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[wisetaner]

Hi everyone,

I've been trying to figure out exactly which business and tax forms are required to form an official indie game development company (particularly in Michigan). I've read both sides of the argument regarding whether or not it's even necessary to form a company before the first game is complete. However I'm trying to look at the bigger picture, such as forming a limited liability corporation, documenting expenses, profits, and losses for tax purposes, as well as future employees, volunteers, and interns and such.

At any right, I've been doing research on this periodically for the past month and although I know I need the "Articles of Organization" for Michigan. I'm not sure what if any other document's I need for legal purposes. I've read that depending upon the type of business, there could be multiple business forms required. But none that I have come across specify video game developers or indie game developers. Most just mention agricultural or profession (such as Lawyers, I think). But "Articles of Organization" appears to be the core document to form any company for its "doing business as" name. I just cannot figure out if any other forms are required.

Lastly, for those who might be wondering, forming an official business and filling tax documents can help elevate a small amount of financial loss burden, if and when you spend money on equipment for the company but didn't many much of anything that year. That's just one example though.

Anyway, I'd be grateful for any input on this.

Thank you!

Mike

[Paragonyx]

Registering a business is not difficult but can be a bit tedious. There are services that help you streamline the process and make it as hassle free as possible.

I recommend using something like LegalZoom.com. I don't know what your budget is but it is a time saver so that you can focus on the actual game development part of your business.

Good luck!

- Alexis

Paragonyx.com | Facebook | Twitter | Tumblr |

[wisetaner]

Hi Alexis,

Thank you for the information, I do appreciate that, although I'm definitely not opposed to doing the tedious legal documents myself, actually I prefer doing my own documents (once I know what is needed). As I'd rather save every dollar I can (or in this case $150...as that's what legalzoom's charges). I just need to know if there are any other legal documents necessary, aside from the "Articles of Organization".

But again thank you very much for your information!

Registering a business is not difficult but can be a bit tedious. There are services that help you streamline the process and make it as hassle free as possible.

I recommend using something like LegalZoom.com. I don't know what your budget is but it is a time saver so that you can focus on the actual game development part of your business.

Good luck!

- Alexis

Paragonyx.com | Facebook | Twitter | Tumblr |

[RaconteurNick]

Hi wisetaner, I have some advice that may not be the most preferable but it's what I can recommend based on speaking with many entrepreneurs, attorneys, and other business professionals. Obviously I'm not an attorney so this is not official legal counsel.

Spend the money and do it right the first time. Is this preferable? Hell no! A few hundred bucks on LegalZoom is way better than 1k+ for an actual attorney. But, what happens when your articles of organization need to be amended? A fee to change them and re-file them. What if you miss a form or do it wrong? More fees to amend and re-file. Small things like that. It adds up, and trust me -- especially if you're giving equity to anyone else in the company, you need to get it done right the first time because then you never have to worry about it again.

It seems you're going with a limited liability company. I'd recommend this form of business entity for gaming because it gives you the liability protection of a corporation but the flexibility and simplicity of a partnership. However, it does come down to your needs, which only you can truly decide with.

As for when to start the company, it's not really a requirement until shortly before the game launches (it takes a few weeks for the paperwork to be filed with your state's secretary of state) but you can do it as early as you wish. If you have or are attempting to attract an investor it's also the preferable route because most investors want to give you money only after you're established (because they won't make that check out to wisetaner, hehe).

The Articles of Organization are the core document that define the company and set it up. You have to have them. For an LLC, especially if you're by yourself, you don't have to file an Operating Agreement. However, I strongly recommend filing one, again especially if you're giving any kind of ownership to anyone else in the company. If it's just you, don't worry too much about it at this point in time. But if anyone else is given equity you absolutely need one filed.

Finally, about taxes and such -- you should start forming a relationship with a CPA, because they are just as important as an attorney. I was lucky enough to get a pretty good handle on accounting and finance during my business education, so I know my way around financial statements -- but even then, I just keep a spreadsheet detailing expenses so we know where everything is going when I need to show it to the CPA. You can even find simple programs like QuickBooks if you don't want to hire a CPA. Most CPAs would be kind enough to answer a few questions for free, but again, I'd try to form a relationship because the ability to just call them or email them about a tax question is extremely valuable.

My path certainly won't be recommended by a lot of people, but if you want it done most efficiently, this method should be your goal. I've had friends use LegalZoom, but the amount of research and time it took them, to me, was better used on just hiring an actual attorney who knew what they were doing and didn't make a mistake. Is perhaps borrowing the money from a family member or friend an option?

One other thing -- are there any startup incubators/accelerators in your area? Their job is to help you with precisely this kind of stuff, as networking is about 80% of what they do.

I wish you well in your endeavors!

[MakeItUpAsIGo]

I would also recommend going with legal zoom, while I understand RaconteurNick sentiment about the importance of doing it right, there is no guarantee that the lawyer would do it right either.  I set up a consultation about business formation with a lawyer the other day and honestly at the end of it I felt like I was out 100$ and an hour of my time, I didn't really learn anything new or get any advice outside of what I already researched on my own before hand.

[wisetaner]

Hey Nick and MakeItUpAsIGo, I just saw your post's, I'll reply to them tomorrow.

A lot going on right now. 

[wisetaner]

Well, Nick, I can understand most of your points, though in regard to "do it right the first time". Whether it be through legalzoom (as the others have mentioned) or a lawyer, unless you have a LOT of money to burn...or a very complicated business model. Once you know which forms you need to complete and turn in, I really don't see where all confusion comes from. Why not take some of your own time to learn about the forms and do it right on your own for less?

Now if you have partners or several employees or global sales or even trying to determine all of your assets and liabilities at the end of the year. Then I totally understand the need for a lawyer.

But if you are starting a business as I am, as just a single person in charge of the LLC indie company, my (as well as everyone on this forum) best resource's are our individual states government website's, the sba government website (U.S. small business administration), the website related to yearly taxes...starting with IR, and of course this forum to chat with others.

Sure sites such as legalzoom will complete the paperwork on your behalf, but they will charge you the price of gold for it; and how can you be certain they will even have your best intention in mind. However unless you pay for their package, you won't have the benefit of a lawyer double checking it for errors. Just to add that on the BBB website, although legalzoom has an A+ rating, they have had about 190 complaints against them. True they were resolved, but the descriptions of the complaints, tell me that legalzoom is merely interested in profiting and they will get around to your forms, eventually...unless you keep on them.

All I'm saying is doing your own research to read through various government web sites and having the confidence to work through the forms yourself is a good thing. Once you discover which forms you need, you can always seek answers from those government sites.

I hope that makes sense.

As always, I am thankful for the input!

[RaconteurNick]

wisetaner, you're absolutely right. The confidence to do the research and make your own progress is key to being an entrepreneur. I come from Louisiana, and our SBA website is terrible and from the early 2000s -- Louisiana is behind the curve when it comes to tech and info, so you can see that I have a different mindset than most.

I highly recommend exploring interaction with any startup incubators or accelerators in your area for more specific advice, as they are almost always run by seasoned entrepreneurs who, if they don't possess the knowledge themselves, will know the right people to get you in front of.

Wherever you go, there will be risk, and I've noticed that lots of indie devs are risk-averse. Sure, the lawyer might make mistakes, but I prefer to handle that type of stuff face-to-face; personal preference. As I said, there are two main documents: Articles of Organization and Operating Agreement, with the latter not being required in a situation like yours. Your state SBA website can give more specific information about forms (as it varies by state) and if you're not sure still, again I recommend reaching out to an incubator or accelerator in your area. Or, you could find an attorney who does not charge a fee for the initial consultation and ask those questions.

Whatever your path may be, I wish you the best of luck.

[wisetaner]

I didn't realize that not every state's SBA site is current, that certainly would make things more challenging. As for those incubators and accelerators that you've mentioned, I'll look into those...I know of think tanks, but I'm not very familiar with the ones you've mentioned. So as I said, I'll do some research on those.

There is nothing wrong with individual mindset's when it comes to anything in life, after all if we all thought the same it would be rather dull. 

Not only that but different mindset's allows us to learn from each other.

As for the paperwork I will be submitting, it looks like it will be the "Articles of Organization" with the state and the EIN form with the fed gov. Aside from those two forms it doesn't appear that I'll need anything else.

On a side note, I find this forum and the people on it to be very useful, friendly, and grounded. 

wisetaner, you're absolutely right. The confidence to do the research and make your own progress is key to being an entrepreneur. I come from Louisiana, and our SBA website is terrible and from the early 2000s -- Louisiana is behind the curve when it comes to tech and info, so you can see that I have a different mindset than most.

I highly recommend exploring interaction with any startup incubators or accelerators in your area for more specific advice, as they are almost always run by seasoned entrepreneurs who, if they don't possess the knowledge themselves, will know the right people to get you in front of.

Wherever you go, there will be risk, and I've noticed that lots of indie devs are risk-averse. Sure, the lawyer might make mistakes, but I prefer to handle that type of stuff face-to-face; personal preference. As I said, there are two main documents: Articles of Organization and Operating Agreement, with the latter not being required in a situation like yours. Your state SBA website can give more specific information about forms (as it varies by state) and if you're not sure still, again I recommend reaching out to an incubator or accelerator in your area. Or, you could find an attorney who does not charge a fee for the initial consultation and ask those questions.

Whatever your path may be, I wish you the best of luck.

[MorganRamsay]

I've started three companies: two for-profit and one nonprofit. I have nine years of formal business education and 13 years of experience as an entrepreneur. I strongly disagree with the advice here about using a service.

Incorporate your company yourself. Learn the concepts that are involved. You will be better off with an understanding of the fundamental nature, structure, and role of a business. Grab a copy of Nolo's The Small Business Start-Up Kit and go from there.

[RaconteurNick]

I've started three companies: two for-profit and one nonprofit. I have nine years of formal business education and 13 years of experience as an entrepreneur. I strongly disagree with the advice here about using a service.

Incorporate your company yourself. Learn the concepts that are involved. You will be better off with an understanding of the fundamental nature, structure, and role of a business. Grab a copy of Nolo's The Small Business Start-Up Kit and go from there.

There's always a danger of doing it yourself, even if you research it completely. It's certainly possible, but I would at least seek out any free guidance and ask questions to someone who's done it before in your area (thus would be familiar with any local or state restrictions or variations). The majority of TIG developers tend to be more focused on code than business, so again I recommend at least trying to speak with professionals or accelerators if you intend to do it yourself, if only to ask pertinent questions.