A business development toolkit designed for Quebec’s video game studios. It brings together practical insights and reliable resources to help studios understand the key challenges of building and growing a business, and know where to find additional guidance.
The Game Studio Toolkit
1.2 Choosing a Legal Structure
Choosing a Legal Structure
A studio can operate under different legal structures. In the video game industry, three are particularly common when starting a business: sole proprietorship, general partnership, and corporation.
Each creates a different relationship between the people running the studio and the business itself, particularly in terms of liability, ownership, contracts, and administrative obligations.
The first step is to understand which structure best fits the studio’s needs. If incorporation is the preferred option, additional decisions will need to be made regarding how the company is incorporated, who owns it, and its corporate obligations.
Key Takeaways
- Sole proprietorships, general partnerships, and corporations do not provide the same level of separation between the business and the people operating it.
- Incorporation is not automatically necessary when starting a studio. The appropriate structure depends on factors such as the number of people involved, planned activities, risks, and business needs.
- If incorporation is chosen, the next steps involve determining how to incorporate the company and structure its ownership.
Why It Matters
When starting out, a game studio may consist of a solo developer, several co-founders, or a growing team that needs to sign contracts, secure funding, and own assets. These situations do not necessarily require the same legal structure.
The choice of structure affects liability for business obligations, how ownership is organized, and the administrative requirements the studio must meet.
It can also affect access to funding. Certain programs offered by the Canada Media Fund (CMF) and SODEC have specific requirements regarding a company’s incorporation, location in Canada or Quebec, and Canadian or Quebec ownership and control. Reviewing the eligibility criteria of relevant programs early on can help studios avoid unexpected obstacles.
The goal is not to incorporate as quickly as possible, but to choose a legal structure that aligns with the studio’s operations, risks, and long-term objectives.
Ressources
La Guilde Service Partners Who Can Help
Legal and business advisory services that can support studios in choosing a legal structure, incorporating, handling corporate formalities, and preparing business-related documents.
Accounting and financial advisory services that can help studios assess the tax and administrative implications of different business structures and establish a solid financial foundation.
Additional Resources
Government of Quebec | Understanding Different Business Legal Structures
An official starting point for comparing the main legal structures available in Quebec, including sole proprietorships, partnerships, and corporations.
Éducaloi | Choosing the Right Legal Structure for Your Business
An accessible resource explaining the differences between common business structures and the factors to consider before making a decision.
Government of Quebec | Quebec Enterprise Number (NEQ)
An official resource explaining the purpose of the Quebec Enterprise Number (NEQ) and how it is used in business administrative procedures.
Government of Quebec | Understanding Business Registration
Explains business registration requirements and clarifies the distinction between registering a business and incorporating a company.