Hi all We've been working on an MMOG for the last couple years and we're getting near the point where we should be incorporating. Now we just need to decide where. The easy choice would be locally (British Columbia, Canada) although even then we'd have a choice between provincial and federal incorporation. There are a few things to consider: The biggest concern we have is liability, and it would be nice to protect ourselves against silly lawsuits as well as government snooping. That rules out the US right away, and is the mean reason we'd consider not doing it in Canada. On the other hand, we'll probably run the servers here anyway (unless we find some compelling reason not to), and that might make it pointless to be incorporated elsewhere. Then there's tax issues too. Any thoughts? Anyone considered similar problems already?

Best answer is: hire a business/tax lawyer and and accountant and ask them. This stuff is WAAAAAY to complicated and real-life risky to get trustworthy answers from the internets.

-me

Delaware.

PS: I didn't read your post.

Oh, we will ask a lawyer and accountant, definitely.

I just like to do my homework before I talk to any professional, whether they're dentists or lawyers or even mechanics - that habit has saved me from trouble in the past. So I thought I'd try to discuss it here a bit first.

You are both living and doing business in Canada. Yet you want to incorporate in another country since you don't like the policy of your own government or your nearest neighbor.

You'll really want to retain several competent lawyers if you want to become internationally based, and make sure you can afford the cost of international business.

Have you considered exactly how you will have a presence or retain a legal contact within that country? How you'll work out taxes (or follow tax exemption laws) in every country you are involved in? Are you prepared to handle multiple nations' business paperwork? How'll you handle imports/exports and the thousands of international regulations? Have you considered what will do if legal issues occur in that nation? Are you prepared to make mutliple airplane flights and extended visits internationally, stay current on the basics of business law in each country, and even fight or defend lawsuits in that other country you incorporated in?

By far, the only sane place to incorporate an small shop is the place that you currently reside. If the place you are living really doesn't suit you (or your business), you should move.

Yeah generally you have to have a physicality in another country to be considered a "resident" business of that country. Then you have to follow that country's business/labor laws which generally make it hard to not have any native employees. Further, if you make money from that business and you are living in Canada you're going to get double-taxed; both said country and Canada (where you live now) will take their cut of your personal income. International business is going to be much harder than dealing with whatever regulations the US or canada require.

-me

Good points, thanks!

We're not set on incorporating overseas, nor is it even probable, just considering all the options thoroughly since now is the time to do so.

The bottom-line question is whether the savings (in taxes or risk) would justify the hassle. It would be nice to hear personal experiences from somebody who's done it before.

some bouger wrote:
>It would be nice to hear personal experiences from somebody who's done it before.

It would be much nicer to hear professional advice from an expert in the legal aspects of incorporation!

Having a limited liability company (in the UK) does NOT protect you any more against tax or government snooping. [Edit: dividends are now taxable] Providing you *behave yourself* it protects your personal assets from being seized in the event of things going horribly wrong for reasons that you could not have realistically avoided.

It's important to realise that you *have* to do things properly. If it can be proven that you overstep your ground as director of a company (fraud / embezzlement / irresponsible management) plaintiffs can potentially come after you and your personal assets.

The company is basically a registered entity which can independently own things (and be responsible for its taxes) and hold legal responsibility.

Contracts can be issued from the company, and although they're no more or less binding than a personal contract, the organisation and segregation of 'business' from 'personal' assets and activity do impress. The underlying organisation of a company structure also lends a more professional air to your organisation, especially where investors are concerned. You also have the advantage of being able to raise capital by selling shares, but this can be a double edged sword if you want to maintain control of your company throughout.

Psychologically, I found that setting up the company was a 'point of no return'. The investment in time and money to do it (on top of the development work, which let's face it, most of us do as a hobby) made it a very serious thing to do. I certainly wouldn't consider pulling the plug on my project now, not that I would anyway, having worked on it for so long.

We have a very international team working with us. Our contracts very definitely state that we consider our team 'self employed' and therefore responsible for their own tax from income, insurance contributions etc. etc. If you're not actually setting up a studio with local people (or at least people in the same country) you should consider this, as working out various taxes for deduction from income, paying the appropriate revenue services, or even drafting differing contracts for different circumstances can rapidly become a massive pain in the arse. As if running a development team wasn't already.

However, everyone is singing from the same sheet: Seek and take on board professional advice from an accountant regarding the setup of your company, and a good industry lawyer regarding your contracts. Expect the process to take weeks of time, and cost a fair amount - do NOT cut corners by going for the cheapest option, it's just not worth it. Find people you can *happily* work with, you'll be seeing a lot of them.

Good luck, and good hunting.

Thanks for the tips. Like you, we are an international group and everything is done by contract - no employees. I won't even be an employee myself, as my own development company (which is incorporated, and of which I am technically an employee) will hold the stake and contract my services. Hopefully that will minimize the hasslesome employment paperwork.

I guess at the root of my interest in this is this thought - MMOs tend to attract silly lawsuits. "My son played online for 5 days straight and grew purple tentacles. Give me a million dollars to compensate" (ok slightly exaggerated, but unfortunately only slightly).

While I am pretty confident that in Canada these kinds of suits would go nowhere, if we could set up in some jurisdiction where such cases would be immediately laughed out of court, that should at least merit consideration.