A friend and I have been wanting to collaborate on a mobile app game. It’s a ‘start small but dream big’ kind of venture, where neither of us has much experience, but we’re hoping that if we succeed, we could build on it and become a proper full-time game dev studio in the future.
The main issue here is that we’re both from different countries, and neither of us wants to risk personal liability in releasing a game without having first formed a LLC. I know the odds of ACTUALLY being personally sued for damages are very low, but it’s just not a risk that we want to take.
There seem to be a lot of problems with forming a LLC when both people are in different countries, though. There are multiple laws against having a co-founder, director, or even an employee being someone from a different country.
How do game dev teams or studios consisting of people all around the world get around this problem?
I worked on a very large team with people from all over the world. The company was registered in Great Britain.
I do know that if we register in our state (US) that we have to fill out a form stating if our work will be completed in our state. It is fine to have other people work with us from elsewhere as long as the names of the people paying the taxes for the company live in our state. So check with your tax laws. That is probably where you will run into issues. I have also worked on games in other countries and if you are paid, you will need to make sure you pay the taxes to your own country…at least that is how it works for the US. I consulted a tax person to help me.
You have mentioned the liability protection but taxes are another Large part of this equation. You really should consult with a professional especially since your case is more complicated than a typical LLC or corporation. There are a couple normal ways to deal with what you mentioned. A common one (and its more to do with taxes) is that the foreign partner would create a domestic corporation and that corporation would then be the other half of your LLC not the individual.
Your impression of the protection offered by an LLC is off too. If it comes to the courts, the directors of a LLC can be held accountable as well. It’s only the owners that have protection.
Ultimately consult with a lawyer. Legal advice on the internet is worth less then the pixels it’s printed on. Especially because law in different countries varies so widely on LLCs.
Thanks. When you worked with the company that was registered in GB, were you considered a ‘contractor’?
You’re right, taxes are definitely a big part of the equation, which we are considering as well. The main concern is liability though, for if there is no way to do it with limited liability then we will not be collaborating at all (so the taxes will be a moot point at that stage).
So an LLC can be owned half by an individual (who is resident in the country it is registered in) and half by a foreign corporation?
I agree with both of you that a lawyer would be best, and we will get one if we absolutely have to, but I was hoping for people who have collaborated across different countries to share their experience on how they did it. I get that the details will differ.
Thanks for bringing up the potential difference between owner liability and director liability, I will look into that in my local laws.
Yes a LLC can be owned by an individual, group, or business entity such as another llc or corporation. Foreign persons or entities can create a LLC in any of the 50 states just like you can. Rules for creation are different in most of the 50 states (and cost to create one) so to reiterate talking with a professional is highly recommended (even if it’s just a quick chat).
When you worked with the company that was registered in GB, were you considered a ‘contractor’?