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Kenny77

Company Ownership

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I'm looking to start up a indie game development business with some friends, and I've read in some of the articles here that it is a good idea to lay out company ownership or a plan before approaching publishers. With that said, what should I know, and what are our options?

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Hi Kenny,

Please forgive me if I sound blunt. You asked a business question (perfectly OK, because this is a business forum), and I'm giving you a businesslike answer.

You say you're starting an indy "business" with "some friends." That might mean you're all experienced pros who've become friends through professional associations, or it might mean you're just friends, all amateurs with no idea of what it is you're trying to get into. I cannot tell from this sentence which it is.

If the former, you should hire a lawyer and he can tell you how to write your legal and business documents, and what kind of clauses to put in it (especially if you hire a game industry lawyer, those are not hard to find if you do a thorough Internet search).

If the latter, again forgive me, it's likely that the endeavor will fail (teaching you a lot in the process) before you ever really run up against anything that the expense of a lawyer would have justified.

So to save some of us the trouble of writing answers that don't address your situation... how about you explain your situation a little more clearly for us? What kind of business exactly - are you experienced programmers, producers, artists, with the funding to start creating at least a "vertical slice" demo? Or are you all just bright kids with a bunch of brilliant game ideas that exist only on paper? (For starters.)

Tom

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We're mostly learning on our own, with little experience thus far. We're not looking to make the next W.O.W or Grand Theft Auto, just to make some simple text RPG's and work our way up until we're reading for 2D and 3D games, then approach some publishers. We're trying to cover all the bases now, so we don't have any surprises or problems later.

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Kenny wrote:
>We're mostly learning on our own, with little experience thus far. We're ... looking ... just to make some simple text RPG's and work our way up ... then approach some publishers. We're trying to cover all the bases now, so we don't have any surprises or problems later.

And do you still have a question? My advice to hire a lawyer, and David's advice to buy a book if you can't afford a lawyer, probably took care of it, as far as I can tell. If you still have a question, the usual principle of "it depends" still applies - there is no universal magic answer to any question. We'd need a fuller understanding of your exact situation in order to give you the best answer for your exact situation.

I echo David's advice to buy that book, and I echo my own advice to hire a lawyer.

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One of the things I notice in this forum is that there's posts about "How do I make a game company?" There's no difference in making a company of one type or another. Being a Game Development Company is no different than being a company that washes cars, makes catering food, grooms animals, etc, as far as the startup is concerned.

Here are some excellent resource URLs.

http://www.irs.gov/businesses/small/article/0,,id=99336,00.html

http://sloperama.com/advice/lesson16.htm

I would be remiss without mentioning Tom. ;)

You will also need to go to your home state's webpage and search up their pages about starting a business in that particular state.

There are tons of websites on starting a business, but your best bet for legal and free info is your government's webpages. Now, you could save some cash by either filling out the startup forms yourself and making contracts based on ones in Nolo books you get from the library, but the best bet is to spend the bucks now and have a good lawyer set it up. I'm not sure what state you're in, but for small friend startups, LLC (Limited Liability Company) is a good way to protect yourselves without incurring the expenses of S-Corp or losing protection via Partnership or Sole Proprietor.

Tom Buscaglia had a Game Dev Legal Kit for $300 or so, which is a steal, but again.. I didn't use it. We had some complicated stuff (one of our developers is in another state and another developer is in Brazil), so I needed a lawyer. If all of you are in the same state, things are less complicated. LLCs can be a pain at times (everyone always has to be putting in the exact amount of money as their percentage of ownership), but is a valid company type.

As far as publishers, I don't know the best route to that, since we're doing what's considered the most impossible of all things: a bunch of amateurs creating a small, niche MMORPG that we'll be publishing and hosting ourselves. But I can tell you we don't expect anyone to even turn a head in our direction, so we're not planning to even think of trying to get actual game publishers to publish us, since we're unknowns.

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Quote:
Original post by Kenny77
We're mostly learning on our own, with little experience thus far. We're not looking to make the next W.O.W or Grand Theft Auto, just to make some simple text RPG's and work our way up until we're reading for 2D and 3D games, then approach some publishers. We're trying to cover all the bases now, so we don't have any surprises or problems later.
I agree with Tjaalie. Personally I'd say the first step is to learn enough that you're ready for 2D and 3D games at the least, before worrying about legal issues or forming companies. You don't need a company to make a game with a bunch of friends.

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The problem we're having in this thread is that the OP still hasn't painted us a clear enough picture of the situation. If it's just some high school guyz putting their heads together, that's not a "business," and of course nothing much is going to come of their collaboration, so they don't need to hire a lawyer they can't afford. If it's graduated adults with day jobs collaborating after work hours, with likelihood of becoming a "business," then that's an entirely different thing.

There's no magic universal answer for every situation. The famous phrase holds: "It depends."

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I agree with what was said earlier: starting a business is generally the same process with any industry. All you need is to be 18, and be prepared to do a fair amount of reading if you haven’t had any college business classes. Most of the legal work required you can do yourself, it just takes time to do it right, and if you’re trying to learn on the fly, it will likely take even longer. Don’t be discouraged. You can prepare everything for a lawyer to look over, and according to what I’ve read, you can get things settled in only a few meetings with him or her, provided you have everything else done before hand. If you live in the USA, the IRS has a few resources to starting your own business, so check out their website. I would also encourage you to pick up a book on how to write a Business Plan. Even with technology as it is today, to my knowledge it’s still not criminal to visit your public library, and check some books out—and it’s free.

The truth of the matter is, if you have a few grand just lying around, there are services on the net that will do everything for you, and bang, you’re a company. I wouldn’t suggest it. There’s just no sense in trying to lead a company without knowing what is put into making it work. So good luck man, you’re facing the same beast hundreds of would-be game developers have in the past. You’re in good company. (No pun intended) ;)

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