[IGDA_indies] Hey there
Ben Sawyer
indies@igda.org
Fri, 9 May 2003 08:16:06 -0400
This is a multi-part message in MIME format.
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MessageI'm an not a lawyer and I don't play one yada yada yada... so =
verify this...
They're both right (including the idiot part)
You needn't be incorporated to deal with a publisher. Even more so =
because you don't have assets yet worth protecting and you don't need to =
go through the paperwork and upkeep costs of a corporation before it's =
needed. You incoporate when you're ready to and that can be triggered =
by any of the following below.
My guess is you'd only need to be incoporated when you sign the contract =
if you plan on limiting any liability. Corporations or LLCs exist for =
several reasons the most important ones being: =20
Tax reporting reasons
Eases dissemenation of value, assets and capital among multiple parties
Protects your personal liability
None of that has to do with 99% of what you do prior to signing a deal. =
You don't have any revenue to deal with, you can divide up with a simple =
signed letter of agreement any so called "ownership" for the team. And =
you don't have any liability.
In terms of signing a deal or if you publish the game yourself then you =
potentially do have some of those items beginning to be created so you =
may want to do this. Again you don't have to. You could just be a sole =
proprieter. Sell your game, take the money, and put it in a business =
account at a bank. For that you would need a seperate Tax ID for =
businesses. The IRS has this form (can't remember the name) and you can =
get this via telephone in 1 day (prepare to sit by the phone for a =
while). The only time in this scenario that you'd be in trouble is if =
someone sued you. If you're being sued as a person, not as an LLC or =
Corporation then they could seize your personal assets - my guess is =
your mansion could be in trouble - if you had one. Ask yourself what =
likely hood someone could sue you for much at first though? If you've =
taken no advance, if you've not created a piece of software that could =
destroy mankind or at least their computer, etc. you're chances of being =
sued are as good as getting me to stop playing BF1942. However, there =
are other risks like copyright violation, and other issues you need to =
consider. A good lawyer would consult with you to determine the =
risk-reward of doing an LLC or Corp. The costs aren't really that much, =
figure about $500 and some lawyers will do it for free because it's a =
good way to sign new clients. After that it's $100 a year in fees to =
file. But you also have taxes, etc. =20
Another aspect about incoporating is some companies don't want to deal =
with groups of loosely affiliated individuals - they want a corporation =
so they know that ownership issues are worked out within that entity. =
No one is going to send 5 different checks to five different people. No =
one is going to sign a product which has questions of ownership issues - =
a liability the other side will refuse to encounter. =20
One thing about liability - depending on your actions, and other issues =
it's really possible for hardcore lawyers and suits to pierce "corporate =
veils" as the term is called so don't think because you have an LLC you =
can just walk down the street and off a busload of nuns. There are =
issues involved with this all you should ask a lawyer to explain to you. =
It's not a Sherman Tank. In most cases you'll be fine - in others you =
won't.
My guess is you should just sit tight. Wait until an event comes along =
that forces you to do this then just gather your stuff and sit down with =
a lawyer. It takes a week to get it all pulled together so it's not =
like it'll gum you up.=20
I incorporated a long time ago mainly because I was taking on a partner, =
employees, and publishing books which opened up my liability =
considerably up until then I had no huge need to do it. We did an =
S-Corp vs. an LLC there are some slight differences I can't remember =
exactly what. =20
So the girlfriends, uncles, brothers, father is right - you probably =
don't need it now. You're friend is right in that he's an idiot because =
essentially he brushed you off and didn't give you the entire story, =
probably because he doesn't understand what you're doing and what it =
means. I suggest you just find a good local small-biz attorney who =
finds it interesting what you're doing and just deal with him or her =
when the time is right.
- Ben
----- Original Message -----=20
From: Drew Sikora=20
To: IGDA Indies=20
Sent: Friday, May 09, 2003 1:15 AM
Subject: [IGDA_indies] Hey there
Hi all indies out there. My name is Drew Sikora, head of Blade Edge =
Software, and I've been working with a small development team (4 people, =
currently) for about 5 months now on a little bitty 2D game project. =
We've already stretched our development time almost twice as long as =
planned but we're learning a lot in the process about stuff like dealing =
with non-responsive team members and coping with doing this all in our =
spare time. (we're a virtual team, but the core group is in NJ). I'd say =
visit our site at www.blade-edge.com but there's not much happening over =
there - I'm waiting until we get our game site up and running to update =
the company site.
Anyways I guess the first issue I'd like to bring to this list is =
whether you should be incorporated or not before going up to a publisher =
(we're looking at TryMedia right now). One of my team member's =
girlfriends' father (you might wanna read that again ;) is a lawyer, and =
he said no, it's not necessary since we don't have an office and assets =
and all that, but a close friend of mine who I trust says that guy's an =
idiot and of course we should incorporate to prevent against lawsuits =
and losses and what have you. I'm inclined to side with my friend since =
I know him better but I'm also looking for other opinions as well. =
Thanks guys, looking forward to some cool indie discussions.
Oh, also I'm 20 years old and although I started going for a CS =
degree, I've decided to drop that and pick up a business degree instead =
so I can be savvy :P Also I've self-taught myself so much computer stuff =
I've kind of turned it into a bad habit, so I had to find something else =
to focus on. Peace.
Drew Sikora
President, Lead Programmer
Blade Edge Software
AIM: DarkPylat
ICQ: 70449988
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<HTML><HEAD><TITLE>Message</TITLE>
<META http-equiv=3DContent-Type content=3D"text/html; =
charset=3Diso-8859-1">
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>I'm an not a lawyer and I don't play =
one yada yada=20
yada... so verify this...</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>They're both right (including the idiot =
part)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>You needn't be incorporated to deal =
with a=20
publisher. Even more so because you don't have assets yet worth =
protecting=20
and you don't need to go through the paperwork and upkeep costs of a =
corporation=20
before it's needed. You incoporate when you're ready to and that =
can be=20
triggered by any of the following below.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>My guess is you'd only need to be =
incoporated=20
when you sign the contract if you plan on limiting any liability. =20
Corporations or LLCs exist for several reasons the most important ones=20
being: </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Tax reporting reasons</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Eases dissemenation of value, assets =
and capital=20
among multiple parties</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Protects your personal =
liability</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>None of that has to do with 99% of what =
you do=20
prior to signing a deal. You don't have any revenue to deal with, =
you can=20
divide up with a simple signed letter of agreement any so called =
"ownership" for=20
the team. And you don't have any liability.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>In terms of signing a deal or if you =
publish the=20
game yourself then you potentially do have some of those items beginning =
to be=20
created so you may want to do this. Again you don't have to. =
You=20
could just be a sole proprieter. Sell your game, take the money, =
and put=20
it in a business account at a bank. For that you would need a =
seperate Tax=20
ID for businesses. The IRS has this form (can't remember the name) =
and you=20
can get this via telephone in 1 day (prepare to sit by the phone for a=20
while). The only time in this scenario that you'd be in trouble is =
if=20
someone sued you. If you're being sued as a person, not as an LLC =
or=20
Corporation then they could seize your personal assets - my guess is =
your=20
mansion could be in trouble - if you had one. Ask yourself what =
likely=20
hood someone could sue you for much at first though? If you've =
taken no=20
advance, if you've not created a piece of software that could destroy =
mankind or=20
at least their computer, etc. you're chances of being sued are as good =
as=20
getting me to stop playing BF1942. However, there are other risks =
like=20
copyright violation, and other issues you need to consider. A good =
lawyer=20
would consult with you to determine the risk-reward of doing an LLC or=20
Corp. The costs aren't really that much, figure about $500 and =
some=20
lawyers will do it for free because it's a good way to sign new =
clients. =20
After that it's $100 a year in fees to file. But you also have =
taxes,=20
etc. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Another aspect about incoporating is =
some companies=20
don't want to deal with groups of loosely affiliated individuals - they =
want a=20
corporation so they know that ownership issues are worked out within =
that=20
entity. No one is going to send 5 different checks to five =
different=20
people. No one is going to sign a product which has questions of =
ownership=20
issues - a liability the other side will refuse to encounter. =20
</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>One thing about liability - depending =
on your=20
actions, and other issues it's really possible for hardcore lawyers and =
suits to=20
pierce "corporate veils" as the term is called so don't think because =
you have=20
an LLC you can just walk down the street and off a busload of =
nuns. There=20
are issues involved with this all you should ask a lawyer to explain to=20
you. It's not a Sherman Tank. In most cases you'll be fine - =
in=20
others you won't.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>My guess is you should just sit =
tight. Wait=20
until an event comes along that forces you to do this then just gather =
your=20
stuff and sit down with a lawyer. It takes a week to get it all =
pulled=20
together so it's not like it'll gum you up. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I incorporated a long time ago mainly =
because I was=20
taking on a partner, employees, and publishing books which opened up my=20
liability considerably up until then I had no huge need to do it. =
We did=20
an S-Corp vs. an LLC there are some slight differences I can't remember =
exactly=20
what. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>So the girlfriends, uncles, brothers, =
father is=20
right - you probably don't need it now. You're friend is right in =
that=20
he's an idiot because essentially he brushed you off and didn't give you =
the=20
entire story, probably because he doesn't understand what you're doing =
and what=20
it means. I suggest you just find a good local small-biz attorney =
who=20
finds it interesting what you're doing and just deal with him or her =
when the=20
time is right.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>- Ben</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dgaiiden@blade-edge.com =
href=3D"mailto:gaiiden@blade-edge.com">Drew=20
Sikora</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A title=3Dindies@igda.org=20
href=3D"mailto:indies@igda.org">IGDA Indies</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, May 09, 2003 1:15 =
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [IGDA_indies] Hey =
there</DIV>
<DIV><FONT face=3DArial size=3D2></FONT><FONT face=3DArial =
size=3D2></FONT><BR></DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial size=3D2>Hi =
all indies out=20
there. My name is Drew Sikora, head of Blade Edge Software, and =
I've been=20
working with a small development team (4 people, currently) for about =
5 months=20
now on a little bitty 2D game project. We've already stretched our =
development=20
time almost twice as long as planned but we're learning a lot in =
the=20
process about stuff like dealing with non-responsive team members and =
coping=20
with doing this all in our spare time. (we're a virtual team, but the =
core=20
group is in NJ). I'd say visit our site at <A=20
href=3D"http://www.blade-edge.com">www.blade-edge.com</A> but there's =
not much=20
happening over there - I'm waiting until we get our game site up and =
running=20
to update the company site.</FONT></SPAN></DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial =
size=3D2>Anyways I guess=20
the first issue I'd like to bring to this list is whether you should =
be=20
incorporated or not before going up to a publisher (we're looking at =
TryMedia=20
right now). One of my team member's girlfriends' father (you might =
wanna read=20
that again ;) is a lawyer, and he said no, it's not necessary since we =
don't=20
have an office and assets and all that, but a close friend of mine who =
I trust=20
says that guy's an idiot and of course we should incorporate to =
prevent=20
against lawsuits and losses and what have you. I'm inclined to side =
with my=20
friend since I know him better but I'm also looking for other opinions =
as=20
well. Thanks guys, looking forward to some cool indie=20
discussions.</FONT></SPAN></DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial size=3D2>Oh, =
also I'm 20=20
years old and although I started going for a CS degree, I've =
decided to=20
drop that and pick up a business degree instead so I can be savvy :P =
Also I've=20
self-taught myself so much computer stuff I've kind of turned it into =
a bad=20
habit, so I had to find something else to focus on. =
Peace.</FONT></SPAN></DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D938070505-09052003><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV><SPAN class=3D938070505-09052003>
<DIV class=3DMsoNormal align=3Dleft><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial">Drew Sikora</SPAN></DIV>
<DIV class=3DMsoNormal><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial">President, Lead=20
Programmer</SPAN></DIV>
<DIV class=3DMsoNormal><SPAN style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Arial"><A=20
href=3D"http://www.blade-edge.com/">Blade Edge =
Software</A></SPAN></DIV>
<DIV class=3DMsoNormal><FONT face=3DArial><FONT size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Arial"></SPAN></FONT></FONT> </DIV>
<DIV class=3DMsoNormal><SPAN style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Arial">AIM:=20
DarkPylat</SPAN></DIV>
<DIV class=3DMsoNormal><SPAN style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Arial">ICQ:=20
70449988</SPAN></DIV></BLOCKQUOTE></SPAN></BODY></HTML>
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