Getting paid in esports

In today’s article, I’ll cover how to get paid in esports. Depending on your location, your contract and more, it could be as simple as requesting a PayPal and filing your taxes. If you deal internationally it could get messy and sending and keeping track of invoices is always a challenge. Please note, this is not legal tax advice but my experiences. Always consult an accountant for your esports company or lawyer for your legal questions.

Step 1 – Contract

So you’ve been able to get a sponsorship in esports and have some interest. You are now getting ready to negotiate terms on the deal. What should you look out for?

  • Have someone draft up a contract. Your lawyer can help you or theirs may have a template. Make sure you read it over with proper legal advice. Never ever sign anything without having a lawyer look at it. What’s $500 vs a $10,000 oops?
  • Make sure your payment terms are acceptable. Example, when do you expect to get payment? Is it net 14 on deliverables? Make sure there are not clauses that are unreasonable that can prevent you from getting paid
  • Ask for payment upfront. Ie a flat fee or percentage upfront in order to begin your services. Some larger clients may not allow this if you’re just starting out. You’re going to have to see what works by client. Worst they can say is no.
  • Specify the currency in the contract. Usually it will say what the currency is. Make sure it’s what you prefer
  • Clarify if you need to charge tax or not. Example, if the org is from the US with no Canadian entity you may not have to charge tax. May be vice versa as well (confirm with your accountant or tax specialist!)

Step 2 – Terms / Invoice

  • Create an invoice with the following:
    • Your payment details:
      • Can be a paypal
      • Wire transfer (be very clear and specific and give as much info as you can)
    • Contact info (you dont know will pay this)
    • Late fees (yes, include these. Should be outlined in the contract generally).
      • Ie 2% per month simple interest. Whatever the terms are.
    • Your company name, contact info, address etc
    • Their company name, contact info, address etc
    • Work completed, line item details
    • Total amount (include an area for taxes if you have to charge)
    • Currency you’re charging
    • Company header

Step 3 – Setting up your accounts and accepting payment

  • Classic banking options
    • Local banks offer a wide variety of options on getting paid. The issue is the currency available when dealing with local banks. Generally you’ll be able to get a few options such as USD, CAD and perhaps Euro depending on the banks.
      • You need to open an account in your local currency + the currency you’re accepting. Ie, I am Canadian, I will open a Canadian account + a USD one
      • You will also need to generally go into a branch and open these up
    • Wire transfers are one of the safest options in terms of accepting payments. They’re expensive for both the sender and accepter so figure out if it’s worth sending on the amount you’re getting paid
  • Digital or online payment processors
    • Paypal is an option but I’m not a huge fan due to the large amount of chargebacks associated with it.
    • Stripe, Square and others. These generally high fees but allow you to accept
    • Quickbooks, Xero etc. These are cool because they sync with your accounting software and can keep transactions. There are some general restrictions with each so do your research
  • Hybrid online bank
    • I did some research and found that TransferWise is a very convenient option for accepting a multitude of different currencies. For example, I open an account and can accept currency from my customer who has another currency. I then can transfer it to my regular account and convert it to my local currency. There’s a small fee involved but it is a great option and have heard good things.
      • You can link PayPal to this account I believe.
      • You can also accept USD wires or other currency wires
      • You need to submit ID for verification. It was a simple process

Step 4 – Tax Implications

  • Since esports is world wide. You may run into scenarios where you will be accepting money from a company from another country.
  • Find out if there are tax treaties with the company you deal with.
    • Example, you are Canadian. You are accepting money from a US entity. You may want to fill out an W8-BENE if you are a corporation in esports so that you may have a 0% withholding tax.
    • Vice Versa. Canada and US have tax treaties. Confirm that the type of payment you’re receiving is eligible for them.
    • If you don’t confirm, generally a 30% withholding tax may apply.
  • Other countries have other rules and tax implications when invoicing and accepting money.

Step 5 – Collecting payments

  • Sit back, enjoy and collect your payment! Make sure you save enough to pay everyone and taxes associated with the revenue.

Step 6 – Collecting non payments

  • Please note, this is my experience. Not legal advice. Always consult a lawyer!
  • Unfortunately, there comes a time where you have to collect late payments. Sometimes it’s malicious, the company is insolvent or there’s other factors involved (ie a disagreement. Lucky for you, you have that contract right?
  • Generally a gentle reminder of non payments works most of the time. People forget, it’s OK. Just send the note and get paid.
  • If continued ignoring happens, sometimes it’s best to get your lawyer directly involved. Demand letters can go a long way in getting a payment.
  • Blasting them publicly is an option here if you’re desperate. This works well if you’re really fed up. Just figure out your legal situation first and if it’s worth the risk or no reward. They may not care about their public perception.
  • Take them to court if you can. Court is EXPENSIVE, TAKES FOREVER and you may not get a ruling in your favour. Even if you do it may not be worth it and you may not be able to collect anything. This is an absolute worst case scenario for everyone.
  • *Bonus* sell the debt to a collection agency. Yes, you can do this if you’re in the legal right and you’ve exhausted all options. I have never done this though so YMMV.

Bonus – For Canadian esports organizations getting paid in other currencies.

  • If you’re Canadian it’s always a challenge figuring out how to get paid. The easiest was opening a transferwise account and then followed by gong to a bank and opening two different ones. If Canadians have any questions just feel free to leave a note!

So there you have it, some tips and tricks on getting paid in esports. If I missed anything, please let me know and I’ll be sure to include it!

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