Incorporating GBGames

Usually when I talk to people about making games, I will say that I have plans to start my own game company. In general, I had the idea that I would start out by filing as an LLC, which is a limited liability company. I didn’t think that incorporating was necessary or even desirable, as I would be a one man company. An LLC allows me to keep it as simple as a sole proprietorship while getting the liability protection of a corporation.

Which is all well and good, but I haven’t really been doing anything about it. I can’t always plan to start my own game company. At some point I have to actually start it. Looking at my written goals, I don’t see anything that says, “Incorporate GBGames by MONTH DATE, YEAR”.

I think the reason why I didn’t put it up as a specific thing to do is because I just assumed I would handle it when I had games to sell. Why create a formal company when I’m still trying to make something for the company to make revenue from?

Then a friend of mine incorporated his company recently. I can see that many of his expenses can actually be applied towards his taxes, many expenses that I myself have. Also, he is really kicking into gear with his business. At the moment I can take my time since nothing is pressing me to make games or try to sell them, but if I had a formal company, it would force me to actually do something. I’d get a feeling of urgency since I have a business to run. So maybe incorporating now wouldn’t be too early.

I’m not sure of the answer, so I need to update my research on this topic. Did double taxation laws change this past year? Are LLCs still the best compromise? Any reason why a formal corporation would be better? Should I form a company before a product is actually created? What responsibilities do I need to take on if I do create a formal company? There are quite a few questions, but at the very least it gives me a new set of topics to blog about. B-)

2 replies on “Incorporating GBGames”

You’ll need to look long and hard at what kind of protection an LLC really gives you. And I think you need a partner (at least one) for an LLC. Sometimes people get around that by having their spouse be a partner, or whatever. There are also lawyers who specialize in “piercing the corporate veil,” and so if for some reason you DO end up with a liability, you need to be extremely careful with your bookkeeping or they can, in theory, go after you.

I started out easy – I formed mine as a DBA. I imagine that at a later date I can reform the company as an LLC (I’m not sure I’d ever want to actually incorporate) – but that’s something that could be done as things grow. I just wanted to keep it simple.

I am actually part of a 3-man recent start up, and we’re also still in the pre-selling-anything stage. We opted to go with an S-Corp. I’m not sure of the exact details (I’m the tech guy, someone else is the business guy 🙂 ), but an S-Corp gives you better double-taxation protection and its liability protection has been vetted in court. My understanding is that an LLC’s hasn’t.

An S-Corp is a special filing of a standard Inc. (a C-Corp), which must be renewed every year. I believe the requirements are that it has to be smaller than a certain number of employees and has a limit to the amount of cash on hand it can have, since it pays out most profit directly to the owner(s).

IANA Business Man, so double-check everything I’ve just said :-), but an S-Corp is something to look into.

Comments are closed.