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[Brocklesocks]

I've read a lot of the threads here about how to make legit business out of game-making, but most seem to be geared towards individuals rather than teams of 2 or more partners. I'll try to explain the situation as best as possible, so please let me know if parts of it (or the whole thing) isn't making sense. This is probably going to be confusing because of so many specifics, but I feel the need to research all I can about all of these concerns.

I've read both good and bad things about forming DBAs and LLCs, as well as encompassing corporations for each. I guess I'm doing my best to avoid going to see an actual CPA because I simply don't think that a lot of them would understand the niche business structure that indie gaming has become. Being an artist, I don't have much of a business mindset, so I'm working on developing this a bit more. I appreciate any advice in advance!



Business model

Description:

Mobile-targeted games (Android/iPhone/etc). Since the company's income will be very fluid and streaming because they're sold on their respective markets, there is no way to estimate projected sales on each "product" (game). So, it's important to be able to divide the income as it comes in, as well as decide how much of that income is to go towards expenses such as marketing material, flat-rate contractors and supplies, if needed.

Needs:

• Variable income percentage per project. For some projects, more programming than art may be required, for example. I want to be sure each person is considered per their efforts. Maybe a contract for each project?
• Be able to hire on contractors, who may possibly be required to be allocated percentages of income on project. Example: musician or sound work.
• Have equal say, business strategy and ownership-wise. A safety net, so to speak.
• Easy to handle taxes / automatic if possible.

Concerns:

• Since one may be working with different people on totally separate endeavors, would it be wise or risky to have multiple businesses with the same structure?
• Should each company have an encompassing corporation to be a safety precaution? Example: if the sub-company doesn't do well, or gives itself a bad name.
• Is there a way to have shared business bank account access, while enforcing allocation limitations? This may be redundant and paranoid, but the thought of 2 people sharing the same bank/business account freaks me out.

[/list]

[JackieJay]

I didn't read your entire post, but I think the best approach you could take is having someone lead the company (the people with the most influence on the projects, usually the programmer and/or game designer) handle all the financial side of the company (including paying the taxes) and then either share the profits with the other members by paying royalities, or by paying a fixed fee for their work.

Sharing a bank account seems like a pretty bad idea, and could lead to disastrous results. I don't think you're being paranoid, personally I would certainly not do it.

I'm probably not telling you anything new, but just in case here's my 2 cents.

[weasello]

One thing I'll strongly recommend: never ever ever ever ever get into a partnership. You can split the profits evenly and even give even say in most issues, but one person should be the "owner" and have the final say. If you want to break that down into projects as well, great; Think more in terms of collaboration than co-ownership; one person "owns" an idea and can run with it if they choose.

I'm sure there's no shortage of google stories about partnerships gone wrong, so I won't bother you with my pair.

[Brocklesocks]

One thing I'll strongly recommend: never ever ever ever ever get into a partnership. You can split the profits evenly and even give even say in most issues, but one person should be the "owner" and have the final say. If you want to break that down into projects as well, great; Think more in terms of collaboration than co-ownership; one person "owns" an idea and can run with it if they choose.

I'm sure there's no shortage of google stories about partnerships gone wrong, so I won't bother you with my pair.

Thanks for your advice, man. Really though, share your shitty experiences! A partnership was a strong option I was looking at, but if you really advise against it... I'd love to hear why not 

[nikki]

warning: i'm not too sure if this applies in other countries then my own.

I just started working together with someone, we both have our own business (as tax-paying freelancers) and you can just share the money and work anyway you agree on. there is not a need for a shared bank-account or a real business (wich costs $60.000 here, with the gain of not being personally responsable for great losses)

i would advise on taking your time with deciding how things are going to be split though.
especcialy if your going to work together with a friend.

[Brocklesocks]

warning: i'm not too sure if this applies in other countries then my own.

I just started working together with someone, we both have our own business (as tax-paying freelancers) and you can just share the money and work anyway you agree on. there is not a need for a shared bank-account or a real business (wich costs $60.000 here, with the gain of not being personally responsable for great losses)

i would advise on taking your time with deciding how things are going to be split though.
especcialy if your going to work together with a friend.

I already do lots of graphic design work as self-employed. The problem is that with prefabricated markets like Android and iPhone, there's only 1 bank account that funds can be added to. Also, I'm a little worried about a straight contract between two people. How can I prove anything if there's no overall agreement with the two people working together?

[Zenorf]

It really depends on who you are and who you are working with.

For some people it can be a simple case of shove it in my/your bank account and give the other person half but that requires a serious level of trust when you start working with any kind of large numbers. I mean a serious amount of trust. I can count the people I'd do this with on 1 hand currently.

From a business point of view I would say have a basic contract framework but an individual written contract for each project you work on. When you get to the stage of writing a contract you should have a solid plan for the full development. Always make sure there is a clause for even subsidy of added contractors so you all lose a percentage of your percentage if you need to take on extra temporary staff.

Obviously this is an opinion from a indie dev (not even a particularly successful one) rather than a business manager so take it with a pinch of salt.

[StudioFortress]

The problem is that with prefabricated markets like Android and iPhone, there's only 1 bank account that funds can be added to.

Don't use a personal account, open a business one and have all income paid into there. Then pay yourself and the other people as wages from that account.

If the other people are employees (rather then equal partners) then they don't need access to the business account.

Also, I'm a little worried about a straight contract between two people. How can I prove anything if there's no overall agreement with the two people working together?

It sounds like you are worried about other people working on the project and only performing 30% of the work yet receiving 50% of the pay. So you need to have the percentages that people will receive agreed upon before starting any projects; as well as what those people will be doing for the project. You must have all these details sorted before starting work or it will just cause arguments (or worse court cases!) later.

As an idea you could also try to agree on how you will audit the profits. For example I presume you receive sales stats when selling things on iPhone and Android? You could have it agreed that you will show the other person these stats so they can ensure they were paid the correct amount.

Where I am (in the UK) there are plenty of organisations that help give free business advice and cheap contacts for common things (like help for sorting contracts or offering very cheap office space). You could have a look around where you are for similar organisations as they will be able to give you more professional advice.

[DWWilson]

I didn't read your entire post, but I think the best approach you could take is having someone lead the company (the people with the most influence on the projects, usually the programmer and/or game designer) handle all the financial side of the company (including paying the taxes) and then either share the profits with the other members by paying royalities, or by paying a fixed fee for their work.

Sharing a bank account seems like a pretty bad idea, and could lead to disastrous results. I don't think you're being paranoid, personally I would certainly not do it.

I'm probably not telling you anything new, but just in case here's my 2 cents.

I couldn't agree with this more.

I'll share my experience because it's short. I co-owned a company with a friend, frequently we'd have conflicting ideas. To resolve this we'd compromise, but often the mixed-solution didn't take advantage of either strategy.

For example: Purge the chamber and loose a month's stock, but potentially kill the infection OR not purging the chamber at all, but only barely break even in the month.

We ended up purging half the chamber. The infection wasn't stopped and we didn't break even.

I eventually quit, but returned later as just an employee with no legal authority. It actually worked much better. We both agreed that either one leading would be fine, but trying to lead together is a mess.

[Brocklesocks]

Thanks for the input, guys. It certainly helped make decisions for most of the structure.

With one person I'm working with, he already has his own registered business so I'm going to just come on via contract with agreement to share audit information.

With the other person I'm doing many projects with, we're going to begin a joint LLC and see how it goes. We decided on this structure because a lot of the projects we collaborate on aren't just for games and apps - also website design and web app development.

[Blindsight]

With one person I'm working with, he already has his own registered business so I'm going to just come on via contract with agreement to share audit information.

No matter how you go about it, you mentioned the key term there. Contract Contract Contract! Always have a contract and be as clear as possible who has what duty, including final decision making, and what the compensation is.