Hey all, More and more indie companies, I''m noticing, are created with the LLC moniker. I''ve already incorporated myself and was planning on releasing commercial games through the incorporation, but I was now wondering what the advantages/disadvantages of doing that vs. creating an LLC to release my software under.. thanks a lot!

LLC''s tend to be easier for "business newbies" to understand:
* Simpler structure
* Simpler management
* Pass-through tax handling
And so on.

If you already have a full corporation and are comfortable with that structure, you should definitely stick with it. Corporations offer advantages beyond LLC, as I''m sure you know.

-David


DavidRM
Samu Games

The Indie Game Development Survival Guide

Thanks man, that eases my worries somewhat.

I had that nagging feeling that LLC proprieters knew something I didn''t..

Um, they might.. Have you ever heard of something called "personal liability" ?! Like if someone sues you, they can take your house, kids, car, and life away to pay the damages. Well an LLC protects that from happening to it''s operators.
AFAIK, no other entity provides such protection, so in your case your personal assets would be fair game in the event of a lawsuit..
Hope you have a good lawyer to ensure everything you do is legal!

Isn''t what you speak of AP also covered under a Corporation? It seems like an LLC is for people who want to avoid the complications of starting a corportation but want the benefits of what LLC apparently offers. I am not speak matter-of-factly; just appears that way.

What do you mean what they "apparently" offer? You''re right an LLC is much easier to setup and manage than a old style corporation. That''s one reason why they made them. Not everyone wants to go thru a bunch of legalities and paperwork just to sell something, and much of it is unnecessary or inapplicable in regards to a small company with maybe only one to five developers.

It''s a matter of taste. Most indi''s or shareware authors are
probably ok with "just" an LLC entity (As many already are..)
FYI, the people who brought you Final Fantasy, SquareSoft, is an L.L.C.. I don''t know about you but I''d say my one-man-company most likely won''t get as big as Square, and even if it did, an LLC would suffice.

I''m not sure about other corporations getting protection from personal liability. I''m sure there are few more things you would have to do to get it from anything other than an LLC. With an LLC, you are sure to be protected. This is why they call it a "Limited Liability" Company, your personal liability is protected.

but, why is it limited liabilty and not no liability.

Ask your lawyer. No seriously. You are never completly without liability no matter what entity you choose. All hell would break loose if people thought they couldn''t be liable for their businesses. Like I say, talk to your lawyer and he will let you in on everything. Or you can look sh1t up yourself online, check the law sites they will tell you about anything you need to know.

There''s no such thing as "no liability." Just look at Enron. If you break the law, you are still going to be liable, even if you''re fully incorporated.

It''s limited liability because you can still be held liable for certain things. This area of the law is still quite ''gray'', in that there is no official ''piercing the corporate veil'' as with a corporation that lawyers use.

So, as an owner of an LLC ( one of the owners lets say ), if you openly commit fraud you can be personally held liable. An LLC will protect the common business person from most anything, except willful unlawful business practices ( even then I bet you''re still pretty good to go ).

Also, it can depend on what state you establish your LLC in. A state who wants LLC business, etc usually has litigation that way more in favor of the business owner(s) than people(s) going after said business in a court of law.

Delaware and Nevada are excellent states to establish an LLC in, because they want your business and they don''t charge any ridiculous fees like some states nor do they require any previous years of tax returns, a sliding cut of your revenue, etc to apply. However, you have to register as a foreign corporation in the state where your business physically is if you''re not residing in that particular state where you establish your LLC ( which is subject to some costs ).

LLC''s suck for getting funding, because of tax issues for potential investors.

Mostly, an LLC is a great thing to start off with because it protects you and gives you a pretty good bit of flexibility in a lot of areas. If you start looking for funding and things of that nature, you''ll most likely make the transition to a corporation of some type. There are some other reasons to switch as well, but I''ll leave that as an exercise to the reader ( AKA I''m too lazy to type them out ).


.zfod