Hello everyone, Well me and 2 other friend have started to develop on XNA after we heard the new announcement about that we can make game and sell them on the community marketplace. We were wondering what kind of arrangement other people were doing. Form a legal entity (incorporated), stay an informal group? For exemple if we start getting good sales then we can get substansial income which we cant just say it was some gift or some extra bonus thing we got. It will have to be declare, so if it stay informal that mean it will part of our personal income tax. Or we can incorporate as a company and then the income goes inside the company to be then use to reinvest in the company and give benefits to its members. Also if we legalize it, it also should be more simple for the distriubtion of profit among ourselve, to have a document/agreement that we sign specifying how to split the revenus. All suggestions/ideas/comments are welcome, Thanks for your collaboration in advance. Sincerely Fred from Québarium

I'm going to form an LLC before selling any of my games to protect my personal assets just in case of something like a lawsuit (not that I'm expecting one, but better safe than sorry).

Income is income is income... there are some bonus tax doges if you form a corporation but there are also a lot of extra hassles (in the US at least). You can't avoid the tax burdens just by calling yourself a business.

If its your 'personal' income you can still offset that against expenses to reduce tax burden

If its a company then you can still offset against expenses - you can't just put the money in an account call it reinvesting and not pay any taxes though. Accept taxes...

Having a legal organisation will help in the case of multiple members and an LLC as Nick suggested will reduce your liability. Lets say you write a game that makes $10,000 profit and then someoen sues you for copyright. Without an LLC they can come after all your personal property too. With an LLC (as long as you avoid comingling of funds etc) then they can only sue for the company assets....

There's a million other things half of which I will get wrong if I try to explain...

I would really recommend reading this http://www.nolo.com/resource.cfm/catID/5DE04E60-45BB-4108-8D757E247F35B8AB/111/182/ and using the books and resources on that site.

You might also find your local library has some small business seminars or something too.

 

Ohh I forgot to mentionned we are from up north in Canada ;-) Yah another reason was an Inc. was for protection against potentail which seem to be a national sport in the US 8-(, it sadden me each day when I see some bunch of patent troll to sue any company as soon as they start to have someting sucesfull. If those people owning the supposly infringing patents did put something on the market that was in direct competition with their own product I think would be fair. But now most of the time it just some paper that are in some file cabinet in a lawyer office and that never been put to good use in a product. Ill take a look at that web site, but I guess it might only apply to US stuff. Ill check my local ressource here, and continue to check other people opinion to see which way they go. In my personal view we should go for the inc. and I did it before with 2 other friends and its not that bad, just alot of boring forms and thing to do, but nothing you cant do by yourself.

ZMan, I hope you're not trying to give legal or accounting advice on this forum. We can't do that :-)

That being said, for me, I looked into creating an S corporation (which may avoid certain double taxation that C corporations may suffer), but in California, there is an $800 minimum tax for any incorporation, and I'm not sure I'll ever sell enough that that would be worthwhile, so for me, doing it as myself might make the most sense. Your best bet is to go to someone who knows about the rules in your particular state and ask them, or perhaps read a book specific to your state on the library, if you're confident in representing yourself...

I was hoping I was being vague enough in my 'advice'....  but yes you are right... read the books talk to qualified people and dont assume that 'making a company' == 'avoiding taxes'....

Oh and since you are in Canada only take advice from Canadian armchair lawyers and accountants.

Every State in the US has different laws on creating a business.  Anyone can form a Corporation (C or S), Partnership, Sole Proprietorship, or an LLC.  You probably don’t want to do anything on your own if you’re asking the question on a forum about creating games. J

The best advice I can offer is find someone who’s done something similar and ask for a reference to an accountant and/or lawyer they trust.  I asked my financial advisor because I trust his advice.  So, don’t trust a comment from someone like me…seek the advice of professionals who you already know.

intruder:

We were wondering what kind of arrangement other people were doing.

I already have my own software development company (in business 22 years as of this past May), so I'm just going to stick my existing company name and logo on the game.

Does it count as legal advice if I say "put everything in writing and make everybody sign it"? Because it seems like that should just be common sense, but most people don't do it.

You will be suprised how many people don't put things in writing. A verbal contract isn't worth the paper it's written on.

I am in the horrible situation of having to form an agreement between three guys, one in the US, one in Canada, and one in the UK.

So far I have had meetings with five law firms, all of which have turned down the work as being "far too complex and highly likely to be ineffective".

Creating a company in the UK is trivial, cost around £60 and takes 30 minutes. It is all done on line and the Inland Revenue are informed of the company within milliseconds of the formation.

Often you get free domain name registration as well.

However I don't think even that will be enough for this situation, I am going to be looking at the BVI's and the Bahamas to see what sort of legal protection they afford.

 

 

 

 

 

 

 

Stainless:

You will be suprised how many people don't put things in writing. A verbal contract isn't worth the paper it's written on.

Hear, hear! It always amazes me how much stuff people don't write down, and this is not just in software development. Any time you have money or property exchanging hands, you should have something about it on paper. This doesn't need to be a formal legal document, just a bit of paper that says "on day X, persons A and B agreed to do Y", then you both sign it and both keep a copy.

9 times out of 10 this can sit in your bottom drawer and never need to be used, but that 10th time, you'll be glad you had the agreement in writing! Without that, any future disagreement will devolve into a silly "yes you did / no you didn't" argument, which is pretty much impossible to win or take to court if it ever came to that. You don't need a ton of fancy legal wording for a judge to someday be able to look at your piece of paper and say "hey, I see your signature on this, so obviously you did agree to it back then, therefore you have to follow through on that agreement now".

I think people often just assume that because they are working with a friend, or a relative, they won't ever need to resort to such things. But life is crazy and unpredictable. People can change. Or sometimes they die, and then you find yourself dealing with their next of kin or executor, who might or might not know anything about what non-verbal agreement you had with them...

i know this isint really supposed to go here but i didnt know really where to stick this and it kinda seemed like it fit but if i were to take say halo wars interface ideas with the circle and crap to pick the units you know the selection i guess is what im trying to say umm would that be stealing and illegal or could i use that without fear the way you select units is what im talking about

Generally, you should start a new topic for things like this, but in this particular case it's a legal question so we can't answer it anyway. Interfaces are protectable under U.S. law, while ideas aren't - but where the idea stops and the interface begins is a very difficult thing to determine.