Are you a pro gamer? Thinking of going pro? This video is for you, my friend. It’s the 1st video in a 5-part series on Esports and the Law, and it explains why and how you should start a company.
[Enhanced Video Transcript:] Hi everyone, it’s Lemmy here and welcome to the first ever installment of eSports and the Law. In this vlog and in subsequent vlogs to come we will be covering a number of different topics related to how the law applies to eSports. So if you’re a professional gamer or you’re thinking about embarking on a career as a professional gamer, well, then stay tuned because this vlog is for you. So, without much further ado, let’s get cracking. Here are five different areas of the law which you might wish to consider before you start your career as a gamer.
1. Start a Company (Corporation, LLC, Etc.). All right, so first up, eSports is just like any other business and you may wish to consider setting up a corporation or another similar type of business form. If you specialize in a multiplayer competition such as CS:GO, Dota, or League of Legends, you may wish to set up a corporation, not only for yourself but also for the team. In most cases established teams already have their own corporation. A corporation is basically just the legal face of a business’s operations and is recognized as a person under the law with its own accompanying rights and legal duties. If you are joining an established eSports team there is little stopping you from negotiating with your team to have your corporation take a stake in the team corporation.
2. Why Start My Own Company? So, why do people create corporations? Well, generally corporations are created because business people want limited liability protection. In other words, business people want the protection of not being personally liable for any acts, debt, contractual obligations, or other liabilities that you may face as you build your business. If there are any disputes or problems the corporation will be on the hook and not yourself as an individual. There might be other reasons why you’d want to set up a corporation, for example, some people believe that by setting up the corporation others may be more inclined to take their businesses more seriously. But there are also financial, accounting, tax, and regulatory reasons why someone would choose to set up a corporation or a similar business entity. So in your research, it might be worth finding out the pros and cons of each. If you’d like to know more, here’s another video specifically on the topic of why people should incorporate.
There are limits to the personal liability protections that you can get from a corporation. Every state in the U.S. will have their own rules on when the law will look beyond the face of the corporation and hold the governing people behind the corporation personally liable. But these are usually reserved for situations where there is fraud or intentional abuse of the corporation for inappropriate purposes. But the bottom line still remains because eSports is a very new industry it is difficult to predict where the potential liabilities and legal pitfalls will come from. So it’s important for you to seriously consider creating a corporation to protect yourself.
3. What Type of Company? Now, there are different types of business forms you can choose from apart from the traditional corporation. And what is available really depends on the state where you choose to set up. To give an example of what you could typically find in a state, there are limited liability companies sometimes called LLCs, there are limited liability partnerships sometimes called LLPs, there are limited partnerships sometimes also called LPs, general partnerships also just called partnerships, and things called B Corporations which are also sometimes called social purpose corporations. Now, it’s not possible to go through in detail all of these different types of entity forms. And so we’ll have to reserve this for another video.
4. Companies within Companies. Lastly, one important point to note, you can choose to set up as many corporations or other business entities as you like and you may wish to set up multiple corporations for different types of businesses that you are running. But a word of warning. If you are setting up multiple corporations or other business entities there are legal financial accounting, tax and regulatory implications, so please think carefully and do your research before you embark on doing things like this. We think the bottom line here is just to keep it simple and just have one corporation or similar business entity for yourself and if necessary one for your team as well.
Anyway, I am knackered and being a European, you know, I’m legally obliged only to work 35 hours a week.