I called up their 1-800 number to register for my vendor number. I’m not sure at what point everyone went to voice commanded phone systems around here but I find they are even more annoying than the ‘mash finger on 1 for English’ kind. By the time I got to the 7th prompt it responded kindly to my monosyllabic grunt and sent me to a live person.

The conversation went like this:

• Gov: Hello, how can I help you?
• Me: I’m starting a new corporation and I’d like to get a vendor permit for RST
• Gov: What types of items are you selling?
• Me: I’m selling retail software
• Gov: Do you ship physical media like CD’s or DVD’s or do the customers download it electronically?
• Me: Just electronically
• Gov: Ok, you don’t have to charge them RST and you won’t need a vendor number. Thanks, and have a good day.

Wow! I thought. That was quick and to the point and now I don’t have to worry about the extra paper work or added cost to the customer. I quickly logged onto my site and removed the 8% for Ontario residents and looked to see if I’d charged anyone unnecessarily. A quick report showed that I had two sales to Ontario customers in November so I did a quick refund with a note and it was done.

On the weekend I started thinking this whole scenario over and wondered how an RST audit would go over when I told them I called and the lady told me that I didn’t have to charge RST. I thought I might need some documentation to back this up so I went looking online. I found the Computer Programs and Related Services guide on the Ontario Revenue site which I’d missed finding before. I quickly scanned down the document and found the following blurb.

All computer programs are taxable, unless the program qualifies as a custom computer program. The method of delivering a program (e.g., via CD, memory devices, electronic transmission, etc.) does not determine the RST status of the program, since computer programs are defined as tangible personal property (TPP) in the Retail Sales Tax Act.

Well now. That doesn’t sound like the information the helpful government employee gave me over the phone. I decided I better call again to make sure the civil servant wasn’t just on a Timmies high when I called earlier. This time I got a different employee and I made my case again. She quickly tells me the exact same information that the first one did. Unbelievable! This time I’m not going to let it go at a simple verbal promise so I asked her about the guide I found earlier, “What about RST Guide 650″ I say. She has no idea what that guide is so I tell her the guide title and where I found it and she takes a look. At this point I can hear her reading the guide quickly and she finds the same blurb I mentioned above. It looks like you’ll have to charge RST after all she says. So after all this I finally got my vendor number. In closing she also mentioned to me that I might want to get a formal decision done and mailed to me so I have something to show if an audit comes knocking. I’m not sure why I’d need a formal decision document if I’m actually collecting tax for them though.

It makes me wonder how many online software companies in Ontario are incorrectly leaving off RST because of some errant advice over the phone.

Do you run an Ontario based software company? What’s your experience with RST and GST on downloadable software?

What might you ask is the end and what is the beginning? The end for me is being a salaried employee and the stability (falsely perhaps) it provides. The beginning is a new software company named Red Tempo Software Inc. that I’m starting up.

Today is the first day of my new company, and by no planning of my own it’s also Thanksgiving Day here in Canada. I couldn’t have picked a more appropriate day as I have much to be thankful for. This year has been great so far and is getting better day by day. I got married to the love of my life on May 31st and now I’m getting set to realize my dream of owning/running my own software company.

My name is Richard Edwards. I’ve been working as a software developer for various companies since I graduated from Wilfrid Laurier University in Waterloo, Ontario back in 1989. First as a PICK programmer for 7 years, and the remaining years as a VB, .NET, MSSQL developer with 3 other companies. I have always had a dream of one day starting my own company and being in control of the entire process. Not only the software development process, but the customer experience, marketing, support and all of the intangibles that come with running it your way. But It’s more than that. It’s the ability to shape your day, week, life to what you want that is so appealing to me. I’ve been reading blogs and listening to podcasts of other Micro ISV’s over the past few years and formulating the plan in my head and I’ve always wondered what I could accomplish if I took the plunge and quit my full time job and focused on my dream. How stable is a full time job anyway? On any given day you can be called into the office, given a corrugated box to put your things in and shown the door. At least doing it this way gives you some control over the situation.

This blog will be a place to talk about my experiences in starting Red Tempo, its products and other random thoughts I might want to express. The posts will cover both business and technological issues that I’m addressing from startup through to maturity.

I invite you to be as interactive as you wish. Leave comments, kudos, jeers or just follow along. Maybe we’ll all learn just a little more along the way.