DBAs, Business Licenses, LLCs, Corporations, etc...
Kynn:
Those of you who self-publish your games, have you set yourselves up as businesses? Do you have a business license, have you printed a "DBA" in the local paper, do you pay taxes? Have you incorporated, organized as a limited liability corporation, or operate as a sole partnership?
I apologize for the American-centric terms -- don't feel restricted from talking about this topic if you're from elsewhere and the terminology is different. Basically I'm asking if you've done the legal paperwork to set yourself up as a "real home business" in an official way.
Eero Tuovinen:
There should be Americans here who have done this as well, but at least Arkenstone is a real company here in Finland - an "open company", which might translate as "general partnership" if I'm to believe the Internet. The benefits are that it's easier to control money flows (small amounts for sure, but it's the principle) between multiple owners and handle taxation, as well as account for all the various expense sources that are used to balance the profits in accounting. If I were alone in this I'd probably do a sole proprietorship ("toiminimi" in Finnish), too, as a matter of simplicity in having some zoning between personal and business expenses. We also consider incorporation from time to time as the company grows, but so far we've been happy with the general partnership.
Having an acting company with paperwork of course means that we pay our taxes diligently; a general partnership in Finland is taxed per-person according to the participant's other income, but the company files for its own operations every spring. Other than that the most bothersome bureaucratic hassle from being a legal company seems to be the VAT, which would require us to file monthly returns to the tax man. This would increase our paperwork by an order of magnitude, which is why we're all but actively curtailing operations to keep revenue under the mandated VAT-freedom limits.
More significantly, however, why are you asking? Perhaps we could discuss the most useful aspects of the topic if we knew why you're curious.
Ron Edwards:
Hi there,
Here are a couple of older threads which offer some good points: The Something-Something Press and
Quick guides to incorporation?.
Let me know if you have questions not covered in those. They're also kind of fun reading because you'll find a number of different points from different personalities.
Best, Ron
guildofblades:
The Guild of Blades Publishing Group and Guild of Blades Retail Group are both limited partnerships, filed as DBAs only (Doing Business As). There really isn't any significant different between such a simple legal set up as that and the various levels of incorporations. But the tax advantages are significant. Most small businesses opt for incorporated status due to an extra layer of fiscal separation it can provide between the business and the principle owners of that business. That can come in handle in the event of fiscal problems or even bankruptcy of the business or should some big lawsuit happen. We find, at this stage of our business development, that the tax advantages make the more simple structure far outweighs the protection against fiscal downfall. Particularly where if we are being careful and operating a good business, fiscal collapse or bankruptcy simply won't happen. As for protections against silly lawsuits, well, they have various forms of liability insurance against that. Both for retailers and manufacturers.
Ryan S. Johnson
Guild of Blades Retail Group - http://www.guildofblades.com/retailgroup.php
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com
Valamir:
The rules for DBAs and sole propieterships vary greatly from state to state.
In IL it entails applying for a business license, a fairly simple form where you attest to having no employees (things get infinitely more complicated when you have employees). This is administered at the county level and involves posting a business announcement for a set period of time in local papers to ensure no local business wants to contest your DBA name. You then get a certificate and business number.
Then you file Schedule C with your Federal tax Return (a fairly simple form if you keep good expense records and inventory control).
Then in IL you also have to file state sales tax returns for anything sold direct to consumers.
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