In the last article, I covered the most common business structures for solo devs and small studio. I tried to leave my personal opinions and feelings out as much as possible. This post is the opposite post. Here’s what I actually decided for Brainfart Studio, and the reasoning behind it.
Quick disclaimer before any of this. I’m not a lawyer or an accountant. This is what I decided after researching my own situation and thinking through my own goals. Talk to a professional before you make anything official for your own studio.
Where I Started From
Brainfart Studio already covers more than one thing. I run this blog. I have a YouTube channel I (eventually) want to keep building. I’m close to shipping Laser Beast on Steam. And I might sell game dev assets down the line. That’s several separate income streams, all under one name, all public-facing.
Sole proprietor is the default. Technically, that’s what I currently am.
But I already have public output tied to my name. And I’m close to making income from multiple sources. With Laser Beast close to shipping, that will be the initial boundary I need to cross. At that point, I don’t feel like I can treat Brainfart Studio as “no income yet”.
Why I Went With an LLC
An LLC creates a legal separation between me and the business. If the business gets sued or runs into debt, my personal assets, my savings, my car, my house, are generally protected. As a sole proprietor, none of that separation exists. The business and the person are treated as the same thing, and everything I own personally is exposed.
I’m the sole income for my family. I have a wife and three kids depending on that income. Liability protection must be a priority for me. I’m not willing to risk my family’s livelihood on my personal business and game development.
Keeping business and personal finances separate is what makes the protection hold up. I haven’t filed the LLC yet. I’m still in the planning phase. Once it’s formed, the business bank account is the next step before any money moves through it.
Cost played into the decision too. Where I live, forming an LLC is a one-time filing fee with no recurring state fee. Other states charge annually, so this part of the math is different depending on where you’re based. For me, the low ongoing cost meant there wasn’t a strong reason to wait until income justified it.
I’m not filing for an S-Corp election alongside the LLC. I’m nowhere near the profit threshold where that starts making sense (yet!). A single-member LLC is taxed the same way a sole proprietorship would be by default. That’s fine for where I’m at. Taxes weren’t the reason I formed the LLC. The liability protection was.
Why This Fits Where the Studio Is Headed
I’m not planning to stay a one-person operation. The plan is freelancers first on a contract basis, and eventually a small team.
Freelancers are 1099 contractors. I pay them for specific work, they invoice me, and they handle their own taxes on that income. Employees are W-2, which means I’d be withholding income tax from their pay and covering payroll taxes on top of it.
Neither one requires a different entity. A single-member LLC can hire contractors, and later, employees, without converting to anything else. The LLC I formed now is the same one that carries through both of those stages, and through whatever revenue growth happens between them. I’m not setting up something I’ll need to redo later.
What Doesn’t Apply to Me
A multi-member LLC becomes relevant once a co-founder enters the picture. A co-founder holds equity, an actual ownership percentage in the business. That’s different from a contractor or employee getting paid for their work. That’s not part of my plan. Brainfart Studio has one owner, and freelancers or employees don’t change that.
A C-Corp matters once outside investment becomes part of the plan, since it’s built around issuing shares to investors. I’m not looking to raise money that way. I’d rather grow the studio through game sales and wishlists and stay in control of it.
Neither structure solves a problem I actually have right now. The single-member LLC does.
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