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Problem #21: The Business of Design
164 Plays30 days ago
This week Tracy and Kristian are joined by Jodi Black, President of Carolina Game Tables and lead editor at Pinnacle Entertainment. We dive into the complex but rewarding world of running your own business (particularly as it applies in the US, since that's what we're familiar with). We talk about the different business entity types from Sole Proprietorships to C-Corps, what might be right for you, and how you can start small and think big. We dive into the benefits that setting up a proper business entity offers, and even touch on the challenge of collecting and paying sales and use taxes for products. This is a dense episode with a lot of information, but it's okay to start small and grow. DISCLAIMER: We are not accountants, lawyers, or tax professionals and none of what's said in this podcast should be considered professional advice. We encourage you to form your own team for this purpose. As your business grows they become invaluable.
Join our discord!: https://discord.gg/Bc9dvuzZYJ
The Han Cluster® Role Playing Game Website: https://hancluster.com
Immaterial Plane: https://immaterialplane.com/
Carolina Game Tables: https://carolinagametables.com/
Small Business Administration: https://www.sba.gov/
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Transcript
Introduction and Hosts
00:00:04
Speaker
Welcome to the Designing Problems RPG Podcast, where we explore RPG development and all the intentional and unintentional problems that we create along the way. I'm Christian Serrano. And I'm Tracy Sizemore. We're your hosts for this Heartstopper. And this week, we're going to talk about problem number 21, the business of design.
Guest Introduction: Jody Black
00:00:44
Speaker
It really is a of pretty big heart stopper, at least for me. um But I'm so grateful, though, that we have our guest for this episode, the wonderful, awesome, amazing Jody Black.
00:00:56
Speaker
She is president of Carolina Game Tables, former COO, but current lead editor at Pinnacle Entertainment Group Incorporated. And for those who have been around for a while might even remember Beautiful Brains Books and Games, an online RPG retailer as well as a pop-up convention retailer.
00:01:15
Speaker
I still have the adventure card, the yeah All That and Brains, I think it was. Yeah, that's fantastic. yeah Yeah, I still have a few those. Yeah. Welcome, Jodi. Thank you so much for being on this episode. I am super excited to have you.
00:01:30
Speaker
Honestly, when Trace and I were looking at this topic, you were the first person I thought of. So, of course, I reached out. and Thank you. yeah all you know, I'm a big fan of the show. um Our Patreon for the Black Edition would not exist without you both having this show. So, i it's it's an honor to be here. I'm honored that you thought of me for this really kind of difficult and tangled subject. yes And I'm here to bring some enlightenment to it, hopefully some humor, ah and and just ultimately to remind people that you can do this.
00:02:04
Speaker
You've read an RPG and you've tackled a technical manual and this is nothing different.
Christian's Business Journey
00:02:09
Speaker
So you can do this. that That makes me feel a little bit better. So so thank you. and You know, the thing is that Christian is like already well- on his way.
00:02:20
Speaker
Like Christians, you've already done the LLC. You've already got, you've already got the EIN. You're already in much further than a lot of the people who are listening to us. That's true. That's true. It's, it's, it's some of the stuff we're going to touch on that I i think gets a little harrowing.
00:02:35
Speaker
um But I think from what, from what I've heard or seen of you guys talking about it, I think it's not that bad actually. So, so yeah, I guess, I guess we should go ahead and get into it then. Yeah. So Jody, do you want to tell us about you before you get into sort of like the basics and what we're going to talk about?
Jody's Business Insights and Offers
00:02:53
Speaker
ah Tell about me. i mean, other than what you've already said, i the main things that I wanted to put out there before I forget about anything else um is that I have wonderful people who work with me and they remind me to say things like Caroline Game Tables has a tax free sale that ends May 1st.
00:03:11
Speaker
That's where we pay the sales tax. And we're going to be talking about sales tax here. So that's a big deal. We can pay the sales tax for you on our tables if they are applicable to your sale. We have a new customer loyalty program.
00:03:24
Speaker
ah and And the other question here that she had for me, we will do ourselves later. um but seeing that ah And just in general, I also have like an invitation to everyone who is listening um After you've heard this, and you probably will still have so many questions, I'm hoping to point you in the right direction so that you can answer the question for yourself.
00:03:47
Speaker
But I also understand sometimes you just want a helping hand, someone that you can ask those questions of. Feel free to at me in the Designing Problems Discord with your questions.
00:03:58
Speaker
If I don't see it, please, Tracy and Christian, you know how to chase me down. Help me to know to answer that because I don't always see everything in Discord. um You can also email me, Jodi at carolinagametables.com, and I will meet with you for free for 30 minutes just to brainstorm anything about um a business setup, what stage you're at, if you should be moving forward for this type of setup or that type of setup, um how you can make connections in this world. Just, you know, i you know, there's a lot that goes into this and
00:04:35
Speaker
For lack of a better word, I've just been through the ringer on a few different pages of it. But also, i' and with each challenge, you realize you can do this. And that's the important part. if that's if i if you come up with nothing else, understand that you can do this. And I'm here to help you understand that.
Business Foundations and Legal Disclaimer
00:04:56
Speaker
So, i you know i've i've run my own business for about 20 years and I have an LLC and that is now encompassing my game work.
00:05:11
Speaker
ah um And I have a couple of DBAs for my LLC because my original name for the LLC was terrible and stupid, which is often what happens. I've got a few DBAs too, and you can have them. They're like candy. You just keep grabbing them. and That's right. That's right. And what might what I mean by DBA is doing business as. And Jody is going to get into all this, but um generally you set up your business. If if you're going to do an LLC or anything other than a sole proprietorship, you have to file it with your secretary of state, with your with the state you're in, and then you file doing business as names with the secretary of state too. Right. Yeah.
00:05:48
Speaker
And so we have a couple of DBAs at Eat Soul Games. I have an LLC. I have an employee identification number, which is basically a tax ID for businesses that's just like your social security number, but it's different.
00:06:02
Speaker
And um these are basic things. But before we get into all that in general, ah Jody, I imagine you'll want to start from a more basic sense like you're just starting out What should somebody who is thinking about putting their game out there and selling it, um either digitally or physically, what should they think about and how how should they maybe progress through the stages?
00:06:26
Speaker
And Jody, I don't mean to cut you off. i just want I do want to say this because it's important. None of this should be taken as legal advice. We are not accountants. We are not lawyers. We are yeah speaking only from our own experience.
00:06:38
Speaker
So please, please, please get a lawyer, get an accountant, you know, get professionals who can, if you have deep questions or you really need to know, you know, deep ins and outs, especially in your state, please and and get an accountant or a lawyer.
00:06:52
Speaker
That was going to be the very first thing I was going to talk about is um My advice given here is based on my experience as an entrepreneur located in North Carolina in the United States. If you're international, I am sorry.
00:07:05
Speaker
I know just enough about some of those places to be dangerous. um I'm not licensed for anything. I'm not an accountant, a lawyer, an insurance agent, or a financial advisor, but I recommend you have all of those people at your disposal.
00:07:19
Speaker
um They're worth the money. They really are. And if you can pay them in beer, even better. But you know um for a few kids if you're just paying like $100 an hour, that seems like a lot, especially if you're looking at your game design budget and you're trying to keep your costs down.
00:07:35
Speaker
But you can spend $100 and get their advice and then you've saved yourself literally thousands. So don't be afraid to call on
Starting a Business: Key Steps
00:07:45
Speaker
them. A lot of them will talk to you without...
00:07:48
Speaker
Having to charge you really. um Before I did my first setup, I did talk to our family accountant. And they're the ones who told me what type of corporation to set up as, where to go to me find the filings. At that time, not everything was online. So I had to like literally paper um file things.
00:08:11
Speaker
and It's like, God, I'm old. um So there was, there's a lot of advice that you can get out there for free these days that are online and we can Put some links to things like in the show notes or on the discord um with the small business administration and that sort of thing.
00:08:27
Speaker
The trick is basically just start looking into it. So um so I guess where to start from is to assemble your team and your tools. You are going to need an accountant bar none.
00:08:41
Speaker
You're going to need an accountant. Even if all you're doing is taking all of these expenses in your own account, is that's called a sole proprietorship, you don't need to file anything to do that. and um But you still want to talk to your accountant when you file your taxes. so Let's say you just want to set up a test product on itch.io or set up a product on drive-thru like through the swag program for Savage Worlds Adventurers Guild.
Testing Business Ideas
00:09:12
Speaker
You're just trying it out, right? You've just got a cool idea. you want to share with the world. You're not sure if you're ready to be a real game designer, although that's the card I carry. I've got a game designer card and it's the one I made for myself like we all did.
00:09:25
Speaker
because we make our own rules. um If you want to do that, that is the first thing that you do is just plan to talk to an accountant when you file your taxes at the end of the year.
00:09:37
Speaker
And you don't need to set anything else up. You're going to use your personal social so social security number as your tax ID, um track all of your receipts and all of your income.
00:09:49
Speaker
This is going to be reported as small business income on your personal taxes. And if you've been W-2 employee your entire life, you the company you've been working for has been taking the taxes is out of your paycheck every week.
00:10:04
Speaker
And they've also paid part of the taxes for you. So you've paid about seven and a half percent of your taxes, of your income in taxes. They've matched that.
00:10:15
Speaker
So you want to save about 20 percent of all of your
Understanding Business Structures
00:10:19
Speaker
income. to pay the taxes on all of this later. That's the same thing for if you're a freelancer, right? If you've got paid $100, you want to save $20 of that to be able to pay your taxes on that $100 at the end of the year.
00:10:35
Speaker
um This income is taxed, but it also adds to your social security earnings if you're counting on that for your retirement. So it's not all bad, right? So there's there's different things to consider there.
00:10:47
Speaker
um as a sole proprietor. So that is what that fancy term is called. Sole proprietor is I'm just testing it out. Yeah. It basically means I'm, I'm, so I'm going to do it and here we go.
00:11:01
Speaker
Right. That's right. There's a couple of things. There's just a couple of extra little things to do. Right. yeah And that's, that's usually a scenario where it's just you, right? Like you don't have a partner, you don't have, you know, or whatever, It's just, you don't have an official stakeholder in your, in your income and in, in your company, right? It's just you.
00:11:21
Speaker
Yeah. Then you get into partnerships and there can be LLC partnerships or, or, or S corps stuff like that. Right. I'm sure we're going to get into. Yeah. Then, then you've got an, let's say like partnership is the next one up and that is like a law firm. I really never heard of that kind of sort of equal footing partnership type deal in the TTRPG world where it's like a law firm.
00:11:46
Speaker
Um, Even on an equal footing, it's not exactly one person is the designated primary and everybody else is kind of secondary. So that does, i can't, I can see it working for a TTRPG group of designers.
00:11:59
Speaker
um Or say you've got like an art director and a main designer or somebody else like that. It could work, but I wouldn't know as much about that. Yeah. ah The next step up is the LLC.
00:12:12
Speaker
That's what you guys are both familiar with already. But for everybody who's listening, ah you have decided to create a corporation, a limited liability corporation. You have filed the tax ID papers.
00:12:25
Speaker
You start with your secretary of state. You look there. You Then from there, you will file for your employer identification number, your EIN. That's like your social security number, but it identifies your ah you're business corporation, basically.
00:12:42
Speaker
um Once you have your business title, that's when you apply for your DBA. You're doing business ads. So, for example, my company that I started in 2009 is called Beautiful Brains Incorporated.
00:12:57
Speaker
And then I had a DBA for Beautiful Brains Books and Games, which I ran the website from and and sold the books from. And then in 2015, when we got the idea for Carolina Game Tables,
00:13:12
Speaker
That's when we did a DBA for Carolina Game Tables. So here's the kicker, you guys. and this is why this is why I really get so passionate about building these businesses for people when they're saying, well, I can continue doing the sole proprietor thing. Yes, you can.
00:13:30
Speaker
But when you have the protection of a corporation and you've started building this business, Like I had no idea in 2009 that I was going to go on to do Carolina game tables. There was no hint of that in my teaching whatsoever. could never have hinted at that. 2009 is when I incorporated my LLC and I had no idea I was going to be writing games at that point.
00:13:53
Speaker
Right. That's fantastic. oh That's so exciting. So by the time we came to 2015, because my business had been its own legal entity for so long,
00:14:05
Speaker
we were eligible for things like small business loans. We had a lot more available to us like credit cards that honestly, I got credit cards in my daughter's names. They weren't even in high school yet. And they got credit cards for the business so that when I sent them out to go get us lunch from the booth, they could do that, you know? So, so there's this great flexibility that you can have when you have your business and And I mean, of course, you need to trust your kids with the credit card. yeah
00:14:38
Speaker
But I didn't have to worry about feeding them. And I could let them do things like, oh, I need to go ship this package at the post office for our company. You've got your own credit card. You don't have to borrow mine.
00:14:50
Speaker
we aren't having to, you know. manage anything like this is your own part of the business and uh and that's there's so much more flexibility because of that and it's guess how much it cost me to file that dba for carolina collect game tables it cost me 15 15 dollars right and i have to renew it every five years i think well Right. I mean, it's like, that's just so cheap when you think about it.
00:15:18
Speaker
um So when you, I don't know how it is in Arizona, but in North Carolina, the only place that I really needed to file that is with our county courthouse.
00:15:30
Speaker
Interesting. That's it. It's only in the county area. Yeah, I have to file it with the Secretary of State. Yeah, and then then you' then you solidify it, basically, it you know register it with the Secretary of State. So that's only for our state.
00:15:45
Speaker
This means that, yes, technically somebody else could create a Carolina game tables in, I don't know, Texas or Idaho, but it wouldn't make much sense for them to. I've already got the domain. Like, sure, whatever, whatever you want.
00:15:57
Speaker
Yeah. but That's where the DBA comes from. And that's that's how my corporate structure is. I don't know. I've gotten up. Sorry, I've nerded out about this. No, right. But I want to say also, if you know in this you know again, for for people out there, there are various levels here, right? Some of them have already run Kickstarters as sole proprietors. Some of them have LLC companies. Some of them are looking to...
00:16:21
Speaker
see what they need to do. And we'll get into a little bit of the advantages of having a company in a second. But I do want to say, establishing the LLC, I did it through an account. So I didn't file the the the the paperwork myself.
00:16:36
Speaker
I paid and my accountant to do it for me. And that just, that just, it was a little bit of an ease of the process to do it. And and it was, it was more than $15. I forget what it was, a hundred dollars or something, 150. I don't remember what he charged me to do it, but it was reasonable.
00:16:50
Speaker
Like this, once you've filed it, once you've got it, it's there for 99 years or something crazy like that. And, um and they also handled the, you have to put an ad in the paper.
00:17:02
Speaker
at least in Arizona. That's definitely an Arizona thing. yeah Declare that you've that you've opened up an LLC. like So they did that for me as well. right So I just wanted to say that ah before we go too too much further, it's it's the DBA is cheap, but establishing the LLC is a little bit more involved.
00:17:21
Speaker
Yeah. Yeah. think they I can't remember if it was 100 200 for us. That's true. And there are ongoing reporting requirements. So for the S Corp that I have, there are two types of corporations. There's the C Corp and the S Corp.
00:17:36
Speaker
And I don't know what they are officially are standing for or what they officially stood for. But in my head, they're small corporations and corporate corporations. And the corporate corporations are the ones that are traded on Wall Street. So I don't think anybody listening is ever going to the file as a C Corp.
00:17:53
Speaker
Not worth it. Oh, I wouldn't. it's I mean, maybe, you know, if you're huge. Never say never. You have articles of incorporation and bylaws you've got to make and this whole thing that goes along with C-Corps that really is a pain in the butt. So don't do it unless you really have to.
00:18:10
Speaker
And again, talk to your advisors, but ah the S-Corp was a lot less work.
S-Corp vs LLC: Tax and Protection
00:18:17
Speaker
And I file an annual report every year yeah that is literally just an online form where I say, yep, everything is the same. We're done here. It's free, you know, for me to make that annual report filing these days because it's online. It used to be a filing report, you know, like a fee, but. yeah Now that it's online, they they do it all for free. So there's not that much that's involved there, but there are some like annual fees that you have to pay like a franchise tax and that kind of thing. So why, what's the difference then between limited liability
00:18:49
Speaker
and the S-Corp. And those are the only two that I'll really pay attention to. So both of them offer you protection as a business and protect your personal assets. That is the key. That is why you set it up as a corporation.
00:19:02
Speaker
For that reason, I recommend that if you're going to do anything crowdfunding, that, you know, you can have the best of intentions, but please get yourself a corporation to kind of put that that barrier, that wall of insulation between yourself.
00:19:18
Speaker
And the public. Who knows how it's going to go wrong, but even better, how it's going to go right. yeah If youre you come up with the next big problem.
00:19:30
Speaker
Game of Thrones idea, if Han Cluster becomes a movie series and Netflix and Hulu comes after you and you're going to be so famous, Tracy, you're to want that that kind of separation too because all of that money is going to go through the corporation and be taxed separately.
00:19:53
Speaker
yeah Then you can hire managers to manage things for you. um At a certain level at the S-corp side, then you're not passing through those earnings like you do with a limited liability. Yeah, right.
Business Longevity and Ownership Transition
00:20:07
Speaker
Right. So that's one of the key differences here.
00:20:10
Speaker
Limited liability is limited literally limited. You're still being paid as an individual and then you're being taxed on the individual side, too As an S Corp, you're still paying yourself as an individual. You can be taxed on the on the individual side.
00:20:26
Speaker
But usually what you do is you get to the point where you can say, um hey, i'm I'm a big enough business owner and I don't have to put in as much time devoted to running my own business that you don't need to be charging me any taxes at all.
00:20:43
Speaker
And if you if that sounds like magic, that These S Corps are paying zero ta dollars in taxes. It is. And I'm not big enough for that yet, but but I'm getting there. Right. So that's the goal is don't pay anything in taxes and um and also being able to transfer the assets to someone else.
00:21:04
Speaker
You can sell this business and retire. No, that's limited liability or corp. um And you can have people inherited from you.
00:21:15
Speaker
So if if Clinton, I kick the bucket, my kids can inherit this place from us. yeah So, you know, these are the things that you can't do if you're a sole proprietor. So that's why if there's a crowdfunding campaign involved, not that I've actually seen anybody, you know, pass away during fulfillment, not able to fulfill that.
00:21:35
Speaker
It's just a matter of time, right? Because there are so many crowdfunding campaigns out there. sure um And I would hate to see that happen for anybody's sakes. but But also just because you want your stuff, you know, and everybody wants it. having that ability to transfer those ah that yeah the ownership of the business and the assets that business owns to someone else is a big deal.
00:22:00
Speaker
It is a big deal, especially when you're building brand and you're building all that stuff that you're trying to to make valuable. Right. And if you do that as a sole proprietor, you have much less option, much fewer options there.
00:22:13
Speaker
Um, and you, and it's, it's often better if you, if you get yourself of company so that you can separate yourself from that IP or that, that ownerers Yeah, and you can do it at any
Transitioning Business Structures
00:22:25
Speaker
time. You can run your sole proprietorship until you get to the point where you feel like, oh gosh, you know what?
00:22:32
Speaker
We're kind of big now, or at least this is getting a little bit too complicated. I've got too many um receipts that are specifically for my business, and I'd rather those go through a different company.
00:22:44
Speaker
Or a different checking account, just so it's easier for me to you know keep track of it. I mean, if you're opening up a different checking account for your business, then you're pretty much there. You might as well create the corporation. Yeah.
00:22:56
Speaker
I certainly have separate checking account. I did it when I built the LSE. Yeah. Same here. And that's, we mentioned like yeah EIN earlier and that like that allows you to, you know, be able to create those separate checking accounts and whatnot.
00:23:09
Speaker
um You mentioned Jody credit cards, right? Getting credit cards, you know, business cards and and whatnot. um And I'm kind of curious, like when you, when, when, when you set up, cause we have credit cards, we don't use them.
00:23:22
Speaker
They just kind of came with the accounts and yeah. So i'm I'm curious, like when you, when you charge things to the, to the car, you're paying that out of the business account, right? Like, absolutely. Right. yeah Yeah. so so there's, so those, for me, I really liked the clean separation of finances, you know, like everything business related is, isnt is in that business account.
00:23:45
Speaker
It's under the LLC, all that, right. That, that to me just gives me comfort. yeah Yes. So, yeah, Yeah. And with the credit credit cards, it's the same reason why you're using credit cards for your personal account.
00:23:57
Speaker
um You get access to rewards, right? If I'm putting the Gen Con booth for $10,000 on my credit card, those are some serious rewards. Like I'm not going to put take that directly out of my checking account for the business.
00:24:10
Speaker
You know, that's it's better to get the points for that sort of thing. I've got the money in the account. That's the checking account. But you don't want to give that number out to everybody. Right. So my experience is that the the credit cards for a business, if your business is
Financial Management and Caution
00:24:25
Speaker
applying for it, is the standard that you have to meet is much more rigorous. Right.
00:24:32
Speaker
than personal credit cards are. I do not have a credit card for my business. I have a credit card that's in my name that I use for my business, but I don't have... yeah my My Eats Old Games does not have its own credit card because when I applied for it, I was too young of a business to have enough records to satisfy them.
00:24:57
Speaker
Right. But oddly I could apply for a personal credit card with with no questions asked. Right. It was, it was of one of those strange things. I'm like, okay, fine. I'm going to get my Amex card in my name.
00:25:10
Speaker
I will use it only for business expenses. And they're there. That's how I do it because I couldn't do, that maybe I could do it now because I've been in business for 20 years, but um I feel no need to do it now.
00:25:23
Speaker
But it's just one of those weird, there's a difference there. Jodi, do you have any more insight on that? um I will say that in this current climate, I would watch out for, um and I don't want to scare anybody, but there are people who trying to take advantage of the um of the business climate. So watch out for things that are too good to be true.
00:25:46
Speaker
I have seen some business loans that look great. um But they are personal guaranteed. so you've got to really watch the fine print. This is another reason why you have a financial advisor that you can send these you know documents through before you sign anything. Like you're talking about applying for a credit card and do you get those um pieces of paper that are the terms of the credit card. I don't know when the last time was that you actually read the terms of your credit card.
00:26:15
Speaker
But that's something that you probably would want to do for your company. Yeah. Yeah. yeah Credit card, maybe not. but and i wouldn't I would expect that to not have as many issues. But for the loans that are for business.
00:26:29
Speaker
Yeah. If it's a business loan that is asking you to personally guarantee it, those terms are super scary. That's something that a friend shared with me.
00:26:41
Speaker
I mean, the way that it was worded, i if your business, they if the business defaulted on the loan and however they wanted to phrase that for what they thought was defaulting on the loan, it doesn't necessarily mean you didn't make the payment.
00:26:56
Speaker
Right. and It just meant that they don't like how you're running your business. Now they think they can call in that loan. But they're not going to come to your business. They're not going to try to sell off your business assets. Let's say you've got a thousand copies of your book in stock and do you want to try to pay off the loan to be able to, you know, by selling off the book. Right. Well, that would be the bank's problem. Right. Because they're they're the ones who had the loan. No, you personally guaranteed this stock. So now they are going to come after you personally, including gear ah garnishing your wages and future jobs if need be.
00:27:31
Speaker
That's super scary. Yeah, it really sort of completely eliminates the entire reason you did the LLC in the first place. Yes, yes. Exactly, on the nose. Like, that's the whole point of the of keeping your personal assets separate from the banking assets or from the business assets. Yes, right.
00:27:49
Speaker
Yeah, it's, it's fascinating. It's also devious. And I guess I kind of have to be a little hats off to them and like, oh my gosh, can they get away with this? But no, now I know what to do for my next game.
00:28:02
Speaker
I've never taken out a business loan i've yeah i've and ah because I never, I've never had to. And Cluster is the same way. i have no plans to take out a business loan, partly because I've,
00:28:14
Speaker
I've built up enough capital to be able to do what I need to do first and then use crowdfunding, hopefully to get me the rest of the way. That's what crowdfunding is for. Right. yeah and So that's, that's, that's the whole plan. And that's, that can be hard for people who want to do, who want, who are, whose ambitions are high, but capital is low.
00:28:35
Speaker
Right. And that's a whole nother discussion, but it's, it's a fascinating one. is And it's called bootstrapping, you know, when you are pulling yourself up by your bootstraps and that you are going to be self funding your business instead of trying to pull out a loan or anything like that or personally guaranteeing it or anything like that.
00:28:55
Speaker
It's still all capital that you are investing into your own business. And again, This is where you want the accountant to keep track of how much money you have invested into your business because that's all money that the business can then pay back to you without paying taxes on it usually. Yes.
00:29:12
Speaker
Over time. So if over time you've put in like $10,000 into your business, well, then the first $10,000 that it pays you back are usually without tax.
00:29:24
Speaker
So, yeah. Or you've put the investment in and you don't pay money on that investment now. You pay it later when you get paid for it. Right. And that that's a way that's a way to go too.
00:29:36
Speaker
But um what are some of the advantages of having these businesses, Jody? Like one of the things that that I know is that even with an LLC, there is more flexibility with how you deal with expenses than with sole proprietorships.
00:29:54
Speaker
Do you have more insight on that?
Expense Management and Tax Benefits
00:29:56
Speaker
I do. And so this is one of the things that when I do panels at conventions about businesses, um especially for the game industry um as business, oh, my gosh, you are going to be so yeah at most everybody walks out of there and says, I'm going to start a business today because I get to write off my hobby.
00:30:20
Speaker
You do. You genuinely do. Especially if if you're doing that as a business. You absolutely can. You absolutely can. And you have to like think big. like ah you You probably would immediately think of um the tools that you need for the trade, right?
00:30:39
Speaker
Like maybe you're buying QuickBooks to handle your bookkeeping, right? So of course you're going to write that off. But also think about, oh, the role-playing game books that you bought so that you can keep current with the standards of role-playing game books.
00:30:54
Speaker
Yep, that' that that's the conventions you go to. um All of the expenses tied to that convention, the flight there or in transportation, the food that you fed yourself, um any taxis or tips or tolls that you've paid along the way. There's a certain tax designation for just the crowd share rides and tolls and parking fees.
00:31:24
Speaker
So you need to keep all these things separated, and that's why you want to track them either with – pieces of paper and, you know, like your receipts in an envelope as like a bare minimum or, you know, an Excel sheet, a Google sheet, or using a tracking software thing like QuickBooks online. yeah But again, it just depends on how many of those you've got and the total number of receipts, right?
00:31:48
Speaker
If you've only got five receipts, then it gets easier to track than if you've got 500. So, but gosh, anything else, your streaming services. Yeah. Do you digitally capture your, your receipts? Like, is that an adult?
00:32:01
Speaker
yeah mental No. I mean, if it's a really crucial one, I do, but yeah yeah, I just, I like that because then I don't have to worry about the piece of paper getting lost or or whatever. Um, all gets a ah a lot hairier with a sole proprietorship where if you have a business,
00:32:19
Speaker
you can much more clearly delineate these are expenses. These are, these are yes not, deductions is the wrong word because a, in a business environment, when you've got the company,
00:32:31
Speaker
their expenses. And they start to do you take those out before you start to get taxed on them. And that is different than personal taxes. right And again, we're not professionals, but it is one of those things that that's good to be aware of when you start actually making money and starting to figure out, okay, I want to move from sole proprietor to ah an actual corporation.
00:32:56
Speaker
And um so, yeah, that's just something to think about. The other thing, of course, is that taxes, doing taxes are going to be more of a headache and more expensive because i because I'm not stupid, pay an accountant to do my business taxes for me because it's crazy complicated and stupid.
00:33:16
Speaker
And so it costs more to do the taxes, but you're going to save more, especially if you've got expenses that are associated with the stuff that you're doing and you're actually engaging in this business.
00:33:26
Speaker
If you're not, then it's not a good idea to have the business. Right. But anyway, I'll let you out. Jody, you talk because you're more of an expert. Well, I mean, I was just going to yeah, you do have to make the money before you can really spend it. yeah Yes. You have to make money. You can't just operate at a loss the whole time. And joe Jody has stuff to say about this, too.
00:33:47
Speaker
Oh, well, as far as operating at a loss, I say that I would recommend that you can operate at a loss for about three years. But then after that point, you want to show a net positive. It does not have to be a huge net positive.
00:34:01
Speaker
And some would even advocate that you want to be as close to zero as possible so that you are paying yourself the full amount of money that you can. And that you are using your money wisely to invest back into your business. ye yeah But um and then when you are looking also, this is another side tangent, right?
00:34:22
Speaker
So when do you know, like, when do I know is it okay for me to quit my day job? And work this company. That's hard, right? Because you're probably looking at how much money you get paid to do x y and Z, whatever it is, and then how much it costs for you to live your life.
00:34:42
Speaker
But they have to remember there are some expenses that you can probably be writing off that are expenses for your business that you're also going to need to pay for as a company, too, as you know, as part of your usual lit living arrangements.
00:34:58
Speaker
So, for example, Internet service. Yes. If you are working out of your home and and actually for me, i get to say that my Internet at my home and my business, because I have a physical location for our business as well as our house.
00:35:15
Speaker
All of that, because we're constantly online yeah um and we're working as much at home as we are in our business and our mobile Internet as well, because we're always on the road.
00:35:26
Speaker
yeah All of that is a business expense. So you don't actually need to pay yourself as much as you think you do, because you're able to take some of those businesses for your business.
00:35:39
Speaker
I don't know what the proper term is. I'm doing the medical term. Activities of daily living is the first thing came to my mind. um But for what it costs to live your life are things that your business can pay for you.
00:35:51
Speaker
And that reduces the amount of income that you need to pay yourself. So, yeah, you're going to look super poor on paper, but you um get to have a greater variety of life.
00:36:03
Speaker
I guess that's the best way to put it. don't know. It's deceptive because it seems like it's more expensive. It seems like, oh my gosh, I've got to pay for to get my LLC. I've got to pay for a DBA. I've got to pay an accountant $1,000 a year to do my taxes or whatever it's going to cost you, right?
00:36:22
Speaker
But there's real tangible benefits that come throughout the year like Jody was talking about.
00:36:33
Speaker
you know Being able to expense internet or being able to expense your cell phones or stuff like that. where the And again, this is all talk to your accountant stuff, but um that's the general, that's how businesses work.
00:36:46
Speaker
yeah This is the world we live in. I'm definitely not taking advantage of of you know those kinds of things, like you know doing the write-offs. Now, I also understand like write-offs, it's not like it's 100% write-off, right? it's It's really just a percentage of a write-off. So people who have the wrong impression sometimes. We're like, oh, I can get a free Mac Mini or whatever.
00:37:05
Speaker
but that's no not it's not how it works. And again, you have to make money with that business in order to use those as expenses. So you can't just have an LLC. And then have W-2 form from your employer and your LLC is not making any money and then pay pay your cell phone with your LLC because you don't have any money to pay for it with.
00:37:27
Speaker
Right. that gets You can't do that. But if you're making money with your business, you absolutely can do that. Yeah. You can do that. And the thing is you have to make enough. Like you have to have enough of a steady income for your business to be able to do that. Yes. Yeah. So, yeah.
00:37:43
Speaker
Yeah. Yeah. And like and we were talking about the credit cards earlier and the business card, um our family is intimately involved in everything that we're doing. So ourselves, our daughters are working for us.
00:37:56
Speaker
I've already mentioned they have their own business credit cards for the business. um If we have a meal out, And we're talking business, which honestly, we do that a lot. So at the end of the meal, we kind of have to stop and we go, well, did we talk it out enough business that this is a business expense? Is this a business meal yeah or is this a family meal? So it was like, which credit card are we pulling out for this? Exactly. And it's a legit discussion too. and But it's an option. it's so that's, I'd say for anybody who's listening to this main takeaway,
00:38:30
Speaker
You have so many more options when you own your own business. You do. And that is why you have greater opportunities for wealth. And I'll just put it that way. Well, because this is what leads to generational wealth.
00:38:45
Speaker
This is how you get the opportunity to buy land and to ah spend more time with your kids and have your own schedules. And yeah. You know, just in general, taking that risk, that has payoffs.
00:38:59
Speaker
So, yes, it's scary. It's all going to be scary. Yes. But you can do it. I'm in the middle of terror right now. Right now, as we speak, terror. You can do it, Tracy. Crowdfunding for Han Cluster starts in less than a week and or a week, about a week from now.
00:39:18
Speaker
And it's it's a terrifying time. and And really, I was talking to them before we started Christian and Jody of like, I've assumed a certain amount of risk and I have to follow through on it.
00:39:33
Speaker
There's no way back. If I fail, I fail. That's the way it's going to be. I fail, I fail. But if i if I don't, I have the potential to actually make some money.
00:39:46
Speaker
And that's that's a risky proposition for somebody who is sitting there with a wife and kids and trying to figure out whether they should do this or not. You know what I mean? It's it's yeah really, really hard to make that decision. yeah And somehow I made it you know, three, four years ago, and now I'm reaping that I've i've got to follow through. kind through it's It's scary.
00:40:11
Speaker
It really is scary. Yeah, it's scary, but you're going to be, at them I'm going to say you're going to be just fine. um So here's, let's, let's go ahead and do like a worst case scenario here, Tracy. Just let's just have a little mental exercise here.
00:40:25
Speaker
Everything bombs. You personally are still going to be alive. And you're going to have friends who support you and love you and think that your product is great.
00:40:36
Speaker
And, and I think you're going to be okay. So to try to keep that in perspective too. yeah Um, There's other ways. If it completely bombs, yeah then I retool, go to Kickstarter instead, do a digital only thing. I've got lots of options
Crowdfunding Challenges and Lessons
00:40:54
Speaker
there. and I just have to make the decision to to stop it before it goes to too bad for me. Either to cancel the backer kit or whatever. That's the worst case scenario. I don't think that's going to happen.
00:41:06
Speaker
No, I don't think that'll happen either. And I've had quote unquote failed Kickstarters, right? so So we did a Kickstarter for a game cabinet um table where you could actually attach, and this was designed for like apartments, right?
00:41:21
Speaker
So you could have a cabinet that you could store your games in, and then you could actually have a part of the cabinet that converted into a game table. It was beautiful too. And it's a super cool thing. I mean, I have one because we made the the prototype, but kept that.
00:41:36
Speaker
um and it it did not fund let's just put it that way it did not fund and it was terrifying and it was agonizing to watch this and to keep putting so much information out there and keep anyways you got you get the drill like we had more than a thousand people sign up for our newsletter saying yes we want to know about this when it launches and then crickets not even two backers like Like, what do you do? you cancel.
00:42:04
Speaker
That's what happens. You cancel and you realize that we're not putting any more money into that design. right that's and And I get a really cool game cabinet that nobody else has. This is a one of a kind thing.
00:42:17
Speaker
you know like I feel the bigger risk with with crowdfunding is you do succeed, right? But then things kind of go awry after fact. Yeah, that's the worst case scenario. That's the worst case. That is the real worst case scenario. Canceling is not the worst case scenario. Right, right. The worst case scenario is you promise or promise too much and can't deliver.
00:42:38
Speaker
I've seen that. I've seen that I've seen it too. And it's horrible. It's horrible when that happens. Yeah. And that is, that's the scariest thing. And you have to be smart enough to say, okay, I'm going to, if I can't do this, even if I've met the stated goal, if I can't do it, I have to cancel.
00:42:56
Speaker
yeah It will, it will create more goodwill than if i tried to do it and fail. Oh, it's the worst case scenario. So the two places that I see that um not working out for people, um especially in the game industry, and you what you already know about people who might have added on like an extra book, say, for example, um but shipping, if you ship things in multiple waves,
00:43:23
Speaker
you are taking a bath and all that shipping money. Don't, yeah you're only going to ship once. That's my best recommendation to you. Also don't absorb the money for the shipping. um Make, you know, the backers pay for that because shipping costs will change.
00:43:38
Speaker
Shipping prices will only go up, you know, so that I know that, you know, all this Tracy, you're going to be collecting shipping separately from the pledge. So yeah. So that's a thing. um And I know one other thing that you and I had talked about that you're nervous about,
00:43:52
Speaker
It's handling the sales tax. So let's talk about that.
Handling Sales Tax
00:43:57
Speaker
It's all new to me because I've not sold physical products. All my company has been consultation or digital deliveries of stuff.
00:44:06
Speaker
So sales of goods and intellectual property, you know, like management type stuff, That is so much easier because it does not deal with the sales taxes quite as much. um And it's sales as services, I guess you could say. There's different there's different sales taxes for those.
00:44:23
Speaker
um And it all does depend on your state. Again, you need to know about what's right for your state. Look at the Secretary of State. But once you have your your business corporation and you're ready to start doing sales, especially sales of anything physical product-wise,
00:44:41
Speaker
you will need to apply for your sales and to use license. And then with that number, you will start collecting sales tax and filing it for your state. If you are selling things across state lines, then you need to know if you've established a sales nexus in that area.
00:44:58
Speaker
um Typically, the sales nexus is defined by you physically, your feet are on the ground in that location, handing the product to somebody else. That's gotten a lot blurred over the years because now we can ship things so much easier. There's e-commerce, right?
00:45:17
Speaker
There's, of course, now there's some states that are declaring, if you sell a digital product, and especially for international, actually for the EU, if you are selling a digital product to their area, then they want you to pay taxes on that too.
00:45:32
Speaker
right So it gets very confusing. Right. Yeah, in Arizona, they've got thresholds for how much you sell that determines whether you're a nexus or not. So if you reach a certain threshold of sales, then you no matter where you are physically, you've now got a nexus in Arizona.
00:45:51
Speaker
you know Yeah. and ah And if you decide to go to another state for a convention, say, and do a show and do sales. So um I'll do Tennessee as a good example, just because it's next to us. so ah We love going to a convention in Tennessee called Cahannoga in Chattanooga.
00:46:10
Speaker
Great show. We have a lot of fun there. And also their sales tax is so easy. So whenever we show up on site, they hand us a form. We're only responsible for the sales that we conduct on site while we're there.
00:46:23
Speaker
We actually pay them at the end of the con and we're done. They don't chase you at all. Tennessee is lovely. Thank you, Tennessee. On the other end of the extreme, we have Texas.
00:46:35
Speaker
If you ever set foot in Texas and make a sale, you're going to be paying Texas for the rest of your life. Just plan on it. Texas will come after you for your, for their so tale sales tax dollars.
00:46:46
Speaker
That's how they operate. And you just better not mess with them. So this is that a case of like you, let's say you go to a con in Texas, you sell physical product. Okay. Now you got to deal with the sales tax there.
00:46:58
Speaker
But if you sell digitally to somebody in Texas going forward, do they regard you as having a foot in Texas going, you know, like indefinitely? Is that, is that what's happening there?
00:47:09
Speaker
Yeah. i don't know about the digital sales. I would, I cannot speak to that at all. I only know about physical sales. Um, and that's because I'm really only handling my, um, Carolina game table sales tax.
00:47:20
Speaker
right So I'm not working with Pinnacles, you know, sales tax stuff at all. yeah I don't want to talk about that at all, but, um, but just find an accountant. Yeah. This is what accountants are for. yeah um But yeah, for, for Texas, it is, ah to this, to the level of their street address.
00:47:39
Speaker
So if you have shipped a product to their area, even though you weren't the one to physically deliver it, like I'm not handing somebody a game table. Those are heavy. Um, but if, but if I'm shipping it later, then yes, I'd still need to pay taxes on it.
00:47:55
Speaker
Uh, no matter what time of year it ships. yeah So and the same would be true for a book. Um, and, There is a term of period even after having establishing that having after having established that sales nexus.
00:48:09
Speaker
I believe it's five years at least. Right. Well, you know, it's that that's accountant stuff. That's stuff that i will that I will ask my accountant about and and I'll get more well-versed on. I'm not worried about it.
00:48:26
Speaker
I can file paperwork. I'm okay with that. And i can as long as I can figure out how to collect the proper amount of taxes from customers and and file the paperwork where I need to, I'm okay.
00:48:38
Speaker
yeah but and And honestly, i I handle it personally. Like I do literally look up every single person's ah street address and what sales tax rates apply to them for their library. for their i mean, it's all kind of integrated online, but you do I do have to look them up and apply them online.
00:48:58
Speaker
I just handle that personally, but you can do um web plugins and apps and that kind of thing to help you with the process. Accountants will handle this stuff for you. I just like to know how this is going and so that I can pay them directly, basically.
00:49:13
Speaker
Right. I imagine for for Carolina Game Tables, it's a bit easier to track manually because like the volume isn't like digital files, for example, that are going to fly like crazy, right? Or you know physical books ordered on Amazon are going to fly like crazy. But like Carolina Game Tables, it's...
00:49:30
Speaker
The numbers are, you know, you make good money. They're low. Yeah. are you saying Are you saying we're not doing microtransactions of a 99 cent PDF? Yes. that's It's lower per sale. I imagine it's a little easier to track. yeah Yeah. It is a lot easier to handle a $3,000 sale to one location than it is. Yeah.
00:49:49
Speaker
Yeah. It's a lot easier to handle that. And it makes the, that hey, it makes our current sales tax sale that much more appropriate. Yes, right. Yes, it does. in just as a final little note there, if you're doing crowdfunding... generally sales tax is handled at the pledge manager level. right So you don't get charged sales tax when you pledge, um but you will, if sales tax applies, and that really depends on all this crazy stuff, that you'll get charged for it in the pledge manager when you do that stuff. And so it's
00:50:24
Speaker
it's it is it is what it is. You got to deal with them There's tens of thousands of business out there who have figured this out, and you will too. And was going to mention too, a lot of a lot of online platforms help make it easier too, right? Because they help track the sales tax and you know all that stuff. They do.
00:50:42
Speaker
It's all crazy stuff. It's all stuff. And and i think I think one last thing is that you don't have to know this all at once. Oh, God, no. We've said that before, is that you can learn. I didn't know everything at once when I was, because I was i was put in a position, I was laid off, and I had to, i had to and and they still needed me.
00:51:00
Speaker
Like, this is one of those rare ah rare things where they've laid me off and they realized that I was doing work for many different offices of many different things, and i and everybody was... was upended because I was gone all of a sudden.
00:51:14
Speaker
And so I was in a position of having to get things going right away. And i set up my LLC partly because I didn't want my former employer to have any way to claim me as an employee after they made me off.
00:51:30
Speaker
So I said, nope, you don't get to do that anymore. you You sacrificed that when you laid me off. Now I'm independent. I'm a contractor. Here's my rate and here's where we're going. But I didn't know everything at that point and I didn't have to, but I learned as I went, I learned, you know, to get the EIN, the LLC set up and then go from there about getting a bank account going and getting all this stuff set up.
00:51:56
Speaker
As you go, you'll learn as you go.
Learning Business Basics Gradually
00:51:59
Speaker
And that you don't have to know everything else. Yeah. Yeah. And you can think of it like when you crack open a new RPG, right? You can read the RPG from front to back.
00:52:09
Speaker
um But I don't know a heck of a lot of people who do that. So you might start with character creation and then you'll skip over to this one chapter where you're going to learn about that particular planet.
00:52:20
Speaker
um And then you're going to chip over here to this other power section and so on. That's kind of how it is for all of this business knowledge that I've accrued and you have to. You're going to learn a little bit about LLCs here and then a little bit about sales taxes there. and You just learn it as you go and as you need to.
00:52:38
Speaker
yeah um And that's going to break it all down for you. you know And if you want to learn more, um I also recommend look at your local community college for a starting your own business class.
00:52:51
Speaker
They're so cheap. It's a night class usually or something that you can work into your schedule. There are also online classes. um I think Udemy is one of those ah websites that has these very bite-sized classes. um there's There's ways that you can educate yourself, even YouTube series, like just start teaching yourself and if it's boring as heck to you well then there are people you can pay for that yeah yeah or scary as heck to you you know that's true you're like there's a lot here yeah yeah well is there anything else
00:53:27
Speaker
No, I, the only thing i I think I could throw in is, you know, I think I've mentioned this on previous episodes about our approach has been very conservative in terms of how we use our accounts and stuff. We just, we literally don't, I think the only thing we've purchased with funds from our account was ah printer.
00:53:44
Speaker
And ah than that. Totally legit print purchase. Yeah, exactly. Totally legit. There's probably many, many others you could have made. Exactly. Yes. Yeah. But, but our goal, our priority is saving as much as we can yeah to produce product. Yeah, sure. And so that's, that's been our, you know, our MO.
00:54:02
Speaker
Yeah. that sort thing Running the business and making decisions about expenses and what's worth and what's not. That's a whole and nother thing. Yeah. Yeah. Is it worth getting a new computer right now?
00:54:13
Speaker
Is it worth getting a new office chair right now or a new desk or not? When we go to cons, we we pay for that out of our own accounts. I mean, to be honest,
Financial Decisions and Community Engagement
00:54:23
Speaker
if we did use our business account, we wouldn't have any money left.
00:54:25
Speaker
yeah So, you know, trying to trying to just save up as much as we can so that we can use it for product and then generate more revenue and month more and more and more. So that's that's been our our goal.
00:54:39
Speaker
So, yeah, you don't have to go crazy with business loans and credit cards and all that. like you know Anything else, Jody? No, I think you're both being very smart about how you're running your businesses. I'm pleased that you brought me in here like to talk about this. ah I probably know more than I thought I did. And then even though I'm just, I'm still learning, you know, we're all still learning.
00:55:02
Speaker
It's always going to be a culture of learning and of growth. And yeah. Don't be afraid to take those first few steps. And if you have questions, just ask. Like i said, you know, at me in the Discord or email me, Jody, at carolinagametables.com.
00:55:17
Speaker
Awesome. Thank you again, Jody. Yes, thank you, Jody, for joining us. Really very informative. Absolutely. Absolutely. So we have a Han Cluster Backerkit crowdfunding coming up on March 25th for everybody who's listening in so like within the time period. Seven times. So please spread the word. Please give it a look. I think it's pretty cool what I'm offering. And I'm very, very excited to finally get this out onto people's eyes and to to reveal some of the secrets of the setting.
00:55:48
Speaker
Nice. Nice. Thank you for listening to the Designing Problems podcast. We want this to be more than a podcast. We want it to be a community. If you'd like to engage directly with us, share your creative triumphs, your roadblocks, or simply interact with a cool group of supportive people, we have our own Discord server.
00:56:04
Speaker
Please come by, join the discussion, and share some inspiration. Until next time, keep designing your problems, because you're bound to solve a few along the way.