DBAs, Business Licenses, LLCs, Corporations, etc...

[Kynn]

Those of you who self-publish your games, have you set yourselves up as businesses? Do you have a business license, have you printed a "DBA" in the local paper, do you pay taxes? Have you incorporated, organized as a limited liability corporation, or operate as a sole partnership?

I apologize for the American-centric terms -- don't feel restricted from talking about this topic if you're from elsewhere and the terminology is different. Basically I'm asking if you've done the legal paperwork to set yourself up as a "real home business" in an official way.

[Eero Tuovinen]

There should be Americans here who have done this as well, but at least Arkenstone is a real company here in Finland - an "open company", which might translate as "general partnership" if I'm to believe the Internet. The benefits are that it's easier to control money flows (small amounts for sure, but it's the principle) between multiple owners and handle taxation, as well as account for all the various expense sources that are used to balance the profits in accounting. If I were alone in this I'd probably do a sole proprietorship ("toiminimi" in Finnish), too, as a matter of simplicity in having some zoning between personal and business expenses. We also consider incorporation from time to time as the company grows, but so far we've been happy with the general partnership.

Having an acting company with paperwork of course means that we pay our taxes diligently; a general partnership in Finland is taxed per-person according to the participant's other income, but the company files for its own operations every spring. Other than that the most bothersome bureaucratic hassle from being a legal company seems to be the VAT, which would require us to file monthly returns to the tax man. This would increase our paperwork by an order of magnitude, which is why we're all but actively curtailing operations to keep revenue under the mandated VAT-freedom limits.

More significantly, however, why are you asking? Perhaps we could discuss the most useful aspects of the topic if we knew why you're curious.

[Ron Edwards]

Hi there,

Here are a couple of older threads which offer some good points: The Something-Something Press and
Quick guides to incorporation?.

Let me know if you have questions not covered in those. They're also kind of fun reading because you'll find a number of different points from different personalities.

Best, Ron

[guildofblades]

The Guild of Blades Publishing Group and Guild of Blades Retail Group are both limited partnerships, filed as DBAs only (Doing Business As). There really isn't any significant different between such a simple legal set up as that and the various levels of incorporations. But the tax advantages are significant. Most small businesses opt for incorporated status due to an extra layer of fiscal separation it can provide between the business and the principle owners of that business. That can come in handle in the event of fiscal problems or even bankruptcy of the business or should some big lawsuit happen. We find, at this stage of our business development, that the tax advantages make the more simple structure far outweighs the protection against fiscal downfall. Particularly where if we are being careful and operating a good business, fiscal collapse or bankruptcy simply won't happen. As for protections against silly lawsuits, well, they have various forms of liability insurance against that. Both for retailers and manufacturers.

Ryan S. Johnson
Guild of Blades Retail Group - http://www.guildofblades.com/retailgroup.php
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com

[Valamir]

The rules for DBAs and sole propieterships vary greatly from state to state.

In IL it entails applying for a business license, a fairly simple form where you attest to having no employees (things get infinitely more complicated when you have employees).  This is administered at the county level and involves posting a business announcement for a set period of time in local papers to ensure no local business wants to contest your DBA name.   You then get a certificate and business number.

Then you file Schedule C with your Federal tax Return (a fairly simple form if you keep good expense records and inventory control).

Then in IL you also have to file state sales tax returns for anything sold direct to consumers.

[Eero Tuovinen]

That DBA system is pretty curious. Here in Finland we have a national registry for companies which a start-up needs to register at; part of the process is an automatic comparison to make sure nobody else uses the same trade name. I guess that doesn't outright prevent conflicts, of course, if the company name then happens to be a trademark or something else important for somebody else.

[Kynn]

Oh, just for the record:

My question wasn't all that clear. It wasn't "what do all these mean and what should I do?" but rather "have you guys done this?"

I've already owned my own business for 9.5 years, but I was mainly interested in hearing what other people have decided to do, instead of discussing the options.

But I don't mind the rest of the discussion on this thread either.

[Ron Edwards]

Hello,

That's kind of a weird post. The Forge is a discussion site, not a place for polling. As moderator, I am not inclined to permit topics that are defined by "just asking" vagueness.

As you are a company owner, what are your thoughts and points about the various options? Or, if that is not what you wanted to talk about, why are you interested in what options independent publishers are choosing?

Best, Ron

[Kynn]

Sorry, I wasn't polling as much as trying to find out other peoples' experiences rather than trying to find out what the options are.

In other words, less of:

"Well, you can do DBA, or you can do LLC, or you can do..."

And more of:

"When we did X, we did it because of Y, and here's what happened."

I'm looking to learn from people who have done it, rather than be told what the options are (especially when the options will vary a lot based on where one is geographically).

Does that make sense?

Myself, I've run a company as a DBA/single owner.  In retrospect, it would have been better to incorporate, but it was a web company that ended up having employees, and not a game design company -- so I've got little experience to go on here, and I wanted to hear about the decisions that other game companies have made.

Hope that doesn't sound so much like "polling" as much as asking for advice.

I'm just looking to self-publish a handful of games, maybe 2 or 3 titles a year, myself, if it helps to know what I'm interested in doing.

[Ron Edwards]

Ah! That's excellent, and thanks.

In my case, it was a matter of shifting to hard-cover book printing. That transition took $5000 of my own money, straight up, as a risk (this was in 2000, before all sorts of current cost-saving option existed). I wanted that risk to pertain to some legal entity that was not, actually, myself, so I needed to make a corporation. If I lost the money, then basically it meant that I'd made a start-up donation to the company and then the company had failed.

I also back-dated the previous year of sales and expenses into a sole proprietorship, which was easy enough to do in terms of the upcoming taxes (i.e. the ones I was about to pay). I suppose it would have made more sense to have established a sole proprietorship a while before that, but in my case, the transition to the full-on book publishing was a very fast one, and I went from pretty much lemonade-stand to full-blown international book distribution in less than a year. I'd kept really good records of all sales so far, so that was easy.

Anyway, I hope that matches what you're looking for, and I'm also interested to see the reasons and circumstances that led to what others have done.

Best, Ron