We rebranded! We’re now Golden Moose Collective (from the former Golden Moose Studios).
Our first year+ in business, we leveled up in many ways, learning:
- An incredible amount about indie game development,
- Ourselves as developers and
- Ultimately, the cost of doing business in the US.
The Location-Independent Indie Game Studio!
Although Golden Moose Studios was technically based in Silicon Valley, our company only spent 3 months physically in the US before we became location-independent game developers (more commonly known as “digital nomads”).
From Fall 2016 through 2018, we traveled across the Asia Pacific, while testing out game ideas and developing our current projects.
We even employed a few independent contractors between 2016 and 2017. (Like us, many of our contractors also happened to live in other countries.)
During this time period though, we didn’t actually do any business in the US – We didn’t ship a game during that time, which meant we didn’t sell any products or hire any full time employees.
Although our company mostly operated outside the US (and wasn’t doing any business inside the US), we learned (the hard way!) how complicated business taxes can get in the US.
It didn’t seem like a big deal to file taxes, at first…and then it quickly became complicated.
This next section goes into some detail about our particular, complicated tax situation, which may helpful for select developers interested in starting a company in the US (with a foreign partner). It also has information relevant to foreign developers interested in releasing games on a U.S.-based platform (such as Steam or iTunes).
Otherwise, more information about the transition from Golden Moose Studios to Golden Moose Collective continues in the section “Why Close the Studio.”
The Complications of U.S. Business Tax
We happened to start our studio in the most expensive U.S. state for small businesses – California. No matter what – whether you make money or lose money – you pay $800 to the state of California annually (plus other fees). (Other states differ on annual fees.) I admit it felt a little strange to pay that amount since we weren’t selling any products and were hardly in the US during that time period!
Our company taxes were made more complicated by the fact that we had a foreign member, so we hired a company to make sure our taxes were done properly.
Unfortunately, when tax firms only deal with US business tax for US citizens, there are inevitable knowledge gaps about what is required when involving a foreign member, so there were a couple delays that could have been avoided.
Eventually, we learned that we had to get an International Taxpayer Identification Number (ITIN).
The strange part is that we called the IRS before leaving the US to find out if this was something we needed to do before leaving the country, and we were told it wasn’t necessary unless we were opening a company bank account…so I’m not sure what happened there…It would have made our lives significantly easier if we prepared it back when we first looked into it! (It’s also very possible to open a company bank account with only one listed member, so that part wasn’t a big deal since I’m a U.S. resident.)
Here’s the relevant part for all game developers who are not US citizens or permanent residents: If you plan to launch your game on a US platform (such as Steam or iTunes), you need to get an ITIN. Make sure you have time to do this before you plan to launch your game, preferably during a time when you aren’t traveling.
Now that we have the ITIN, taxes and related paperwork have become a whole lot easier, and we’re set to release games on any US platform.
This special number wouldn’t have been a huge deal if we hadn’t been traveling, but to get this number, you either need to submit your passport to the IRS or get a certified copy of your passport. Well, there was no way we were sending a passport anywhere while overseas!
Instead, we found a specialist abroad to first help us figure out how to prepare our taxes without an ITIN, as well as learn how to get an ITIN (without sending a passport abroad!).
There was a lot of hassle, added expense and stress over getting that magical ITIN (mostly because we learned too late that it was something we needed, in addition to being abroad).
We were very lucky that at the time, we happened to be in a location with a correct consulate, with an opening during our limited time window. Otherwise, we would have had the extra expense of changing flight tickets and plans to travel to a big city or capital with a consulate.
The Cost of U.S. Small Business Taxes
It cost well over $2000 to prepare our company taxes that first year, plus the $800 state taxes (plus additional, related fees…for example, your first year in business, there are service/convenience fees associated with paying state tax through another system, as the FTB payment service is only available to companies who have already filed their first year’s taxes).
We also happened to be in Vietnam when filing our taxes and submitting ITIN paperwork (we couldn’t e-file our company taxes because we didn’t have the ITIN!). This meant that we paid an additional $90+ to ship that paperwork in all its glory to the US. (To compare, we recently sent some paperwork to the US from Malaysia. We only spent about $10, which was like a dream! It’s expensive to send paperwork to the U.S. from Vietnam, and it wasn’t something a family member or friend could send from the U.S. because so-called “wet” signatures were required.)
Now that we’re familiar with the US business tax filing process and have the necessary taxpayer numbers, we can do the accounting and tax filing ourselves and even e-file! (Hooray!)
I can’t begin to explain how incredible it felt to e-file this year, after last year’s long series of tax specialist calls/visits, consulates, printing shops, post office runs, etc.
Why Close the Studio?
As we mentioned, the hard part is over! We got the ITIN (even while traveling), and we picked up other skills along the way, such as proper bookkeeping, generating Profit & Loss Statements, etc. This means that, in the future, we wouldn’t need to hire accounting or tax specialists to keep Golden Moose Studios running.
It would cost roughly $1000 a year, give or take, to keep the company in operation, which is doable…We could also move the company to another state to reduce costs (although moving a company can bring about other tax complications)…but there are a few reasons we decided against this:
- Our development goals have changed since we started GMS. We no longer feel like we need a company to make the games we want to make. (More on this in the next section.)
- To be honest, the oh so many complications with taxes left a bad taste in our mouths after that first year. We don’t mind paying taxes, but with all of the issues – from misinformation from the IRS itself, misinformation from tax specialists, and ultimately having to consult with multiple specialists (just to make sure we were doing everything correctly) – it was an eye opening experience into just how complicated it can be to follow business regulations (even when you’re trying hard to do so!).
- Plus, if a specialist gives you incorrect information or you’re unaware of a regulation (or regulation update), costs can really add up. To us, it now makes more sense to wait and start a company when there’s extra capital to hire specialists – specialists with dedicated time to stay on top of new business and tax regulations.
- Staying on top of business regulations and taxes only chips away at development time and capital (especially since we don’t have a real need for a business at this point). We prefer to channel that extra thousand or so into making our games even better!
Why Did We Start Golden Moose Studios?
- To make our dream game, alongside collaborators: Our goals were very different when we started the studio – we were intent on making our dream game – our make or break game – and we wanted to work with others to make that dream happen (contract artists, animators, etc.).
- To protect assets and hopefully improve our chances of working with an external partner: By having a proper company, we could protect company assets, possibly make it easier to reach out to publishers in the future and hire employees when the time came. We have since changed our focus, prototyping a few ideas before settling on our current games, which we plan to ship later this year (if all goes well).
- Before going indie, I’d read about nightmare stories of developers not protecting themselves and becoming involved in legal disputes that resulted in delays of game releases (the most well-known story was Phil Fish but there are plenty of others that haven’t made gaming news).
- To establish a brand: I come from a marketing background, with an MBA in International Management and prior experience as a Marketing Specialist at a game localization company. From a marketing perspective, it makes sense to establish a brand that people can follow and relate to. Campo Santo (the developers of Firewatch) is a a good example of this. I believe it was in this recent Konsoll talk by Jane Ng where she spoke about the success of their branding strategy through merchandising, with some fans even getting tattoos of the company’s brand.
- While I absolutely believe a strong brand is important, you don’t necessarily need a company in order to achieve this. We’re still sharing information under a brand – it’s just called Golden Moose Collective, rather than being housed under an LLC. Solo developers can also become brands themselves, due to their public presence and games’ success.
I highly recommend waiting to start a company until you at least have a solid prototype, so you can build out the rest of your team (if needed) or share it with investors/publishers. Otherwise, there is no real need to start a company (even if you’re a solo developer hiring external artists). (This sentiment has been expressed by other developers, such as Tim Ruswick on his YouTube channel Game Dev Underground.)
By waiting to create your company until you’re well on your way toward building your game, you – hopefully! – will be past some of the growing pains in forging your own path as an independent developer, perhaps adapting your vision or discovering that your first prototype isn’t working out the way you expected it to.
To reiterate, I recommend having something solid and playable before starting a company – you don’t know where that first prototype may take you, and you won’t have to deal with the other learning curves involved in starting a company (taxes, accounting, whatever), on top of making your game.
Making a game is time consuming enough!