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JmarsKoder

How do i start a software company.

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I was just wondering if anyone knew the process and things I would ahve to do to start a software development company. I want to start something with just me, my bro, and 2 other coders. A team of 4. Reality Makes Me XIC I don''t do spelling, I hack code: passion is my feul. Use my programs, experience genius. http://www.x-i-c.com/

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Do you mean a real company, or just a team with a logo, letterhead and fancy-schmancy name?

Real companies need to be registered. You could probably find the forms and additional information at the Post Office.

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Thanks to Kylotan for the idea!

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> I was gonna flame him but I will keep my mouth shut

Ahh, who cares - by the sounds of the post hes a kid who wants to program/make games. When I was 10, I stated up a "company" with a friend (Syntech!) to make games. Did it amount to anything? Of course not. But Ive been a game programmer for four years now, and it was doing things like that that kept me interested. Let people have their fun - its not harming us :-)

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you probably won''t find a lot of constructive critizism on a question like that. if you ARE serious, tho, i suggest going to your local book store and pick up a book or two on the subject. that''s the best i can offer you, as i have never started a game development company.

there''s no reason to flame this guy. i seen way more %$^* stupid questions than this. this question isn''t even stupid.

To the vast majority of mankind, nothing is more agreeable than to escape the need for mental exertion... To most people, nothing is more troublesome than the effort of thinking.

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i like this sooooooooo much more than people who claim to already be a company and want to recruit help under their imagined company name...
JmarsKoder: there are different types of companies (corporation, LLC, et cetera) and each has it''s own benefits and problems (mainly tax issues, who gets the profit money, and who pays if the company fails). each has it''s own paperwork and licensing to get it started too. however, if you do not want to suffer through annoying and confusing legaleze, and you don''t want to hire a lawyer to figure it out, there are a lot of websites that will handle the details for you (for a small fee of course)... check out www.corporate.com for example (there are a lot of these sites out there though, so you should use a search engine to find the best price for the most work on their part).
i would recommend waiting until you are quite nearly done with at least one good game before actually officially starting a company, since as soon as you mail in the paperwork you are responsible for tax filing and all sorts of other crap, which would be pointless when you haven''t even sold anything yet.
if you DO want to start one though, i''d say go for a LLC (limited liability company) if they are legal in your state. the taxes are easier to figure out, and if the company flops you don''t have to give away your house and car (hence the "limited liability" part).
either way, good luck.

--- krez (krezisback@aol.com)

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Sole Proprietorship isn''t such a great thing because you have 100% liability for any losses you incur. This means they can go after your car, your house, etc. As krez said, your best bet is LLC which I do believe is now allowed in all states. Some just have different requirements for them, like maybe you have to have two or more people in the company (as partners not employees) to call it a LLC, but some states allow you to be the sole owner. And again, as krez said if a LLC fails the only thing you lose is the money you put into it, nobody can take anything personal away from you.

And Torn Space is right about incorporating. This is usually done for large companies who want to go public and sell their stock. It costs thousands of dollars and requires the involvement of lawyers and accountants. Plus corporations have to pay taxes twice. Once on the profits and once on the stock dividends.

And of course unless you have a game you can sell there''s no point in starting a company as the others mentioned

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quote:
Original post by Supernova
And Torn Space is right about incorporating. This is usually done for large companies who want to go public and sell their stock. It costs thousands of dollars and requires the involvement of lawyers and accountants. Plus corporations have to pay taxes twice. Once on the profits and once on the stock dividends.


Uh, no, that''s not true. I''ve owned two businesses (and i''m working on my third). I''ve had discussions with my lawyer about this subject, and he suggests that even the most basic businesses should incorporate. He''s an attorney, it would make sense that would know about such things. Same holds true from the books i''ve read. They almost uniformly suggest forming a corporate entity for every business.

We live in the most litigious society on earth. When 80-year-old ladies want to sue you because they spilled coffee on themselves, then complain it was "too hot", you had better protect yourself. Especially when the jury levies a 10 million dollar judgement against you for such an incident.

My first corporation was certainly no "large company". I had 6 employees, and I had no intention of taking it public. The idea that incorporating is only for the big guys is a fallacy. I paid $1500 for my lawyer to do the paperwork. Fortunately, you can do all the work yourself for a fraction the price. Bottom line: forming a corporation "requires" neither lawyers nor accountants.

I''m working on my newest venture now and the cost of filing all the coporation paperwork was only $300 (cost varies by state). Forming one will not make you immune from all lawsuits, but it will go along way in shielding you from personal liability.

As far as your "pays taxes twice", that''s not necessarily true. Infact out of LLCs, LLPs, sub-chapter ''S'' corporations and standard for-profit corporations, only the standard for-profit corporation suffers the potential for double taxation. Even then it''s not automatically double taxed, only if you don''t prepare well.

In my experience, most small companies would benefit from forming a sub-chapter ''S'' corporation. $300 and filling out some forms to get some generous tax benefits and legal protections is pretty cheap in my opinion.

Forming a business entity affords you some ancillary benefits. For one, people (especailly business people) will take you that much more seriously knowing you are incorporated. Credit from banks, credit from other businesses, the list goes on.

Someone suggested waiting until you have a product nearly ready for market before organizing. Again I don''t agree. Attorneys use the phrase "piercing the corporate veil". This is a neat lawyer trick used when they sue coporations. They are attempting to break down the corporation to expose the corporate officers and shareholder. Thus making them personally liable; not a good thing in otherwords.

How do they do this? Well if they can demonstrate that you conducted "official" business outside of your coporate charter (this would include things like operating as a business before it was officially formed), then you are vulnerable to litigation. Even simple things like forgetting to keep the "minutes" from your required annual meeting can expose individuals to liability. My point: lawyers are ruthless, don''t give them any ammunition to use against you.

I agree it''s dumb that you should have to go to such great lengths to protect yourself, but the truth is Tort laws are against you. You can cry and moan that it''s not fair, but that''s life. Your options are expose yourself, or protect yourself.

As far as who wanted to flame JmarsKoder goes, get a clue dude. He never claimed to be a company, wasn''t asking for you to come work for him for free, and nothing in his post came across as foolish or dumb (perhaps a little ignorant, but that''s why he asked for help!). Maybe it''s just me, but he certainly didn''t appear to commit any flammable offense.

~don

"They that can give up essential liberty to obtain temporary safety deserve neither liberty nor safety."
- Benjamin Franklin

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Guest Anonymous Poster
From the looks of your "xXtreme and Intelligent Code" page, I think you might be biting off more than you can gum.

I don''t think people will run around screaming how great an application is that pulls a "prank" on someone or say you are the next big thing with a sub-par personal organizer. You should look into making some "Relatively Useful" or even "Not So Trite" code, because you''ve failed on the extremely intelligent side. Not to mention your wonderful grammar. I hope one of your employees is an editor!

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quote:
Original post by pink_daisy
forming a corporation "requires" neither lawyers nor accountants.

or websites that do it for you, i'm sure you'd argue. but, who wants to work through all that paperwork, triple-checking it so you don't screw yourself up? it's not "required" but it saves time that could be spent developing...
quote:
Forming one will not make you immune from all lawsuits, but it will go along way in shielding you from personal liability.

there isn't much that you can be sued for if you are simply developing video games (unless some schmuck tried to put the CD in his eye or something).
quote:
Someone suggested waiting until you have a product nearly ready for market before organizing. Again I don't agree. Attorneys use the phrase "piercing the corporate veil". This is a neat lawyer trick used when they sue coporations. They are attempting to break down the corporation to expose the corporate officers and shareholder. Thus making them personally liable; not a good thing in otherwords... How do they do this? Well if they can demonstrate that you conducted "official" business outside of your coporate charter (this would include things like operating as a business before it was officially formed), then you are vulnerable to litigation. Even simple things like forgetting to keep the "minutes" from your required annual meeting can expose individuals to liability. My point: lawyers are ruthless, don't give them any ammunition to use against you.

even if they proved that you worked on the game before you did the paperwork, what could they possible sue you for? maybe i have lived a sheltered life, but i can't think of anything that someone would sue a video game company for. if you have examples i'd love to hear them...

--- krez (krezisback@aol.com)

Edited by - krez on January 15, 2002 3:43:32 PM

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Guest Anonymous Poster
quote:
Original post by krez

even if they proved that you worked on the game before you did the paperwork, what could they possible sue you for? maybe i have lived a sheltered life, but i can''t think of anything that someone would sue a video game company for. if you have examples i''d love to hear them...




Your publisher could sue you for some (real or imagined) breach of contract. Say your lead programmer quits or gets hit by a bus, and you miss your delivery date.

Or some parent decides to blame their kid''s suicide on your game, and sues you for wrongful death.

It''s standard practice to form an LLC or a corp for independent films. It should be the same with games.

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