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VAT/Sales Tax, Incorporating, Changing DBA, And More

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1 comment, last by Ninjaboi 9 years, 3 months ago

Edit #2: I've decided to simply hire a lawyer locally whenever my game is at the point where I have to make a decision on selling it, bringing in contractors, or other situations like alpha-funding. So this is basically solved. Thanks for clicking on the thread though!

Note: I'm only putting these questions into a single thread because after reading the rules and a few posts here it felt like the right thing to do. It's a bit long so if you are busy or don't want to read it all then just read the questions in bold. If however I was supposed to break these into several threads, please let me know and I'll correct it. Thanks!

Hi, I'm a hobbyist developer currently based in Texas. Recently I've been heavily considering making my next project commercial and doing so with more projects as I go. I've never charged or for that matter really distributed my games I've made up until now, because they were either using other people's IP or they weren't really supposed to be "fun" as much as they were fun to make and use for learning purposes. However this next project I want to be different. I do want to give it a chance at commercial success and I believe I can get it to that point ( don't we all lol ), but my issue is with the legal/business side of things and not really the technical side of things.

As the title suggests, I have a few questions on the matter that I think are appropriate here in the forums. I'll break them up and bold the core question itself for those who are skimmers and solidify what my questions are. I don't expect any one person to answer them all so don't feel you can't reply if you only have input for a select few of them. I also welcome any constructive criticism or suggestions.

1. Does it sound reasonable to change my Sole Proprietorship's services from an unrelated field to game development ( given the information below )?

I currently have a Sole Proprietorship in an unrelated field. For reasons I don't care to discuss in the form of this question, I am wanting to drop the services I currently offer with that business and replace the business' purpose as my own game studio. I currently do business under my birth name and plan to change the Doing Business As to the studio name once I've decided on one. The business will, for now, only include me.

2. Should I incorporate into an LLC in Texas now or is it considered sane to wait until the business attracts larger income/publicity/members?

As already stated, I will not have any other member besides me in the business. There's always a chance that I might go for contractors for music and such, but as long as I keep any work ownership transfer agreement solid ( probably with help from a lawyer or other service ) I can't see much else preventing me from staying solo in the beginning. Especially if I can avoid the extra paperwork and bookkeeping while I test the waters as to minimize any negative impact failure might bring. I do intend to incorporate later on for sure as long as things pick up, but I wasn't sure if there was something I was missing that makes it more compelling to do so earlier ( as many I've read about say they incorporated early with only themselves as members ).

Edit: Forgot to mention that I don't think I'm targeting any platforms that require me to be incorporated to distribute on them. I'm targeting PC and Linux for sure via whatever portals seem practical. That means no consoles. If portals such as Desura require incorporation that might be something worth talking about here, I'll probably look this up now that I came back and remembered this was needed in the conversation. Can't believe I forgot it.

3. What should the name of my new business be?

I'll be getting a new DBA anyways for this business so I wanted to know what the ruling is on names. Not the legal rules that per se such as making sure it doesn't violate a copyright, trademark, or has already been taken/registered. Also not the legal rules of say putting "LLC" or "Inc." or other identifiers in the name. What I mean is there are a few different ways people go about naming their companies and it makes me wonder if there's a reason for that. Some do "<insert name> Studio(s)", others do just "<insert name>". That's what I'm looking for more information on. Doing some research myself turned up that it really doesn't matter -legally- whichever method I choose, but I haven't really found much that touches the thought process behind how a company is named.

Given those two examples I gave, I'd probably go with the former style if it's purely aesthetics. This really seems like a question that has probably been asked before so if anyone has a link to a previous thread or maybe an article that applies to this I'd appreciate that as I couldn't find one myself.

4. Does my current Employer Identification Number for my Sole Proprietorship "transfer" if I incorporate?

Whether I incorporate early or do so later, I do plan on doing it. I just wanted to know if the current EIN I have will stick with me or if it will be lost with me incorporating. It really doesn't matter much to me aside from some form changes but it's something I've been wondering.

5. If I only go through portal and vendors that perform VAT/Sales tax for my games when they are sold, will this allow me to avoid having to maintain a Sales Tax Certificate in my state?

I ask this because it would make sense to me that if all money that is moved from customers to me goes through a vendor that handles VAT/Sales tax ( and their own cut of course tongue.png ) that it would mean the tax would be handled by them entirely and not me. The whole point for the certificate in my state is to pay the sales tax owed by selling my goods/services, but if a vendor takes this out and pays it for me then I don't see why I need to have it. If this is true and I don't have to maintain the certificate, that saves me some hassle and I'll just make sure to distribute only where this service is offered ( it's worth giving them a cut if they handle such a big part such as this ).

If anyone reading this needs more information feel free to ask. I'm still fairly new to all this so any additional advice given that's not related to these questions is also welcome. For those that are even remotely curious as to what my next project is, I'll be posting about it in the appropriate section(s) of the forum when it's underway.

Thanks for sticking through all that and sorry if I ramble too much!

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Go and write the game. Don't worry about any of this stuff.

When your game is complete and ready for sale -- or even just ready enough that you're considering investing in hiring some contractors -- then you can go hire a lawyer for two hours to sort all this out for you.

Write a good game, worry about selling it when it works.

Go and write the game. Don't worry about any of this stuff.

When your game is complete and ready for sale -- or even just ready enough that you're considering investing in hiring some contractors -- then you can go hire a lawyer for two hours to sort all this out for you.

Write a good game, worry about selling it when it works.

Thanks Katie! I think I'll do just that. Luckily I live near Dallas which is a major hub for lawyers who can help me sort it all out in person. After sleeping on it I realize most of this is still too subjective to my situation for anyone here to give a concrete answer.

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