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[matwek]

I’m looking for some advice on declaring myself self-employed and/or setting up a small company (based in the UK).
I’ve taken a look around the site here and searched for some info but unfortunately the advice (whilst useful and appreciated) is always tailored towards the OP rather than the specifics of my situation.
I was hoping that if I gave the community some background on what I want to achieve they might be able to offer me some advice, or at least point me in the right direction.

At the moment I work full time and in my spare time I often do odd freelance jobs by creating art for games, nothing major, just a little bit of extra cash.
Well in the last year or so my work load has increased dramatically as I’ve gained more skill, contacts and exposure. Now I want to make sure I’m doing everything properly and paying tax where I need to, with the end goal being that I can cut back my full time work to part time and do more freelance stuff in my spare time.

In addition to that I’m working on a couple of profit share projects that have the potential to make some money in the future, so I would like to be prepared for that as well.
For one of them the finances are being handled by someone else, so I would simply need a legal way to accept what money we do earn.
For the second project I may have to set up the company myself and collect the earnings before redistributing it to the other people working on the project.

Does anyone have any advice on the simplest way for me to do all this legally? I have no intentions of building up a proper company with employees; all I would need is the ability to manage my own personal money.

Also how would this topic affect me…
http://forums.tigsource.com/index.php?topic=39726.0

I’ve had some advice from people I know, but none from anyone who has actually worked with a similar set up before.

Thanks in advance for any help offered.

[Chris Koźmik]

UK has such trivial and friendly legislation when it comes to business that you should not worry. (I really envy you, you have it sooo easy in UK ) Just go/call your nearest "chamber of commerce" and they should explain you everything.

Basicly you can go SoleTrader route (prefered) or LTD (I would not recommend it for you because it requires more business knowledge, but it has some nice advantages).

If you want to "redistributing it to the other people working on the project" I recommend brushing up your business knowledge considerably (also maybe go for LTD, it's much safer because if it goes bankrupt it's just the company that loses money, not your personal assets).

[Dropout]

I was in a similar situation, Full time job and trying to do the indie game thing on the side.

I figured I had so little time to spend making games, the last thing i wanted to do was all of that sorts of business admin and accounting stuff too, So i ended up just paying someone else to do the company formation. I used http://www.crunch.co.uk/ to do it, and for - not a massivley brilliant price - something like 70 quid a month, you get a nice web gui where you can enter all your incoming money and outgoing expenses and they fill out all the HMRC forms and generally take all of that workload from you.

It works out pretty well, so I guess i'd recommend it. they aren't particularly games-focused so that's a downside, maybe someone else would be able to advise better there.

HTH, you can email me at luca at eightyeightgames.com if you ever have any questions and I'm not about.

Luca

[matwek]

Ah that’s good to hear, thanks for the advice.

The project where I could potentially be handling the money only has a team of 3 (45% to me, 45% to the programmer and 10% to someone else).
If I was handling things as a soletrader would that simply be a case of...

• Collecting the money in my business account.
• Handing out the various percentage cuts to the others and letting them deal with their own tax.
• Making a record of anything I spent on the business (things like outside help and new equipment).
• And then getting taxed at the end of the year on what remains.
• At which point I could transfer it to my own personal bank account.

Would that also work for Kickstarter as well? Not sure if we're going to go down that route yet but if we did would that be...

• Kickstater take their cut
• Receive what’s left into business account
• Distribute to others
• Record expenditures
• Get taxed on what’s left over.

@Dropout
I might look into that.
I'm hoping that I'm competent enough with my maths that I can handle the accounting side of things myself but it’s nice to know there’s a backup, although £70 seems a bit steep.
I would be interested in emailing you to find out a bit more about what they do and how it worked out for you.

[Chris Koźmik]

If I was handling things as a soletrader would that simply be a case of...

• Collecting the money in my business account.
• At which point I could transfer it to my own personal bank account.

Disclaimer: I'm not a citizen of UK, so everything I say is general and need to be checked with your country's legislation!

As a SoleTrader you don't have a business account (well, you can but it's in fact your personal account). Your whole property are considered your "business assetes". Also if your "company" goes belly up you lose everything you own (house, all money, etc) + get possible new debt. LTD shields you from all these (but it's more complex).

I'm not sure, but handling employess seems much easier in LTD. If you go SoleTrader route you probably should make some "contract" with the rest of your team (them being other SoleTraders).

Also, don't forget the *volume* of income (possible VAT if you reach certain thereshold). If you all act as separate entities you can avoid it (if you don't get too much volume).
(note: don't mistake income with profit)

[matwek]

As a SoleTrader you don't have a business account (well, you can but it's in fact your personal account). Your whole property are considered your "business assetes". Also if your "company" goes belly up you lose everything you own (house, all money, etc) + get possible new debt. LTD shields you from all these (but it's more complex).

I think I should be ok in regards to going bankrupt. I don't intend to run things as a business, just a legal way of collecting money and paying tax properly. I won't be taking any risks or spedning large sums of money so I'm hoping that won't be a problem.

I'm not sure, but handling employess seems much easier in LTD. If you go SoleTrader route you probably should make some "contract" with the rest of your team (them being other SoleTraders).

I imagine this will be the tricky part. I consider myself a trust worthy person and have every intention of giving people all the credit and cut of the profit that they deserve but I totally understand that people would prefer (and expect) everything to be offically planned out in a contract.
I hate using the term "employess", because they're far from it, we're equal partners of the game and its design. But in terms of how money is handled it seems to be the easiest way to deal with things. I imagine a joint business between a Brit and a Brazilian would have complications.

Again, thanks for the advice.