Are you incorporated? What kind of legal structure do you recommend for a full-time game developer? If I can't find a publisher for my game I will be marketing it myself, which may be a factor in this decision. I haven't spoken with a lawyer about this yet -- because it's still a while to go before I complete my first product -- but I probably will consult one eventually. My primary concern is protecting my personal assets in case a bigwig decides that my game somehow damages the trademark of some other product I never heard of.

LLC - Limited Liability Company is your best bet. You get the benefits of being taxed like a partnership, and the liability of a corporation (meaning no personal liability but you get taxed as if you had it). I believe Steve recommends www.bizfilings.com to register your company.

This doesn't matter though as far as getting sued. Nothing will save you from being sued by a large (or any size) company, regardless of how your business is registered. Well, the only thing is they can't touch your personal assets should you lose the case. But that's about it.

I'm not a lawyer, but:

I've been told that even in you're an LLC or Incorporated, if you do things like: Not have a set salary, are the only employee, dont keep accurate records, that they can "Pierce the corporate veil" and come after your personal assets if you're taken to court. So it's not just a matter of having an LLC or Inc. on your name.

I'd talk to a lawyer or an accountant about it.

Spending a few hours with a good corporate attorney is money well spent. Also check out the many books by Nolo Press on this topic.

This is my third start-up (sold the first two) and my first LLC. The first started as an S-Corp, the second as a C-Corp. The only reason to go with a C-Corp is if you want to attract investors (and you can have a few with an LLC, but it's a bit messier).

Thanks for the tips. I will consult a lawyer when the time comes. I've read a couple books on small business that contained some legal structure advice, but the laws are changing so rapidly with LLCs (particularly state-by-state) they weren't that useful.

@alchemist -- did you manage to attract investors for your second company? And does the fact that your third company is not a C Corporation say something about the quality of that experience? :rolleyes:

Heh. We had investors for both the first and second company. In both cases we started with our own money, then a "friends and family" round, and finally a couple rounds of angel (small investor) and in the second case some late venture capital funding. For all of that you definitely need a C-corp.

I'm currently running as an LLC, but I expect that to change at some point. Getting investment money takes an enormous amount of time and energy, but it beats going out of business or being constrained to a very small business that you can't grow easily.

When you get your investment is almost as important as who your investors are. It used to be easier (though not as easy as people like to make out now) to get VC funding with a business plan; now you need that and a strong demo if not a full product. So I'm trying to get this bird off the ground with some smaller self-funded products first, and then I'll switch it over to a C-corp and do the investment dance again.

Oh, one other thing for anyone who's considering this: one of the very first questions you get asked will be "what's your exit strategy?" In other words, "how do I as an investor get my money out of your company?" There are two basic end-points to any company: acquisition (where your investors get paid off in cash of the acquiring company's stock) and IPO, where your investors are able to sell their stock on the open market. The latter is a lot less common than it used to be during the hey-day of the Internet bubble, and probably isn't realistic for most small companies. But there's nothing wrong with being acquired either; that's what happens to most successful small companies.