Posted 06 July 2012 - 10:04 PM
As such, all of the same things that apply to the registration and operation of a business apply to your intended endeavour as a video-game developer.
Can you operate without registering a business?
That depends on your local laws, but yes, it's very likely that you can. You would still have to pay any appropriate taxes, and may or may not have to file certain paperwork. SimonForsman seems to have a reasonable handle on the laws that apply in your area, so you will probably want to begin with the links and information he provided. Ideally, you should also consult with a lawyer to ensure you are following the proper laws and have filed the proper paperwork.
Why should you register a business?
A properly registered business is a legal entity, and as such helps to protect you from some of the legal and financial risks that are involved in doing business. It can potentially also ease the difficulty of assigning ownership of the property you create, and can potentially make the relationship between yourself and any potential employees more straight forward.
If you're unsure whether or not to register a business you should get advice from a professional familiar with the laws and regulations in your area. Again, consulting a lawyer would be advisable. It may also be beneficial to speak to an accountant.
Anywhere you see or would use the term "studio", simply replace it in your mind with the term "legally registered business". A development studio is not special, nor is it even a universally applied term; it's just a name that some (perhaps many) games development businesses call their organisation.