I can’t get my head around this, and I’m trying to figure out the best option for me to start a studio, and I really only have 2 options, running as a sole owner, or a corporation.
If I go for a sole owner: Cheap, quick, easy to maintain, little to no paperwork, HOWEVER, a huge problem being that I am liable for anything and everything that can possibly happen to the company, including being in debt and/or sued
If i go for a corp: Harder to start, ass load of paperwork, harder to maintain, more money required, complex structured, large tax payments, HOWEVER, one perk being that I personally would not be held liable for debts and/or being sued.
So from anyone else’s point of view, being the only 2 options in Canada, what the heck should I even do? Its been weeks (maybe a month now) that Ive been figuring this one out, I mean how much of a liability would a video game be if distributed digitally? Why would someone want to sue an indie company for any reason (other than trademark and/or copyright infringement)?
If anyone has any input, please do share, at this point, any information is valuable for me!
It’s a calculated risk, really. If you’re small, a sole proprietorship is probably your best option since you’re going to have next to no overhead and really, the likelihood of you getting sued is going to be pretty slim. You’re not in any super huge liability issues and the REAL difficulty will just come from figuring out how to file your taxes.
I plan to work alone (for the time being and my current project) so it will be considered as a small studio, but anything can happen which scares me, Ive heard of people losing everything from going down this route, its difficult to scope out what really could happen. I know a few steps to reduce my risk (acquire legal software, avoiding copyright infringement, etc) but its not enough for a solid sense of protection.
Trancedev,
Your dilemma is not unusual. I suggest go underground. Use pseudonyms and finish the project before deciding what direction to officially take.
Well, I get what you’re saying but deciding on this situation now or 4 months down the road would not be different, Ideally I want to get this settled now as my current project should be released within 4 months, I don’t like putting serious matters like this on ice, especially since I cannot move forward on my plans without solving my current issues.
Except in most places thats not really the case. Directors/owners, particularly if they are sole owner can often be liable for their companies debts. There is a bunch of precedent around this in various countries and as with all such matters its best to talk to an accountant and a lawyer.
I’m currently going through the process of registering as a sole trader, primarily to start paying tax. Like John has said, talk to an accountant. Im letting mine do all the work because it goes way over my head. All I know is, HM Revenue can suck a dong, stealing mee monies.
And I wish I had the resources to collaborate with an accountant/lawyer. If thats the case, it basically answers my question and going corporate would be a waste of energy/money/time. All this business bullcrap really makes me consider if I should even bother to release my own game and instead just go with the boring old work for a large company that makes super generic games… god I really hate and love this industry…
In this situation I would suggest that the lawyer is optional if you have a good accountant and you will likely find accountant to be pretty cheap for this kind of thing. They have done it many times before.
Yes, a corporation is pretty much worthless for liability avoidance. Especially for a single shareholder. If you want to release a game, do it. But do your homework first - make sure you aren’t using others IP, and make sure you have rights to the assets you use.
Hmm, so you think its worth taking the risk leap, tbh Im very careful about what I put in my game, 95% of the stuff is created by me, that other 5% is usually used from commercially safe assets in most cases. I guess thats the big risk of going into the indie business, anything else you would suggest to reduce risk?
Buy the correct number of licensed software for you and your staff,
Do not do false advertising,
Do not offer false promises,
Pay your staff well,
Do not ask your staff to use pirated software,
Tell the truth. If you cannot do it, don’t sign a contract and make false promises.
Do not bite off more than you can chew. If you can code but cannot draw well, get a 2d or 3d artist. Pay him well so that at least the models are correct and rig is correct.
You can purchase insurance to cover you should you become liable, but really as long as you make your own assets, there should be little issue, but you need to be careful what you use and under what license.
Great suggestion guys, I am an army of one, so I can handle all the elements needed to finish my game, so I control anything that goes through the pipeline and I will be extra cautious about content and assets.
@Arowx What type of insurance would I look into to cover myself should I become liable for anything regarding my products? I’d like to keep my options open and I’m open minded to any help that would potentially save my future company, Thanks.
Go for an llc maybe? An llc is very easy to setup, and at least where i’m at since i’m solo I file just like any other person not a corp. Simple and easy.
Really just do a lot of research as there are tons of differences that can really affect your wallet, it really comes down to what works best for you.
Yeah back when we formed Simian Squared the first thing we did is choose a chartered accountant to practically manage the business. You think “but won’t they cost money?” well I’ve got news for you, these ninjas create more money for you than you would have had if you never paid them.
As a sole proprietor, keep receipts of any assets you buy and if you need to hire some work make sure you contract them. Don’t accept anything free because you never know if you own the rights until its too late… Receipts and contracts protect you. A sole proprietorship is good if your an artist and you want your name to be known.
(Canada for me)