The Entrepreneur Tax that Kills Business

This is a cross-post from my contribution at CloudAve.com

All governments, including the Norwegian, talk at length about how to stimulate growth among small businesses and the need to focus on innovation. To accomplish their goals various schemes are offered; grants, tax reductions or state backed industry plans. But while other governments try to help small businesses, the Norwegian government at the same time slaps entrepreneurs with hefty taxes. In Norway if you own shares in a company you will be taxed purely based on the ownership and the value of your share. And im not talking about tax from any income you may receive if you are employed at the company, sale of those shares or dividends from those shares (that would be income taxes at 28% for sale of shares and dividends). No; the tax system in Norway includes personal asset taxation based on the value of the company that person own shares in. So if you own 50% of a $10 million company then you will be taxed 1,1% of that value ($5 million) = $55 000. Yearly.

So picture this: you have a great startup going. Bootstrapped to the max, customers rolling in giving your servers barely any time to rest and your competitors are left stranded. The company share value skyrockets on the stock exchange while the entrepreneurs are eating at McDonald’s because they would rather use the money on new servers instead of nice cars, Russian caviar and French champagne. Then the tax-man arrives. “Well hello there, you owe me a big pile of money”. The entrepreneur doesn’t really understand this and replies: “but my salary is $3000/month and have not taken out any dividends from the company”. Mr. tax-man laughs: “Hah, well this is Norway and here you must pay 1,1% asset tax based on the company value, no matter if the company is profitable, has any income at all, or if the current stock value happens to be significantly lower than our tax-claim based on share values from way back last year.”

This is not fiction. Last month I received my tax returns which included an invoice for $6000. Last year I had no income whatsoever as I spent my time trekking up in the Himalayas, snowboarding in Iran, doing yoga by the Ganges and heaps of other stuff during my ten-month trip. While having a blast I also kept on to my shares in 24SevenOffice (ERP/CRM solution which I co-founded). And based on the value of the shares (2007 pre-financial crisis) this resulted in my tax fees. So if I wanted to sell some shares to cover my tax fees now that would be at half the price compared to the share value which the tax fee was based on. Either way it is a tax claimed on money I do not own or have earned (at least yet). It might actually be money I will never see if the company goes bust.

This year I started for myself, doing some freelancing as well as starting a new venture called MakePlans (a booking/reservation system). I would like to spend my income from freelancing ensuring continuous development of MakePlans. Also I would like to continue to hold shares in 24SevenOffice. But the result of this entrepreneurial tax is that I either have to get a loan in the bank or sell off some of my shares, possibly even to a competitor or a foreign investor. Which I assume is not what the Norwegian government wants or is beneficial for the software industry here in Norway. And that is the tragedy of this type of taxation. Not that I have to borrow some money to cover my bills, but that it is actually bad for businesses. And that is not good for the government which is not good for the society. Me having to pay this tax has a negative impact on the health system, educational offerings and all other operations from our tax-funded government.

Now $6000 is not something to file bankruptcy for. I can manage it. But lets assume that the Swedish music-streaming success and great service Spotify was started in Norway. Techcrunch reports their value at $250m. Lets also assume that founder Daniel Ek owns 20% (actually I would think he has a larger share). With a 1,1% asset tax this results in a $550 000 bill to the Norwegian government. And this should be paid by a person who owns shares in a company that is yet to make even one dollar in profits. Now that is something to be worried about.

Balder – Open source photo gallery built with Ruby on Rails

• Public gallery showcase
• Homepage
• Source on GitHub

So you got lots of photos, yeah? Tried installing some PHP-gallery and it sucked? Or bought a Flickr Pro-account but want more control of how your photo collection is displayed (or still want access to your data when you stop paying them)? Fear not; Balder is here for the rescue.

As a result of a project with two photographers I did this summer I have now open sourced the code and named it Balder. It is a photo gallery built in Ruby on Rails. It aims to be minimalistically beautiful and simple to use. Look at it as Flickr on your own server – without the social features that is.

So what can it do?

• Organize in albums (as events in iPhoto)
• Combine albums in collections (as albums in iPhoto)
• Stores photos to disk in folders
• Create multiple thumbnails of custom sizes
• Read and writes EXIF/IPTC title, description and keywords
• Upload multiple photos in one go (can also scan existing folder structure)
• Tag photos. Can also tag albums (or the result is that all photos in the album is tagged)
• User management with roles and permissions
• Geo-location of albums & photos with Google Maps integration.

If you want to see it in action look no further than to this domain. After my 10-month trip in 2008 I took a few photos and you can see a selection at photos.inspired.no.

And this is how it looks for the administrator:

Upload multiple photos with live progress:

Add albums to collection:

Want to try it out? Head over to BalderApp.com for this free open source Ruby on Rails photo gallery or go directly to the source-code which you can find at both GitHub and Gitorious.

This just in: Photos taken as hostages on Flickr

Johan is in the same situation as me; had Flickr Pro for a while and didn’t really feel the need to continue it. My pro account expired in April and I should have backed up all my photos because now I have to pay $24,95 to be able to do so. With a free account only the latest 200 photos are available. Not only public but in the organization tool in Flickr as well as the API.

This is a very good example of the type of problems that exists with storing data in the cloud. We as users must demand access to our own data, whether we continue to pay for the service or not.

I am making a photo gallery myself and it is currently in beta. I plan to include an import function that will utilize the Flickr API; download the most recent photos and delete them when their saved on my own server. This way I should be able to get out all of MY photos.

A letter from Iran

hi espen

how r u? here every things is close. thats why i cant come on line in face book.even messenger… just very slowly smtimes yahoo…. sms is close. and most of day even phones r close…

what can i say about their violence? u cant even emagine that… plz tell me what things u want to know?

just i can say here is hill. everybody that u ask elected musavi… but see… its very hard when u know they r cheating u and u cant even shout or say give my right. all over the city is full of souldures and polices and…. some of them r from libenan, its funny that he pay money to arabic people to kill and beat iranian coz they want their right.

every day we go to protest… every night people r out…some with car and some walking…. they bleep to show their opositions.

i dont know what will happen to us…! but this not humanity.

today was the cermoney of people who died, they killed… and there r too much more the ones who r arrested and in prison they persecute them… i saw manythings by my eyes, they beated me too just coz i was walking in street…

any way, im really not good. i feel very sad now and dont know what can we do?!!!

they dont want even to count again , even if they do now its not reallity. they changed everythings… and our leader khamenei send congradulation to ahmadi nejad!

in saturday, counting finished in 2 oclock but they called on 8 oclock, before it get finish. 24 million… really funny. in all newspaper that reacived in our hand at 11,(3hours before counting finish) they said ahmadi nejad was win…

so they think people r stupid. but this time nobody accepted. but unfortunally just in tehran. coz people in other cities dont have risk and they affraid, if they beat one of them they even dont come out. and in tehran also, how do u think? how many days more people can come out and protest and…?!!!!!! they r dictator. finally they will get tired and force to accept, same as always…

before election i talked with many people in all cities… %80 said musavi… how can it be possible?!!! and if they r right, why they dont care about people who r shouting give back my vote? its not election, its selection……? why all phones r close? why they kill? they dont let people show….

and these people who r out r %20 of opositions. for example arround me, everybody elected musavi, but now they dont come out,they affraid… so, see this %20… everybody who can think, understand its rigging.

actually people r tired of this regim. musavi was a excues that they come out against of them.we didnt have too much choise.and all of our choises force to work for this government and regim,they have to.so we had to choose between them. but for sure every one of them would be better than ahmadinejad.

any way, u say about there and ur news about iran there and other places. what and how do u feel about it and what will happen from ur side?

take care
[name removed]

Engelab Iran

I spent three months in Iran last year and got introduced to the most welcoming people I have ever met on my travels. Iranian hospitality is legendary and was impressive by both the young, rich and liberal in north Tehran as well as large poor families in conservative rural towns. I also made some good friends there who I keep thinking of while these current events keep escalating.

Me and two Italian friends had dinner at Naghsh-e Jahan Square in Isfahan. The second largest square after Tiananmen square in China. The three girls on the next table were pretty and not at all shy. They showed us around town and bought us lunch (no argument there).

And this is what it looked like today, filled with brave Iranians fighting for their rights and for their vote to count.

My friends in Isfahan went to the university and lived at the dormotories. Earlier today there were reports of attacks on the dormotory there and this video confirms it. I hope they are ok.

Most people see Iran as an axis of evil. A dangerous place. With fanatical and religious people. I have written before about the truth about Iran and its people. But even so I am surprised about the turnout of these demonstrations and how brave the people are for standing up to their government. When I was there I tried talking to people about the problems that exists because of their leader and the way the state is structutured. Most people were very dissatisfied with the government but they seemed to be very apathatic about making any changes. They tried to live their lives and kept their joys in private. Maybe this time the government pushed too far with their fraud. Or maybe they saw that when (even) America can CHANGE so can Iran. Another thing to remember is that Iran tried this 30 years ago. These events are in some ways very much alike to what happened when Khomehni took power. The people were dissatisfied with the Shah (king) and wanted a true democracy. Khomehni promised it but as we all now did not live up to his words. The result is that Iranians have until now been very reluctant to make such a major change again.

These events also make me think how lucky my timing was last year. I was in Tehran in early 2008 and suddenly there was an election which was all new to me. But it was a local election. I went out on the streets to check it out but it was a ghost town except for a small crowd of 50 people outside the university where the voting booth was. One old man shouted “Bush – monkey. Bush – monkey” and I smiled and said “balle” – “yes”. Earlier that month another important event occurred in Tehran – the day of the revolution. About a million conservative Iranians parades in the streets along with me and two Norwegian girls. But it was a peaceful day out for families and people were smiling.

While I am worried for my friends in Iran and worried that the demonstration will be cracked down upon without any result, or maybe even for the worse, I am still glad to see these events occuring. A change for a slightly more liberal president is not enough. A revolution is needed.

Engelab Iran – Azadi.

Revolution Iran – Freedom.

Google releases Page Speed for Firebug

Users of the excellent Firebug debug tool for Firefox probably also uses YSlow, a performance analyzer from Yahoo! It gives good tips for decreasing page load time such as gzipping static files or combining javascript files. Google has now released a similar add-on for Firebug called Page Speed. It is very similar to YSlow but it also introduces a new tab feature called”Page speed activity”, a request overview, and in addition to giving performance suggestions it also tells you the improvements of implementing the suggested changes.

You can find Page Speed over at Google Code.

Let them all win..

Quite a diplomatic result for the winners in the “browsing” category in CNET’s Webware 100: Firefox, Flock, Google Chrome, Internet Explorer 8, Maxthon, Opera and Safari. In addition to all the browsers and browser-shells Diigo, iGoogle and XMarks won as well.

I suggest that CNET drops this category.

Gitorious – free open source git project hosting

GitHub is a very popular repository hosting for open source ruby projects. Git is a version control system similar to (but a lot better than) SVN. I use git hosted on GitHub for my current project, MakePlans – a booking/reservation system. But for many is GitHub not a viable alternative since it is not free for non open-source projects and while it is great for many to outsource backups and repository management, it is not an option for those who needs to host it in-house due to security or other internal guidelines.

Enter Gitorious!

Johan Sørensen from Shortcut, a ruby on rails company here in Oslo, made this amazing free open-source “GitHub-clone” (update: Gitorious was launched the same week as GitHub.). It has been available as a open-source project for awhile but recently Shortcut made a free public site available for those who do not want to install Gitorious themselves.

Gitorious boost most of the features that GitHub has:

• Host git-repositories.
• Visual source browser.
• Teams.
• History of the commit log.
• Clone/fork projects, download zipped file.
• Comments.
• Notficitation system.

On a day to day basis the source tree browser is what I most often use with GitHub. It is ajax-based and loads commit messages after the rest of the page is loaded. This is often a slow process in GitHub and something that works much better in Gitorious where no ajax is used.

There is not much I miss from GitHub, but I cannot see a way to constantly watch others repositories as is possible in GitHub. I follow various rails-projects in GitHub but I use it mainly as a form of bookmark so it is not a very important feature for me.

QT announced today that they will use Gitorious as their public repository for their cross-platform UI framework. Hopefully more will follow so Gitorious can gain the attention it deserves compared to GitHub.

The Problem with URL Shorteners: ow.ly Server Errors

This is a cross-post from CloudAve.

If you currently click on a ow.ly shortened URL you will be shown a server error page at ow.ly – not the URL you or the publisher intended you to see. Proponents of these services have so far ignored the main problem; trusting a third party. I guess they see the problem now when potential visitors to their site are stopped by a server error on someone else’s site.
The question of trust in this regard is especially important because these services has no working business model. Also any developer can create such a service in less than an hour making the barriers of entry for this service extremely low. Expect to see URL shortener services changing their tactics: Digg launched their already much hated DiggBar last week. This service unlike most other url shortener services wraps the actual landing page in a frame and adds a top-frame bar with Digg information. Ow.ly is also now doing this (unsure if this feature is new to this service). The problem for site owners is that they have no control over how these services will change. DiggBar is already “stealing” link-juice by having a digg-shortened link on Delicious instead of the original url. Also DiggBar and Ow.ly responds with a frameset (200 http status code) instead of a redirect (301 http status code). This can result in a lower pagerank as Google will not see the link from “Site X” to “Site Y” but instead from Digg.com to “Site Y”. In my view URL shorteners are just plain evil. They add an extra unnecessary layer on the web.

Bluebird

Still in beta but on its way to be the best Twitter client on OSX. Thankfully not resource heavy as the case with AIR-based clients like TweetDeck.

Bluebird twitter client

I am using the Light theme