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TIGSource ForumsDeveloperBusinessCompany founding (the complicated way)
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Don Andy
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« on: June 23, 2008, 03:59:44 AM »

OK, now, I'm currently a bit confused in general, since if there's one thing I suck with, it's laws and economics, so I figured I'd ask for advice in here.
And mainly because Tigsource has some of the most helpful guys ever.

Soo, long story short, I'm currently looking into founding an indie gaming company with a bunch of people. Which kinda sounds easy by itself...

The real problem with that however is, that pretty much every single member of the bunch is located on another continent. We have people from Europe, the US, just as well as Australia. I myself am situated in Germany.

Now, this is were the real headache starts. For starters, I wouldn't even know what KIND of company to start with that. And seeing that different laws apply for every member of team doesn't make it easier.
Augh, just trying to wrap my head around this makes it throb like crazy.

Anyway, we are currently working on a game and we intend to sell that game. Now, a lot of people are working on that game, and a lot of people are likely gonna want a piece of the cake eventually, so we kinda need to handle the profit sharing in some way and I thought that we'd have to found a company eventually anyway, so I could just go ahead and do it right now.

So, anyway, do you guys have any advice to kick me off in the right direction?

OK, yes, I'm quite aware that founding a company on the base of a few people I know from the internet may be a bad idea, but please let THAT be my problem :D

And sorry for making this post unstructured and hard to read, but I'm really confused about all this. I so hate all the law and economics shit.
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Farbs
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« Reply #1 on: June 23, 2008, 04:19:50 AM »

Well, I gotta say I don't envy your situation re: internationalism. I can suggest though that you read everything you can find written by Tom Buscaglia. This should be a good place to start:
http://www.intelaw.com/gamearticle1.htm
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Guert
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« Reply #2 on: June 23, 2008, 06:40:38 AM »

Before I start, I'm refering you to this thread, if you have missed it. If not, we'll try to figure out what to add to the thread so that it's more useful Smiley

Now, first thing first, you have to establish where you want to start the company. Depending on the country and state/province/region, there may be some government help to start up a new company. For instance, some programs help new entrepeneur below the age of 25 to start a small employee based company by giving them a couple of grans. Other programs may get you tax refunds if you have less than 3 employees. It's crucial that you get these info before you start one since it may influence on what kind of funding you might get.

The international part ain't much of a problem on your side, it's rather tricky for your employees. Since they will be receiving money from outside of their countries, they will need to do 2 tax income: one for their country and another for yours. And maybe more depending on their region/province/state. On your hand, the tricky part is getting the job done, but that's another topic.

It would be quite a good move if you signed these guys under contract, if not already done. Have an lawyer write up a contract that stipulates how much you are giving, on what basis and until what time the contract is in effect. This way you can have something like "you give 50% of the profits once 6 months of sales are over" or "you give them 5% of the profit every time you sale one copy". You could also decide to give them 500$ on the date of release and that's all. The idea here is that you decide terms that will make both parties, you and the contractor comfortable. Also, make sure that you add a line in the contract stipulating that all legal battles will be held in front of your country state/province/region court. There's also a lot of other things hence whyit's good to pay a bit to be fully protected.

So in general, read up on company definitions, get yourself a lawyer to write contracts and get as much info about government programs before you start the company. You don't need to have a company to hold someone under contract so, wether you decide or not to start one, you'll both be safe under it.

I'll look around if I don't have sample contracts lying around to give you an idea... Although I'm definitvely not the best person to talk about this (I'm pretty sure there are other members who have more experience than me with this) I hope this has helped you a bit.

Good luck!
« Last Edit: June 23, 2008, 06:42:37 AM by Guert » Logged

moi
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« Reply #3 on: June 23, 2008, 07:57:09 AM »

First my advice to you would be to look up by yourself all you can learn about business. I know it might be tedious and boring and difficult to wrap one's head around, but nobody will be able to teach you how to run your business and if you can't/won't make that work , then you're heading for disaster; because a running a business is a serious businesslot of work and nobody will do it in your place.
There are also web forums specialised in business where they'll probably be able to help you better (although the TIGS people might have a more specialized experience on the videogame business)

I don't know which laws apply to your country(ies), one possibility that comes to my mind would be to consider everybody as shareholders in the company, thus every profit would be divided between everybody. I think that could work..maybe?....
Each participant would bring its work as part of the founding material and thus own a percentage of the company. That implies to wait until there is a suifficient body of work created.
That said my experience with business is very limited so maybe that idea is totally not relevant/applicable. I hope someone more knowledgeable than me would come and clarify Undecided
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Don Andy
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« Reply #4 on: June 23, 2008, 10:14:52 AM »

Quote from: Farbs
Well, I gotta say I don't envy your situation re: internationalism. I can suggest though that you read everything you can find written by Tom Buscaglia. This should be a good place to start:
http://www.intelaw.com/gamearticle1.htm

That was a really informative read, thanks a bunch Smiley

Quote from: Guert
Before I start, I'm refering you to this thread, if you have missed it. If not, we'll try to figure out what to add to the thread so that it's more useful Smiley

Yeah, I've read that thread, but it only covers the founding of a company of one single guy who pretty much REMAINED one single guy.
My own personal situation is infinite times more complicated :D

Quote from: Guert
Now, first thing first, you have to establish where you want to start the company. Depending on the country and state/province/region, there may be some government help to start up a new company. For instance, some programs help new entrepeneur below the age of 25 to start a small employee based company by giving them a couple of grans. Other programs may get you tax refunds if you have less than 3 employees. It's crucial that you get these info before you start one since it may influence on what kind of funding you might get.

Yeah, that's one of the major headaches for me. Preferably, I'd like to start the company in the US (in the most favorable state, naturally). However, can I even do that as a German guy who never set a foot into the US? So far, what seems most "intriguing" to me is a LLC, but I'll look deeper into that.

Quote from: Guert
The international part ain't much of a problem on your side, it's rather tricky for your employees. Since they will be receiving money from outside of their countries, they will need to do 2 tax income: one for their country and another for yours. And maybe more depending on their region/province/state. On your hand, the tricky part is getting the job done, but that's another topic.

What worries me are contracts, as laws likely differ from country to country. I'm currently looking into getting a lawyer for this stuff (my "fathers" happens to know a few), but those are mostly specialized in German law, which isn't so useful when the actual company is based in the US.
Eventually, I may need to get a US lawyer *phew*

Quote from: Guert
It would be quite a good move if you signed these guys under contract, if not already done. Have an lawyer write up a contract that stipulates how much you are giving, on what basis and until what time the contract is in effect. This way you can have something like "you give 50% of the profits once 6 months of sales are over" or "you give them 5% of the profit every time you sale one copy". You could also decide to give them 500$ on the date of release and that's all. The idea here is that you decide terms that will make both parties, you and the contractor comfortable.

Yeah, putting everyone under contract is the first thing I thought about when we decided to sell what we make. From what I got in the articles that Farbs posted, I should also make sure that their IP effectively becomes the one of the company.

Quote from: Guert
Also, make sure that you add a line in the contract stipulating that all legal battles will be held in front of your country state/province/region court. There's also a lot of other things hence whyit's good to pay a bit to be fully protected.

That's a pretty good idea, I didn't think of that. The problem again is, would that mean the court of the company's region or the court of mine?

Quote from: Guert
So in general, read up on company definitions, get yourself a lawyer to write contracts and get as much info about government programs before you start the company. You don't need to have a company to hold someone under contract so, wether you decide or not to start one, you'll both be safe under it.

I've been giving the whole thing a lot of thought, and I think doing the whole thing under banner of a company will be better in the long run. And yes, I know I've still got a lot of reading up to do.

Quote from: Guert
I'll look around if I don't have sample contracts lying around to give you an idea... Although I'm definitvely not the best person to talk about this (I'm pretty sure there are other members who have more experience than me with this) I hope this has helped you a bit.

It actually helped quite a lot, thanks  Grin

Quote from: moi
First my advice to you would be to look up by yourself all you can learn about business. I know it might be tedious and boring and difficult to wrap one's head around, but nobody will be able to teach you how to run your business and if you can't/won't make that work , then you're heading for disaster; because a running a business is a serious businesslot of work and nobody will do it in your place.
There are also web forums specialised in business where they'll probably be able to help you better (although the TIGS people might have a more specialized experience on the videogame business)

Haha, yeah, I didn't expect you guys to do the work for me, sorry if it sounded like that :D
I'm constantly reading up on more stuff. The major problem is that I can barely wrap my head around the my own country's laws, and now I have to wrap it around a few other countries' laws, too  WTF
I went with the problem to you guys since, as you already noticed, you guys are more vised with game development stuff, and there are some high-profile developers here on Tigsource that probably have a lot of experience with this already. That and you guys are generally always so helpful xD

Quote from: moi
I don't know which laws apply to your country(ies), one possibility that comes to my mind would be to consider everybody as shareholders in the company, thus every profit would be divided between everybody. I think that could work..maybe?....
Each participant would bring its work as part of the founding material and thus own a percentage of the company. That implies to wait until there is a suifficient body of work created.

I considered that already, but it sadly isn't as easy in my case, as we're quite a lot of people in quite a bit project :/
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Ciardhubh
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« Reply #5 on: June 28, 2008, 12:39:10 PM »

The real problem with that however is, that pretty much every single member of the bunch is located on another continent. We have people from Europe, the US, just as well as Australia. I myself am situated in Germany.

I've been reading a few bits here and there. A "limited" in the UK might be worth looking at if you are going international. As far as I know it frees you of a lot of possible trouble. Though this has led to people considering limiteds a bit shady ... or so I've read once or twice. There are companies or lawyers that you can consult for this kind of business form.

As a German I'd say avoid founding a video game company in Germany if possible. The laws here can break your neck. Just be unlucky and make a small mistake and some lawyer will send you "Abmahnungen" that'll cost you a few hundred if not thousand euros. Laws for business on the internet are horrible here. With the new child protection (Jugendschutz) laws, you'll be confronted with more trouble than it may be worth it. E.g. if you plan on selling your games on a physical medium, you must have a USK certification. Other systems like PEGI or ESRB are much easier to handle and are much less restrictive.

I was horrified to see all the requirements and pitfalls of trying to sell a game here.
« Last Edit: June 28, 2008, 12:52:35 PM by Ciardhubh » Logged
frosty
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« Reply #6 on: July 04, 2008, 10:20:47 PM »

I would do the simplest thing possible to start. 

You, or the most business-savvy person of your group, create a single-person company and then just pay out royalties to everyone else who works on the game.  They are essentially contractors in this arrangement.  It's common for people to flake out during projects anyhow, so spending all of that time making them actual employees or co-founders would be risky.  In the unlikely event that the game is a financial success, you can restructure.

Also, you can usually write your own contracts for the simple stuff.  I did when I hired a musician in Sweden for my game, and it was less than a page.  The point of a contract is just to get everything down so that all of the gray areas are crystallized and everyone knows what to expect.  Few indies have the funds to successfully sue another individual,  especially in a different country, so no matter how good your contract is, it always comes down to trust and clarifying things beforehand.
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ஒழுக்கின்மை
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« Reply #7 on: July 07, 2008, 11:50:09 AM »

I would do the simplest thing possible to start. 

You, or the most business-savvy person of your group, create a single-person company and then just pay out royalties to everyone else who works on the game.  They are essentially contractors in this arrangement.  It's common for people to flake out during projects anyhow, so spending all of that time making them actual employees or co-founders would be risky.  In the unlikely event that the game is a financial success, you can restructure.

Also, you can usually write your own contracts for the simple stuff.  I did when I hired a musician in Sweden for my game, and it was less than a page.  The point of a contract is just to get everything down so that all of the gray areas are crystallized and everyone knows what to expect.  Few indies have the funds to successfully sue another individual,  especially in a different country, so no matter how good your contract is, it always comes down to trust and clarifying things beforehand.

This is what I did, even though we're all in the US.
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