Re: Commercial Games - Tax Implications?
@EricY: In short, it really depends on how one chooses to file. Most people doing small business choose to et up their business as a pass-through corporation, where the income passes directly through to the owner(s), in which case it is taxed at the individual rate, and acts like any other income where income-based benefits are concerned. There is also the opportunity of setting up a business entity such as a Chapter C corporation, which pays its own taxes on its own income, meaning that the developers aren't directly impacted by the game proceeds, because the proceeds don't technically belong to them. The disadvantage to this option is that the corporate tax rate is significantly higher than the individual tax rate (assuming the developer isn't inordinately wealthy)—though with the new tax bill that just passed, it looks like the corporate tax rate will be going down considerably. Getting personal income out of a separate taxable entity is also not as straightforward as getting income from a pass-through. So, while I'm certainly not in a position to offer official advice, basically what I discovered was that for someone who is not concerned about their personal income going up unpredictably, setting up some sort of pass-through is the most sensible option; on the other hand, for someone who wants to be able to control how the company's profits impact their own individual income, setting up a Chapter C corporation seems more like the way to go. Other things that can complicate the decision are the number of people involved, the expected income and nature of income versus expenses, and so on. All of these are things we had to consider when deciding how to set up Out of Sight Games.
_______________________________________________ Audiogames-reflector mailing list Audiogames-reflector@sabahattin-gucukoglu.com https://sabahattin-gucukoglu.com/cgi-bin/mailman/listinfo/audiogames-reflector
