Corp, LLC, or Sole?

Happy Bishop Games is getting ready to publish its first game, Triune. However, we need to lay the groundwork for establishing HBG as a business before we publish anything. Or do we? 

Couldn’t we just publish stuff and rake in the money? First of all, this is rpg publishing–it’ll be more like using tweezers for the money. Second, any profts I make are taxable. I might fly under the IRS radar forever, or I might get caught your first year, or the worst–getting caught years later. That’s worse because then the IRS will demand back payment for all those years I avoided paying taxes. No, we will be taking the honorable (and legal) route and establish HBG as a real company. Sort of.

See, after much research, we discovered there’s really three options for the legal status of HBG. They are 1) sole proprietorship, 2) Limited Liability Corporation (LLC), and 3) a real corporation. Let’s start backwards. Forming a real corporation is unnecessary. Yes, you can incorporate under Delaware state laws fairly cheaply. But I don’t have any employees beyond myself and don’t need that level of complexity.

As for an LLC, there is a temptation. The big pro of an LLC is the whole “limited liability” thing. If HBG is sued for some ungodly reason and loses, the enemy couldn’t take away my house. Personal assets are protected, hence “limited liability”. However, it’s costly (In Illinois, it costs $500) and, for our purposes, unnecessary. We are not working with intellectual property outside of our own, and as long as we fulfill our obligations for contracts such as artwork, there’s little to no reason to sue us.

Therefore, Happy Bishop Games will be organized as a sole proprietorship. All this requires is for me to complete a form from our local county and pay five bucks. Done!