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Starting a Company – The Paperwork

So you’ve decided what to call your company, you know what type of company you want to start, and now you want to buckle down and make content.

Well, everything you’ve done so far has been just planning. Until you file with your secretary of state (google it or use the business.gov website to find the address) you don’t have the protection of the legal structure you’ve chosen. You have some protection, provided you actually do file the paperwork correctly within a reasonable period of time, but you don’t have the full protection for taxes or legal liability until the paperwork is filled out and approved by the Secretary of State’s office, or whichever local state office registers corporations.

Filing the paperwork might require signatures by every founding member of your company, or it might just require one signature, depending on the corporate structure and the state requirements. Some states, like Nevada, combine the Master Business License Application with part of the New Business Registration process, so that new businesses get signed up for both at the same time, and only need to fill out one form.

In addition to a state business license, you might need one from your county and municipality, depending on what kind of company you are starting, and what your jurisdiction requires. The forms are often online, but can also usually be obtained by calling City Hall directly and requesting a packet.

As you can tell from the differences in types of company from the last post, it’s usually a good idea to have an attorney help you with the process of filling out the forms. Many small firms will charge a flat rate for their assistance, which usually includes the fees charged by the state as well. Even with a lawyer’s help, you might encounter problems because of the way registration occurs, or because of processing or other human error.

After getting the certificate from the registering agency, congratulations! You can now create content that is or will be owned by the company, and not your potential employees (as long as you get them to sign the right paperwork before they start working, too), and lawsuits will be filed against the company, and hopefully not your house. Most filings require annual reports to the Secretary of State’s office, and if or when you get employees, you’ll need an IRS Tax ID and other money matters which a CPA can help you figure out. Remember to keep the money separate, and only pay yourself back for the costs of starting up, and a legitimate salary, and you should be able to keep it that way.

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Posted in Make-Up Post.

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By Anne-Marie – August 26, 2010

Starting a Company, Part 2

Yesterday we looked briefly at how why names are important, and a few ways to check whether the name you want to use is already taken.

Now you have a name. No one else has a real claim on using it, or preventing you from using it in connection with your business, and you know what you want to do with the company. Now what?

The next step is usually to talk to a CPA or attorney to determine under which type of legal entity you should do business. Even before beginning the creative process, or having friends design websites, or getting other people to create something for your future company. Why? Because your company doesn’t exist yet, and doesn’t have a set structure, so any of this creativity is going to be owned by the people who create it, and not necessarily the “company” that requested it.

Copyright law states that authors own their creative works, unless it is made under a work made for hire agreement, or as a part of their regular employment. Such a pre-creation transfer of ownership requires that the paperwork be filled out BEFORE the thing is made, or the company (or the company’s lawyer) has to run around doing licensing catch-up, getting people to sign away their rights and interest to works for which they were already paid. Unless they are very good friends, the artists are probably going to want more money to assign their rights to the company, so why not clarify things by taking care of this step before having anything get going?

An attorney or CPA can discuss what type of business would work best, whether more employees are planned or needed, and whether a transfer of ownership is expected. If you just want to make one game out of your garage and then go into another line of work, the paperwork trail is fairly simple. You can set up as a sole-proprietor and may not even need to get a business license in your state. If you plan to work with several friends, and drop in and out of production as you create several games, then creating a Limited Liability Company or LLC, or a full-fledged S-Corporation might be a better idea. You have to fill out more paperwork with the state, and keep clean books for the business, separate from your own personal accounts, but there are more tax benefits granted to a totally separate business, and legal liability may be lessened, as well.

Partnerships may work if you intend to keep working with the same few people, but corporate law requires each partnership to dissolve once any member dies or wants out, so starting over with a new entity might not be easy in a few years. Also, depending on where you live, your state might consider marital property in establishing what type of loan can be granted to your business, and what liability extends beyond the corporate structure.

Tomorrow: Filing and Having People Sign Paperwork

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Posted in Wednesday: Current Issues.

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By Anne-Marie – August 25, 2010

So you want to start your own Game Development Company…

Congratulations! This might be  the beginning of a new career, fame, fortune, and all that other stuff. You might be successful enough to pay off your student loans, or you might have to declare bankruptcy after a few months, with nothing having come of the endeavor. Either way, there are a few general steps to follow when setting up a small business.

Step 1: Choose a name.

Technically “have an idea of what you want to do” is first, but this post assumes you already know what you want to do. Having decided what service you will offer, or what software you will code, picking a name is actually the next most important thing. Deciding whether you want to set up as a full-fledged company as opposed to just getting a business license and starting out alone will be covered in the next post.

Why is it important to choose a name? So people know where to find you, and know who did what when it comes to the work that you will do. Before getting a webpage or printing up business cards, it’s a really good idea to do a few simple web searches to see if your name has already been taken in your area (location or field of business).

Why check to see if the name is taken? Because trademark infringement doesn’t require the intent to infringe someone else’s trademark in order for the second person to lose in court. If someone else has registered the name you want to use in connection with your type of business, they can probably get you to stop using it and get money out of you in order to punish you from having done so.

Ways to search:

US Patent and Trademark Office – They have the nationally registered trademarks, and a fairly good set of tutorials in how to search. However, not everyone registers their trademark nationally, and it can take a while to become familiar with the organization of the searches and results.

Secretary of State – Businesses generally register tradenames at the state level, especially if they’re not just the family names of the people involved with the business. The link provided goes to www.business.gov, which is a website for small businesses, run by the White House, and has a list of links organized by state, so if your state uses the Department of Licensing for tradenames, that information would be provided.

Google search – Or your internet search engine of choice. At the very least, it would give an idea of how common the name is, and how many popular ideas would have to be overcome before people began to think of your company in connection with the word or phrase instead of whoever is already out there.

A trademark search service will provide as much information as you request for the name you want searched, and will be about 200 pages long and cost about $700. They are easily found online, but usually provide the same information that can be discovered on one’s own. They have access to a few proprietary databases, and have more experience running directed searches, but don’t necessarily provide more information than can be found out from other (free) sources.

Tomorrow: Organizing your Business

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Posted in Tuesday: Potpourri.

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By Anne-Marie – August 24, 2010