How To Start A Game Studio (LEGALLY)

hey guys how's it going my name is thomas brush and i make indie games for a living okay so you launch your game and the next day a hundred thousand dollars slams into your bank account that's a huge i don't know down payment for your house or maybe you can buy a brand new ford bronco that sounds amazing or better yet maybe you could put it in the stock market because apparently the stock market loves chaos i don't know what's going on in 2020 but that's what's that's what's happening but guys not so fast here remember you need to pay taxes so how much taxes do you actually have to pay it's kind of confusing right and what about legal liability are you so sure that you're not gonna get i don't know sued from maybe a customer who played your game there's a lot of questions in the air and in the wonderful world of game dev and entrepreneurship you may find yourself feeling completely lost when it comes to the legal mumbo jumbo of starting a business guys i get this i really do without my cpa dad growing up i'm not sure i would have even known exactly how to start an indie game studio in this video guys i'm gonna be the dad that you never had right i'm gonna tell you all of the wonderful things about limited liability companies taxes and i don't know the corporate veil all of this super important information is actually not that hard to understand and it's really easy to start an llc guys it's also easy to click that like button that would really mean a lot to me i'm trying to make this channel explode lately so please click the like button and the subscribe button and that would really help me out a lot i really appreciate it just know guys i'm i'm not a lawyer okay i'm not a certified public accountant and i'm not recommending anything here based on some kind of certification or whatever i'm just like you guys i had to do my own research when starting an llc and starting a game studio and i would just say consider this video just a little portion of the research that you're gonna do all right so first guys let's talk about why you should form an llc and that's a limited liability company an llc according to wikipedia is a business structure that can combine the pass through taxation of a partnership or a sole proprietorship with the limited liability of a corporation all this really means guys is you're gonna get taxed personally because you own the company and honestly there's no real tax benefits that i can think of to actually owning an llc versus something like a sole proprietorship but you do have protection and this is what separates an llc from a sole proprietorship you do have protection of your personal assets in the event of some random lawsuit as a result of your games or your products now really quick guys if you're outside the united states right now don't worry just google llc equivalent in whatever your country is and you should get an idea of what your country offers okay so first things first let's talk about taxes and how they relate to an llc by the way guys i discuss a ton of this business stuff including how you can not only form an llc but use it to secure hundreds of thousands of dollars on kickstarter from publishers and on the steam front page guys this is my online exclusive platform called fulltimegamedev.com last time i ran a big sale over 500 students signed up in a single week so i've got about 200 coupon codes for black friday and i would love to email you the code so you can be first in line on black friday guys last time i did this the codes were used up in about two hours so feel free to click below to get first in line for black friday and hey everyone gets a free 2d game kit immediately when you click below so it's my gift to you no gimmicks here win-win for everybody but anyway let's go ahead and talk about taxes yay an llc is taxed essentially the same as a sole proprietor but to sound smart let me just say that an llc takes advantage of what's called pass through taxation a corporation doesn't get this basically a corporation is going to be taxed on its profits and then the owners are also going to be taxed and this is called double taxation now to be extra extra clear here guys you can claim business expenses without having an llc right however an llc allows for legal protection which we're going to talk about that in a second while also allowing for pass-through taxation that's pretty cool meaning yes just like a sole proprietor you are going to be the owner of your company and you're going to be taxed as the owner but you're also afforded limited liability and who doesn't want that now before moving on to what that liability protection actually is i want to chat about your business expenses i think this is really important pretty much anyone running a business or an llc or not can claim business expense deductions this means whatever you spend from your bank account for your business guys it's not going to be taxed as long as it's actually a business expense and that's actually the catch here so if you're planning on going on a trip to the bahamas and you maybe get a spray tan you can't just claim it as a business expense unless you're the president right true so if you make a hundred thousand dollars on your indie games and you spend 30 000 of it maybe running your business making another game fixing bugs or whatever it is your business is 25 to 35 of that 70 000 is going to be taxed so that's like 17 500 in taxes so the full 100 thousand dollars is not going to be taxed if hallelujah was that would be like 25 000 bucks obviously this is just a guesstimate guys i don't really know what your tax bracket is but ultimately that's like something like 7 500 in savings and that's pretty cool this is why when i actually buy something let's say for my family i feel like i'm not really saving any money i'm just spending it but when i buy something for my business i feel like i'm saving money now obviously this is it's actually needed for the business so buying a giant beanbag for my office isn't really saving money let's keep talking about these business expenses really quick let's just say you pay yourself a salary of like fifty thousand dollars as a game developer well you're the game developer right so that means you're a business expense right wrong that's wrong that's called cheating and this results in something called you guessed it an audit if you personally build wealth from your business because you're the owner of the llc that's gonna be taxed as the owner of an llc or as a sole proprietor guys you're not an employee it doesn't work that way and here's the thing it doesn't matter whether the profit is stored in your personal bank account or your business bank account or in the basement it really doesn't matter where it's stored it's still cash the government thinks that you don't need to run your company so they want a piece of it alright so what exactly is limited liability basically limited liability creates something called a corporate veil all this does is shield the owner's personal assets from lawsuits business debt and stuff like that so let's say you release your game called i don't know seizure city and somebody has a seizure playing it and claims it's your fault this is called tort liability which is honestly in my opinion the scariest form of liability basically if your customer somehow becomes wronged they can technically sue you for negligence so let's say you get sued for half a million bucks and you don't have half a million bucks most of us don't right but you do own a brand new honda accord and you paid for this in cash and that's important you actually own it right the bank doesn't own it and maybe you have ten thousand dollars in the bank guys the government and this lawsuit can actually claim that if you don't have an llc so that's the cool thing about an llc it acts as a safeguard against your personal assets in the event something bad happens with your products guys this is not full protection hence the word limited there's plenty of room to wiggle around and maybe see that you're personally liable but i've always said guys a little bit of liability protection is better than none right but i will say the bigger your company gets the more money you make the more money you bring in guys that's the more potential for liability right meaning the bigger you get the bigger your studio gets the more valuable an llc becomes so how exactly are you going to start an llc guys this is where things get really complicated i'm not gonna lie you're gonna need to go down to your dmv and you're gonna need to wait in line for three to four days you'll need to fill out 12 pages of paperwork and mail them to the washington monument it's actually insanely easy to start an llc so let's jump on over to legalzoom and by the way this is not a sponsored video from legalzoom because honestly guys legalzoom makes it really easy for you to start an llc you're probably gonna spend a hundred dollars more than what you would without legalzoom but i would just say legalzoom makes it so much easier and they also offer i guess some safeguards that i think it's worth the extra fee to use legalzoom all right the first thing you're going to want to do guys is go to legalzoom.com llc and it's going to ask you what you want to name your business so i'm going to name it bouncy ball games let's do a z and by the way guys you also want to check to see if your url is available so just go ahead and try to see if bouncy ball games is available so bouncy ball games looks like it's probably available a good way to check is to go to your provider and try and buy a new domain but let's go ahead and just check the availability of the llc assuming that the url is available as well let's go ahead and do north carolina for the state good it looks like it's available all right let's type in my email address thomas fulltimegamedev.com um what's my phone number eight six four six six six six six six six get my llc um looks like we want to launch yesterday so it's already running and click continue is bouncy ball games your first llc uh sure what do we do we create video games right continue how many employees or will we have employees in the next 12 months no it's just me see essential services continue all right so what i would choose if i were you guys i would choose this one here or this one okay the reason why is because this one includes an ein an ein is an employer identification number which as you can see here an ein is required without it you can't file taxes or open a bank account so you absolutely want this one this one's not enough here so i would get this one or this one i'm gonna click complete coverage though because this includes some licenses that i don't even know anything about i just know that i want as much uh coverage as possible for my business but the other one would have been fine too okay um let's go back here this says business services for bouncy ball games let's take a look and see what those are i don't really want any of these right now so i'm gonna click no thanks they're just trying to upsell me no thanks okay so here we go just select an llc package below and you're all done so i'm going to choose the economy because all this means is we're just going to get this in 30 days right so if you need it in 10 days you're gonna choose this one here but we can just choose economy and as you can see guys it's gonna throw on the 80 fee for legal zoom but also the 125 north carolina filing fee now obviously guys you could file for an llc with north carolina and it depends on the state you're in but in north carolina we can file for 125 dollars but i'm also going to pay this 80 fee here 79 feet with legalzoom because they're going to handle a lot of the stuff that i don't want to deal with right so that's why we're paying a premium here but honestly i would recommend paying the premium so you don't have to deal with all this junk so let's click no thanks here we don't want to worry about a business account let's see if we've got some coupons with honey if you want to use honey all right looks like there's no active code sometimes they'll find one i found one for 10 earlier today so let's go ahead and continue to check out and so as you can see here guys in total we're going to be paying 392 and this is for north carolina right so there's going to be difference in prices across states and obviously if you're not you're in another country you know legalzoom i'm not sure if they offer it for you guys um and it might not even be an llc right but for those of you who are in the united states you're going to see a different price here um but for me it's going to be 392 and i can continue to check out so that's the basic process of creating an llc with legalzoom all right guys thanks so much for listening to me ramble and let me know in the comments what you thought of this video and if any of you actually have an llc i'd love to know what it is i'll talk to you guys next time see ya cheers

Channel: Thomas Brush

Views: 67,654

Keywords: thomas, brush, Game Development, 2D Game Design, Pinstripe, Steam, Tutorial, Software, Unity, How To, indie games, unreal, nintendo switch, game career, how to make games, game dev, start a company, LLC, legal, taxes, how to sell games, indie game dev salary

Id: xK0SDfAvOTg

Length: 14min 21sec (861 seconds)

Published: Mon Nov 23 2020