Forming a company. Do I need to do it?

[BiggusGeekus]

If I want to sell my product, do I really need to form a company? I'm frankly a little daunted by the prospect. On the one hand it looks very easy, on the other there seems to be a million ways things can go horribly wrong.

[Gareth-Michael Skarka]

You can get away without forming an actual <i>company</i> per se (by this, I presume you mean a corporation, partnership, or the like), but you're probably going to have to at least register as a sole proprietor (which will allow you to have a business name, and accept payments made to that name...which is convenient, unless you're planning on releasing product which lists "Joe Smith" as the publishing company).

Of course, all of this depends upon WHERE you are, as well. If you're in the US, this varies depending upon how your State handles taxes and commerce.
So, I can't really give you any more advice without more information.

My recommendation: Check with your local Secretary of State's office, or with the local branch of the Small Business Administration.

GMS

[BiggusGeekus]

I am in the USA (northern Virginia, to be exact).

My concerns stem not so much from forming a company (seems to cost under $200 when all is said and done), but maintaining it. I hear that it is vital to get an accountant or lawyer to start things off, but given the abysmal profit margins in RPG sales it seems to me that consulting such a person would probably be a high enough cost to put me in red -- which I would think defeats the purpose of hiring such a person.

[Gareth-Michael Skarka]

Originally posted by BiggusGeekus
I hear that it is vital to get an accountant or lawyer to start things off, but given the abysmal profit margins in RPG sales it seems to me that consulting such a person would probably be a high enough cost to put me in red -- which I would think defeats the purpose of hiring such a person.

Then I would strongly recommend contacting your local SBA office, and visiting the SBA Website. (http://www.sba.gov) There is lots of advice to be had---the same advice that a lawyer or accountant would give you--and the best thing is, it's free.

Yes, maintaining a business is the hard part. Even without hiring an outside consultant, you have to become proficient with a bunch of things that you've probably never considered: taxes, production, warehousing, shipping, distribution, collections, etc.

My advice? Don't do it, unless you're dead-set serious.

GMS

[BiggusGeekus]

Thanks for the link, the advice, and the fast replies.

I'll hold off forming the company until -after- I have a complete product. But I think I'm going to go for it. I'd rather be angry, bitter, and out some cash than be left wondering "what if I'd done it?"

[ZAON Netrep]

You can always form your company later, and then transfer assets (intellectual property {your game}) as legal consideration for stock in your own corporation. Sole Ps are easier, of course.

Start with it as a personal 'hobby' or 'crafts' project.

Later go to SP or even Corp.

Do not form an actual corporation until you're ready to pay at least $1000 a year for essential year-in reporting and annual meeting notes and other required documents.

The one thing a corporation does, that none of the other options provide you (except an LLC) is separate the business from you in 99% of situational legal issues. In other words, since a corporation is considered to be an actual 'person', the company can be sued for whatever reason and (with few exceptions) leave you and your personal assets untouched. In a Sole P, if you get sued, they can go after your personal assets if they're awarded a judgment. HOWEVER, if you in any way fail to keep your corporate documents up-to-date 100% (such as having annual meetings with yourself if you're a 1-person corp, taking minutes of your meetings, issuing yourself actual sealed stock certificates, etc.), then during a lawsuit against the company they can do what is called in legal terms "piercing the corporate veil".. which means that your corp is proven to be nothing but a veil for you and your personal assets, meaning the company and you are deemed one entity for purposes of seeking damages.

Hope that helps ;-)

[ZAON Netrep]

Oh yeah, and if you don't form a corp, DO NOT append a restricted identifier to your company's name. In other words, it's okay to be a hobbyist or sole P and operate under a DBA (doing business as, which you must file for generally at a token fee), but NEVER add ", Inc." or "Corporation" or "Ltd." or similar identifier lagelly reserved specifically for an actual corporation unless you have a real corp. Important advice for avoiding fraud charges ;-)

[RpmQ]

I'm a self employed artist that thought it was daunting to try to run my own company once also. It's not terribly difficult at all. I find it like most everything else is... A little awkward at first, but once you get the hang of it you think "Hey this is really pretty simple".

There are 3 things I would recommend.

1) search the internet for business types and read into them. It seems overwhelming but basically you'll find a few types of businesses (With many sub categories). Sole proprietorship is simple, but your personal assets can be held liable if litigation occurs. LLC's & Corps keep your personal assets separate from the business assets, but cost more (time and some money) to run yearly.

2) Keep everything in the business separate. Open a separate banking account. Do all your business stuff through that account. I don't care if your a sole propreitorship and it's all put on one tax form. It will cost you less when you do your taxes each year, and will save you time and headaches trying to figure it all out. (Of course, CPA's make the whole tax year much easier)

3) Set up your books correctly. I spent $300 on quickbooks software, and another $400 on a CPA setting up my books, explaining to me where to put things. It was the best money I ever spent. I don't know much about accounting (I'm an artist), but I do know that Postage supplies go into the postage account, and phone bills go into the Telephone account. This also may seem daunting, but after a while you realize it's jst categorizing your expenses, and will save you money when it comes tax time, or if you want to review your expenses each year. Taxes are the hardest part, and thats what CPA's are for! :)

D) Talk to someone who's done it. They can give you a wealth of information that beats reading any book. (Was it easier to learn D&D from reading the umpteen manuals? or from having someone explain it to you?)

-r