Business Tips for New Game Designers
Today I'll be writing about something just a bit different than normal, but still relevant to game design - some of the things you should do business-wise if you intend to get more serious as a designer.
First, a disclaimer: like with all the other posts I've written, I'd like to clarify that I'm far from an expert in these matters. I'm just writing from experience on things that worked well for us. When it comes to business-related matters, always be sure to check your own state/country's laws. What I'll be writing about is focused on US-based things to do, and I've got no experience at the moment with setting up business entities in other countries.
If you want to make the move from a hobby game designer to one that's at least semi-professional, you'll want to create a business entity for those designs. Since designing, developing, and publishing games takes a lot of money, if you operate under a business entity, there are certain tax breaks you would be eligible for. If you form a Limited Liability Corporation (what we formed for Yanaguana Games), the entity is taxed a sole proprietorship if it is a single member, or a partnership if it is multi-member. This means that any money brought in from sales counts as income on your tax return, and business expenses are deducted from your income on your tax return. The added benefit of operating under an LLC (rather than the sole proprietorship or partnership) is that any claims brought against the business can only target the business' assets. If you weren't operating under an LLC, claims brought against the business could end up pulling from your own property & assets.
To form an LLC, I believe in all states you would apply through your respective Secretary of State's office. There is usually a fee involved, which varies state to state. In addition to forming the business entity with your state, you'll need to obtain a Federal Tax ID. This is free to obtain, and is done with the IRS. You'll need to find a Registered Agent. There are businesses that will take this role for you, though from my understanding it just has to be someone you trust that can be served with legal paperwork in the event that you can not be contacted. Lastly, you'll want to make sure to get the info from your State Comptroller about how to register for a Sales and Use Tax Permit (if applicable) and how, where, and when to pay your Sales Tax.
To support all this, you'll need to make sure to keep detailed records on all your business transactions. Unless you're doing quite a lot of business, keeping track of everything in a spreadsheet, and scanning all receipts and invoices should be sufficient. You may want to look into an accounting class for a better understanding of this record keeping.
Other things to think about would be getting a domain name, and email hosting at that domain name. We use Squarespace for both (though the email is technically through Google). It helps to give you more of a professional look.
So there's some tips on how to get rolling on making the jump from a hobby game designer to one that's at least semi-professional. If you have any questions, feel free to contact us and we'll help out where we can.