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Making Apps: To Corp or not to Corp?
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So you have decided to move forward because you have a great game idea, you have a nice visual of it to show others, and you have the finances to support the development of at least one game.

Something you have to decide at this point is if you are going to proceed as an individual developer (meaning you are making games in your name as an individual and collect payments as an individual) or are you going to create a Corporation or LLC (Limited Liability Company).

When you sign up as a developer for Apple or Android, you must sign up as an individual or a business entity. This is because when your app starts to make money, someone or something will have to receive that money (and the IRS always wants their piece of the pie).

 

Individual:

Pros: Easy. No money needed to establish a corp or LLC. You can become a developer faster with less complication.

Cons: You sign up as a developer with your name. This means your name appears as the developer when people download the game. You are operating as an individual. Not to scare you but this means if for some reason someone associated with your games (developer, artist, customer) sues you, you leave yourself open to full liability as an individual. The chances are low that something like that would happen but you never know.

 

Corporation/LLC:

Pros: You look more professional behind a company name. You don't use your personal name as the developer for all to see. If you ever get sued, it is the company that is liable, not you as an individual.

Cons: More complicated. You must establish the corp or LLC before signing up as a developer. You will spend between $600 - $1000 to establish the company depending on where you live and how you choose to establish your business (I used Legalzoom in California). Depending on how you set up the company, you pay taxes on your earnings (once for an LLC or twice with a corp). Also, depending on what state you live in, you may need to pay certain fees or taxes even before your company makes a dime. For me, living in California and having established an LLC, I have had to pay $800 per year as a minimum tax before making a dime on game applications.

 

Conclusion: If I had to do it over, I'd start out as an individual developer not a corp or LLC. Really, the liability is low and the amount of money you have to pay to establish the business and pay taxes and fees before even making a dime make it a very bad deal for a person just starting out.

 

*Please remember that the content on this website and blog is not meant to replace the advice of a professional such as a lawyer and accountant. Please consult a professional for sound legal and business/financial advice.

Making Apps: To Corp or not to Corp?