Game Company: Why?

[ethan_greer]

So, seems like most indie games are published by a game company.  Why is this?  When I publish Thugs and Thieves to PDF, why would I need a game company?  Am I missing something obvious?

[Lxndr]

Financially speaking, incorporation gives certain benefits.

I don't, unfortunately, know exactly what they are.  But I know this is true.

[ethan_greer]

Except that many game companies aren't incorporated, and I've seen on these boards advisements against incorporation.

[Ron Edwards]

Hi Ethan,

That's an excellent question.

Thing 1: If you're publishing a game from a website or another "from me to you" distribution format, a company name is no more than a means of name-recognition. You can use one or not.

For instance, when Sorcerer was a "pay for my PDF" game, Adept Press didn't exist - it was all just Ron Edwards.

If you don't make over a certain amount of money through this method, you don't even have to report the income on your taxes. Under these circumstances, your business is exactly the same, legally speaking, as a lemonade stand. Do you or don't you put "Tastee-Cool Enterprises" on the side of your stand? It's up to you and makes no difference to anyone who needs to care.

Thing 2: If your business does pull in more money than the ceiling, though, then you should get it designated a Sole Proprietorship company for tax purposes. In this category, you should give it a special company name, to keep the tax forms readable. This is not an incorporation; it's just a way to keep certain sets of your income compartmentalized.

At this point, considering the money you're making, a company name is arguably a promotional asset, in that customers are perceiving your business enterprise as a "thing out there" and might like to tag that "thing" with a name of its own. This is only an arguable point, though, not a rule.

Thing 3: Depending on the size of your profits and (more importantly) on the extent of your production costs, you can choose to incorporate. Adept Press is a corporation, defined as a one-man ownership. It gets taxed separately from my other (real) job, based on Adept-Press-only expenses and income. Again: I didn't have to do this, but given that print costs can be pretty savage in the short-term, it made the most sense.

One would also incorporate (and skip #2 entirely) if the company were to rely on partners, extensive employees, freelancers, or other complex schemata involving multiple people.

Hope this helps. By the way, I think your perception that "most indie games" are associated with a company is inaccurate. At most, a lot of them are using the "label on the side of the lemonade stand," which is a company only in the loosest sense of the word.

Best,
Ron

[Valamir]

Yeah, I think most "companies" really are more like "Imprints" which is just a fancy publishing world term for what amounts to a brand name.

[ethan_greer]

Cool.  Thanks for the info!

[Daniel Solis]

If you don't make over a certain amount of money through this method, you don't even have to report the income on your taxes.

Do you know offhand what that cap is?

[Ron Edwards]

Hi Gobi,

Qualifier: I'm not an accountant, not a lawyer, and not a tax expert. Do not use this post for actual advice.

As I recall, the amount is $400.

Best,
Ron