Digital Trade is a relatively new, booming global industry. And, it’s not going anywhere. Legislation you probably didn’t even know existed apply to this lucrative arm of the economy. It’s important you educate yourself to ensure your business is ticking the compliance boxes. Today, I want to outline some of the sticky bookkeeping bits that you need to be aware of if you’re selling digital products online.
What is a digital product?
The official statement from the ATO states: “digital products such as streaming or downloading movies, music, apps, games, e-books as well as services such as architectural or legal services”
Yup, it’s a little hazy! Basically, if you sell a product that is received through the internet – like a download, access to membership or access to a product, it’s a digital product. For example:
- eBooks + Video Training
- Online Membership + Group Coaching
- Online Training + Courses
- Subscriptions or one off purchases for mobile apps, photography libraries, software, templates and more.
Little side note for you – lots of this information ahead also applies to services provided to clients/customers outside of Australia, so some of this may be totally relevant to photographers, marketers, designers and freelance creatives.
If you are operating from Australia and you are registered for GST, you would know this portion of your fee must be specified on all official invoices. But, what happens if you attract worldwide interest? Yes, you fist-pump the air (obviously) and then, you ensure your overseas customers are not charged GST. Exports of goods and services from and used outside of Australia are GST-free.
To muddy the waters for you, you can still claim the GST included in the price of purchases you make to create your digital product. For example; subscriptions, marketing, software fees and so on.
If you’re selling overseas, you must be mindful of legislation (you *might* need to collect taxes or other implications of selling in their country), currency conversion and fees. For digital products (or services), you can either invoice in foreign currency or AUD, it will be converted back to AUD for your income purposes.
Be aware of account fees for your payment methods, especially for foreign customers, ensuring you capture them all!
*Obtain financial advice before you explore digital currencies such as Bitcoin, Ethereum or Litecoin as a payment method.
And again, services & digital products delivered to overseas customers are exempt from GST.
Data Protection + Legal Compliance
As a starting point, ensure you are protected (your content & financially) by having your policies in place. The internet is rife with copycats, hackers and fraudsters with digital products being ripe for all of the above.
- Website Terms and Conditions —terms and conditions that includes information on protecting your business ideas, disclaimers and rules applying to anyone who interacts with your website. Also outlining the operations of your business sales, payment options, cancellation policies, consumer guarantees, and return and refund policies. You should also have a process for customer complaints.
- Copyright – make it clear that you claim copyright protection over all of your original content pursuant to copyright legislation. Generally, copyright should be dealt with in your Website T&Cs for digital/e-commerce businesses, or in your Client Agreement for services.
This is a HUGE topic and I recommend you source legal advice for your business requirements and have tailored legal documents that are made for YOU covering every area relevant to you and your business.
I’ve had my stellar solicitor Tracey from TM Solicitor cast her eyes over this section, so I’m not pointing you in the wrong direction! Because legals are something you don’t want to get wrong.