In previous posts we’ve described how to prepare your app and the different ways you can make money with your app on the Store. Just as important is how you will receive payments for your app sales. In this post, Program Manager Paul Lorah describes how the Windows Store handles payments, and what you need to do to ensure you receive payments in a timely manner.
Before your paid app can be published to the world, Microsoft needs some information to determine how to pay you. That means it’s time to discuss everyone’s favorite topic: banking and taxes! If the thought of paging through stacks of tax forms and bank statements gives you a chill down your spine, you are not alone. Rest easy though—with the Windows Store, our goal was to put as few financial and tax documentation burdens as possible on you. Here, I’ll talk about the set of streamlined set of services we developed to get you ready to sell apps, predictably receive payments, and track earnings.
By the way, you can provide your bank and tax information at any point after you sign up as a developer. We suggest getting this done early to ensure the prompt publication of your paid apps.
Where are my earnings deposited?
Each month, when your sales activity satisfies the requirements to receive a payment (see below), a payment is sent to the bank account you specify. Depending on the country your bank account is located in, these app proceeds are transferred via electronic funds transfer, SEPA transfer, or wire. Be aware of any fees your bank may charge you for receiving payments.
On the Store Dashboard, under your Profile, you’ll find a link to where you can specify a payout account. This is the account that we’ll send payments to. Be sure to have your bank account information handy. You might need to supply some additional information as well, as the steps for setting up a payout account varies for each country. Remember, you must enter your banking information in alpha-numeric values to support the required international bank transfers.
What tax information is needed?
Now that we know where to send your app proceeds, we need to collect some information about your residency status and tax details required by the United States Internal Revenue Service. We’ve created an electronic submission process that only requires you fill out a single form and can get you in a ready-to-pay state in less than a day. For most developers, there will be no need to mail documents and wait for any offline processing before you get your money.
To start, visit the Tax page listed under your Profile on the Store Dashboard. From there, you’ll be prompted to answer some questions about your status as it relates to your residency in or tax status with the United States. Basically, if you or your organization has had an existing connection with the United States, you must complete and electronically sign an IRS form W-9, Request for Taxpayer Identification Number and Certification. We prepopulate the form with all of your registration data so that you only need to add a few pieces of information before submission.
For developers filling out a W-9 form
After confirming your name, specify your organization type. If you registered as an individual, you are required to enter your social security number. If you registered as an organization, enter your employer identification number (EIN).
That should be it, but visit the IRS website if you need additional guidance on how to complete a W-9. After submission of the form your information is validated instantly and the Store Dashboard will reflect either a valid or invalid tax status. If dashboard shows that your tax status is valid, that’s it—you’re done!
For international developers filling out a W-8 form
If this is your first time filling out a United States tax form, it may look a little intimidating! Don’t worry though, because you actually need to supply very little supplemental information. Most Windows developers will qualify to file form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. All developers must complete Part I of the W-8BEN form. Note that an International Taxpayer Identification (or ITIN) number is not needed to sell applications on Windows! If you do not have an ITIN, leave this field blank on the form.
When filing a W-8BEN, you are subject to additional tax withholding on your app proceeds sold in the United States. (This does not apply to sales you make in any country outside the United States.) In many cases, though, you can probably take advantage of a tax treaty to reduce or, in some cases, eliminate those withholdings. The type of rate you can qualify for depends on the country you or your organization resides in. Instead of having to page through lists of international tax treaty documents, we auto-populate all the tax treaty information you’ll need when you select your residency country.
Complete Part II of the form by specifying the residency country of the beneficial owner (you or your company in most cases). If your country is not listed, unfortunately no treaty benefit is available. Then, select the offered article, special rate, and reason for claiming the benefit.
Visit the IRS website for more information on how to complete a W-8BEN and leverage income tax treaty benefits. In most cases your submitted form will be validated in a few hours. Depending on your role (or “capacity”) within your company, you may be required to file additional forms by mail. You’ll be notified at the end of the online submission if this is the case. This is not common, but when required, your tax status will remain invalid until the required forms are submitted to and processed by Microsoft.
Upon receiving a valid tax status and specifying a payout account, you are eligible to begin app sales to Windows 8 customers worldwide.
People are buying my app, now what?
After your paid app is in the marketplace, I’m guessing that you’ll be interested in figuring out just how much you’ve made from your app sales. Deepak Mukunthu recently shared how adoption reports can help you track your app performance and make improvements over time. Now, we’ll talk about how those numbers translate to dollars, yen, rupees, or any of the 64 currencies we support. We designed financial reports to ensure that you can watch your sales grow every day on the Store Dashboard. Here’s how to know when and how much you will be paid.
On the Finance page of your dashboard, you can immediately see what app proceeds are paid, reserved, pending, or available. Paid app proceeds are payments previously made to you. Reserved app proceeds are recent transactions which are not yet eligible for payment. Transactions are generally not eligible for payment until 30 days after the purchase occurred. Pending app proceeds reflect the total app proceeds now available for payment after the 30 days have passed.
Your pending app proceeds are evaluated for making a payout on a monthly basis. To receive a payment, all you need to do is accumulate approximately 200 USD in app sales that you haven’t been paid for yet. Note that app sales are different than app proceeds. Basically, your app proceeds are the amount that you’ve sold, less the Store fee. For example, if you have an app that sells for 10 USD, and you sell 20 copies, your app sales would be 200 USD, and qualify you for a payment once the transactions are no longer reserved. Your app proceeds would be 140 USD (200 USD in app sales minus 60 USD for the 30% Store fee). Note that, as mentioned in Arik Cohen’s blog on monetizing your apps, after your app reaches $25,000 or equivalent of lifetime sales, the store fee drops to 20% and you’ll earn even more.
After the first of each month, if you’ve accumulated enough sales, the estimated value of the app proceeds will be displayed in the summary as available and a payment will be sent to the bank account you provided.
For your convenience, the reserved, pending, and available amounts are estimated in your own country’s currency. Keep in mind that these amounts remain estimates until they are paid; the foreign exchange from the buyer’s currency to your country’s currency does not occur until the proceeds are transferred each month.
Tracking your sales and earnings over time
After you receive your first payment for your app sales, you can view your Payment history on the financial summary page of the Store Dashboard. It details when you got paid, how much you received, what amount was withheld to the IRS (if any), and a report of all the individual Store transactions for which app proceeds were paid.
You might also find it useful to track the financial performance of each of your Metro apps being sold. From the Financial summary page, you can also view Financials per app, where the same key metrics (total amount paid, app proceeds since last payment) are calculated.
We realize that we can’t anticipate all of your data analysis needs, and wanted to give you “raw data” on sales you need to scrutinize your sales at any level. You can export transaction-level details in the detailed transactions section on the financial summary page. Essential transaction data, such as transaction date, currency, store fee, app proceeds, and settlement status, are all included so that you can measure your performance using your own tools or tools from the developer community.
From electronic tax forms to on-demand financial reporting, we designed your dashboard and developer experience to keep the steps, from first signing up to counting your earnings as seamless and quick as possible.