Re: Commercial Games - Tax Implications?
Joseph, yes once you are registered as an LLC you can deduct business expenses. For me, I have been able to deduct new parts for my server (as they've worn out due to being under load 24/7). I get to deduct a sizable percentage of my internet bill (based on the data the server is using each day). I believe it averaged out to 1.1 gigs of bandwidth per day when I last did my taxes! To make things easier (and I suggest others doing this if they will ever run a permanent server for their company, and they're able to do this) I set up a small room in my home that basically only houses the server. Because of this, I am allowed to deduct from my home insurance (I believe), electric bill, and heating/cooling costs for a small percentage. By being in its own room, that room is considered my work space and the square footage of the room out of the square footage of my house determines the percentage of those bills I can deduct. These thing s don't really add up to much, but they do help.
Since I write my own software, I've never had the need to try and deduct any. Depending on the business, I suppose someone might be able to deduct specific software they had to purchase, be it sound editing tools or something along those lines.
When I was building the See Munkeys, I was not able to deduct the various parts that went into the product, but I was able to deduct materials used up during their construction. For example, soldering iron tips and solder. I'm not entirely sure if it was helping or hurting my tax return, but I remember being required to list how much total value in un-sold products I had left at the end of the year. So if you end up dealing with physical items for your business, keep track of everything.
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