I need to take into consideration make even more confused than when I started. I address the people who have already walked that path and can provide information to the people who are just diving into this corporate mystery.

PS: I would be very grateful if someone could answer the questions bellow.

Q1: Can I sell my software if I do not have a firm?

Q2: Should I add VAT when someone is ordering my software?

Q2.1 If yes, what should I do with the extra money (from the VAT) that I collected from the buyer?

Q3 If you have a return money policy, should you return the already paid VAT?

Answer 1

Q1: yes, but financially this would be silly if you intend to make your living off of it, also regarding liability having a company is the better choice.

Q2: No, unless you get a VAT number / become VAT registered. Not charging VAT means you also don't get any VAT back when you purchase something.

Q2.1: Obviously you need to pay that to the government. If you become VAT registered, they'll make sure that you do, no worries there...

Q3: Yes.

Clearly though, if you want to get serious about selling, please visit an accountant and get this stuff double checked. It can cost you a lot of money if you don't get things like taxes, VAT, company stuff sorted properly.

Answer 2

Answering for UK, and somewhat EU...

Q1: Can I sell my software if I do not have a firm?

Yes, although I would not recommend it. Once your software is commercial, you will do well to get commercial indemnity insurance (in case your software does some damage). This is best procured on behalf of a company as the liability will be limited to the company itself.

Q2: Should I add VAT when someone is ordering my software?

UK/EU: Only if you are VAT registered. If UK, earning more than £70k from sales means you will need to register. You can register if less if you want to. Speak to an accountant for advise.

Q2.1 If yes, what should I do with the extra money (from the VAT) that I collected from the buyer?

Bank it until your own VAT return and bill are due.

Q3 If you have a return money policy, should you return the already paid VAT?

Yes.