I was wondering what is the difference of selling Iphone games etc. as an individual or setting up a company name and selling under a company name? I mean do I have to pay tax as individual after or before receiving game sales profits? Also if I registered a company and a game or two took off then this option could get Zynga ( for example) possibly buy it whereby an individual would not probably get an offer.
As an individual, it is easy to get setup with Apple to get paid. You will receive your income directly from Apple, and it is up to you to report and pay personal income tax on the amount you earn. As a company, Apple will require more documentation from you to prove you are really a company, which takes longer. They also require you to have a business bank account, not a personal one. You still get paid before-tax dollars and it is still up to you to report your income and pay your corporate income tax. As for being bought out, if you game is that good, nobody will care that much if you are an individual or a company of one person. Either way you have the legal right to sell your intellectual property to another company. One more thing to keep in mind is that it is not possible (last I checked) to transfer one app from one person or company to another. I have heard, however, that it IS possible to transfer ALL your apps to another company, but it takes a long time to happen and requires direct communication with Apple.
Sole Proprietorships And beware one caveat that I don't think is widely publicized enough: Apple no longer accepts Sole Proprietorships for a company account. In the US you pretty much need to be a LLC or Corporation. I don't know what the legal equivalents are in the UK. I personally wish I had learned this before I spent hundreds of dollars and dozens of hours dealing with government agencies to get Falcon Empire set up as a legal Sole Proprietorship, so I thought I'd pass this information along to anyone who stumbles into this thread. The information does exist elsewhere on the web, but isn't spelled out on Apple's site until you send in your business license and have your application revoked.
Besides the technical and financial information mentioned above, it really depends what your goals are. If you want to start a game company, grow, make it easier for people to follow your other projects, as well as receive some tax benefits (if you know how to move things around), then start a company. If you're kind of testing the waters, or want something the store as fast as possible (if you don't have a finished product already this is irrelevant), or don't really have goals of running a company or releasing other products in the same market then do it as an individual. Personally, I think it's easier and more accepted for the media and consumers to follow and become fans of a company than an individual. And once again don't forget about some of the financial benefits of a company, such as having self-funded 401k, tax loopholes, etc. It depends on your state and/or country, but here in Georgia (USA) it's pretty simple to start a company. It's all done online, costs $100, and there are plenty of banks who have a relatively streamlined process of opening a business checking account. And one big thing with a company (LLC, S/C Corporation) is you don't have to worry about being sued and losing your personal finances or property since the the company is separate entity. This isn't something you'd really deal with in game development, but you never know.
Registering as an individual is much easier if you just want to test the waters getting a game onto the App Store. If you're serious and want to show potential customers and reviewers that you're serious then registering as a company is a good idea - it will save changing over to a company later and most importantly let you start to establish your brand right from the start. Creating a Limited company in the UK is really easy and can be done for around £25, but you have certain obligations such as filing annual returns and company accounts, paying corporation tax and paying yourself (through a salary and share dividends). As a company director you will have to do self-assessment tax returns for your personal income too. As stated above, by definition it being a limited liability company only the business finances are at risk if you get sued. Also, you can put costs (such as your Mac, iPhone, iPad, advertising, web hosting fees etc.) on expenses which is a good thing as you only pay corporation tax on the net profit not the gross turnover.
It looks really daunting to launch a company. I mean how the heck do you hire say a programmer costing 70 thousand a year. Thing is I have a really really good product but again the dilemma to find a GOOD programmer even outsource is pretty daunting. As I said I probably need to outsource to get the game going to start with before thinking of hiring a programmer or marketing person. Concerning tax returns I would probably hire an accountant although with a simple game tax return should be pretty simple to do. But on this note if I trade as individual do I have to to tax returns also?
Alright, the curiosity is starting to gnaw at my bones. Before, you were having a discussion about IAP for a game with 20 million users and now you're talking about outsourcing programming duties... what exactly do you do? If this is some kind of get-rich-quick dream of yours then you might wanna open up a little and people can start giving you advice on that instead.
Lets put it another way. IF you were only a working man or would be if there were jobs advertised in your town, then how would you get a million dollar a month game going programmed and launched and hiring some people?
So you just have an idea and you want to pay someone to create it? If so, and you want to contract programmers and artists etc then you need venture capital to pay them to do the work. To get that you'll have to sell your idea to someone with the cash to pay for it all (a venture capitalist), and you'll be giving them most of the profits as they're taking all the risk. This is true no matter how good you think your idea is. Assuming you don't have the capital yourself (and can't interest an investor) your best bet is to either learn to program yourself or get friends to help for free but with a profit-share agreement for when it comes out. Then it only really costs you your spare time.
Not by default like you have to as a Director, although you still would if you were turning over "a million dollars a month" like you seem to believe you would.
Lol, wait till he starts asking again if he needs to localize a word game in different languages. I would advice to not acting like he had a 20mil game under his belt and does not even know what iap are and how to tax his income.
