5 Questions to Consider Before Starting up a Games Studio


Are you thinking about starting up a games studio but are unsure about the business side of making your own games?

In this video, Stephen Bain, Head of Games & Digital here at MHA Henderson Loggie, shares the top 5 questions to consider before starting up a games studio after University.

Covered in this video:

✅ Are you starting your business for the right reasons?
✅ Is your business idea feasible?
✅ Are you ready to start-up straight after University?
✅ Do you have enough capital?
✅ Will you be starting the business on your own?

📌 If you have any questions, please drop them into the comments section below 👇 or contact Stephen directly at stephen.bain@hlca.co.uk


*Edited Video Transcript*

Are you starting your business for the right reasons?

It’s a big step from designing your own games to running your own business. Think about why people would want to play your games? Would they be prepared to pay money to buy your games? Do some market research. This doesn’t need to be formal, but you can speak to friends, family, others with an interest in the game sector. Think about, what makes your business stand out? What’s good about your games and what’s it’s USP, their Unique Selling Point?


Is your business idea feasible?

Running your own business, working for yourself, can be a very challenging but also a very rewarding experience. The business is yours, so you reap all the rewards that the business may bring. It’s a good alternative for many people to having a traditional job where you go and work for somebody else. But of course, with this comes challenges. The hours will be very long and you’ll need to work very hard, it’s important to strike a balance, to make sure you take some downtime so that you’re not working 24/7.


Are you ready to start-up straight after University?

So, you’re just straight out of university and you’re thinking of starting your own business. This is a good time of life, where possibly you don’t have many commitments. Financially, you may not have a mortgage, you might not have family dependents to look after. You’ve got time, you have energy, you’re really ripe to start your own business. But think about, do you have the right experience? Have you worked in the game sector before? Have you been exposed to the day-to-day operations to understand how a business really operates?


Do you have enough capital?

Even the smallest of start-up businesses need cash to survive. You may be a very lean operation working from home with your own equipment, you don’t really have much in the way of overheads, but you still need to survive. You need to live while you run your own business and how will the business generate cash, especially in the early days? You may decide to have a part-time job to supplement your income while the business grows. This can be a good idea, but of course remember, this will reduce the amount of time and commitment you can spend working in your own business.


Will you be starting the business on your own?

Is it just you starting in business or are there two, maybe three of you going into business together? If it is just you, it allows you to be very agile in terms of making decisions yourself. Although, it’s always good to have somebody in the background, somebody to give you a second opinion and to turn to for advice. If there are more than one of you, there are certain things to consider, even before you go down the legal matters such as business structure and whether you need a partnership or shareholders’ agreement. Think about operational matters, on a day to day basis who will do what? What are each person’s strengths and weaknesses? What can they bring to the business? Who will have the final say in terms of decision-making?


In conclusion

Starting up in business and running your own business can be a very exciting time and we have a good team of people here to help you, every step of the way from a business start-up; from raising funds, accounting, tax, payroll advice, to even perhaps one day coming to sell your business.

If you have any questions, please contact Stephen (stephen.bain@hlca.co.uk) or complete the contact form below and a member of our team will be in touch.


Common Challenges for New Startup Businesses


Starting a new business can be an extremely exciting time. But have you considered some of the challenges that you may face before getting your business off the ground?

In this video, Alisdair McNaughton, Corporate Finance Manager here at MHA Henderson Loggie, shares some of the most common challenges for new start-up businesses and how you can think about overcoming these.

Covered in this video:

✅ Sole Trader vs Limited Company
✅ Funding options
✅ Building a team
✅ Balancing operations with strategy planning

📌 If you have any questions, please contact Alisdair directly at alisdair.mcnaughton@hlca.co.uk


*Edited Video Transcript*

When does my business start?

A business exists when there is a reasonable expectation of commercial gain or profit. Either way, we recommend that you hang on to all your receipts and expenditure, because there might be a way for us to claim back pre-trading expenses.


Sole Trader vs Limited Company

A sole trader is cheaper and there’s less administration, but particularly for video games companies, there’s Video Games Tax Relief, which is only available for limited companies. Check out our article Sole Trader vs Limited Company for a more detailed breakdown of the pros & cons of each option.


Funding

Now that you have your business, you might ask about funding. Funding for startup companies isn’t easy. You have no credit history or track record. We recommend that you stay close to home. Do you have friends or family that can help you out? You might consider working for hire. This will help you build up cash, gain commercial experience and get those industry contacts.


Building a team

With all that in place, you’ll need a team. You may already have a team from university or college, but working in a commercial environment is very different. We’d recommend that you get a legal agreement in place, which will consider things like roles and responsibilities, the share of profits and what happens if one of your team leaves? Consider subcontracting versus employment, it’s more expensive in the short term, but it gives you more flexibility over your team. You’ll probably need advice on HR and payroll and there are legal requirements here that can be complex.


Facing hard times

With your business up and running, you’re going to face good times and bad times. It’s important to ask yourself how you can stay positive and focus through those bad times? Do you have a strong support network you can rely on? Do you have a mentor who’s maybe been through the industry and can offer advice? It’s important that you maintain a good work-life balance so that you can stay in a positive frame of mind.


Balancing operations with strategy planning

With your business in place, it’s important to focus on your operations, get that product built, meet those deadlines, but these are all short term goals. It’s also important to focus on strategies so that you can align those short term goals with your long term objectives.


In conclusion

These challenges will all be unique to you. We recommend that you keep in touch with your industry, attend industry events, read industry newsletters, keep in touch with your peers. We can help you. We have specialist teams in accounting, tax, business solutions and corporate finance. If you’ve got any queries, then email Alisdair directly (alisdair.mcnaughton@hlca.co.uk) or complete the contact form below and a member of our team will be in touch with you soon.

What is Video Games Tax Relief?


Did you know that Video Games Tax Relief (VGTR) allows UK game developers to claim back 20% of their production costs?

In this video, Grant Snedden, Tax Consultant here at MHA Henderson Loggie, shares a brief overview of what Video Games Tax Relief is, who qualifies and how to make a claim.

Covered in this video:

✅ What is Video Games Tax Relief?
✅ Who qualifies for the relief?
✅ What costs qualify?
✅ How to make a claim

📌 If you have any questions, please contact Grant at grant.snedden@hlca.co.uk


*Edited video transcript*

Who can make a claim?

To make a claim, you must be a limited company with a qualifying video game trade, and you have to apply to the British Film Institute (BFI), for a certificate, just to prove that the game is culturally British. This is based on location and character, and a few other factors.


How to apply for a BFI certificate

To apply for a certificate, this can be done through an application on the British Film Institute website, and there’s a total of 31 points for which your game needs 16 to qualify. Find out how points for the cultural test for video games are allocated here.


What costs qualify for Video Games Tax Relief?

Core costs of the video game qualify. These relate to design, testing and production of the game. This will mainly be salary and subcontractor costs. As an example, we’ve had a client who remunerated themselves via dividends, but this was not eligible to be claimed as it is not classed as earnings.


What is Video Games Tax Relief?

The relief is an 80% enhanced deduction for the core costs. For profit-making companies, this will result in a tax saving of 19% on the enhanced deduction. For loss companies, they can surrender the losses for 25% tax credit. We found this to be extremely useful for start-up companies where cash flow is potentially an issue.


How to make a claim

Claims can be submitted to HMRC with the company tax return. This usually has to be submitted within 2 years of the company’s accounting year-end. So for example, a company with the 31st March 2019 year-end, would have to be submitted by the 31st March 2021. Repayment normally takes 4-6 weeks, but this can vary on busy periods.


In conclusion

We hope this has been a useful overview of Video Games Tax Relief, but if you have any questions or would like to discuss how we can help you make a claim, please feel free to contact Grant directly (grant.snedden@hlca.co.uk) or complete the contact form below.

Alan Davis

Alan is Chairman of Henderson Loggie, he is also Head of Tax for the Firm and leads our award winning VAT team. He covers all four offices providing specialist advice on technical VAT compliance and advisory, training and development.

Having spent 16 years with HM Revenue & Customs carrying out VAT assurance visits for a wide range of businesses – from small retailers to local authorities, Alan has gained considerable experience of HM Revenue & Customs inspections. He can help with planning opportunities for VAT efficiency, and can advise our clients on retrospective reclaim opportunities, securing significant VAT repayments.

Alan can also advise on other indirect taxes e.g. landfill tax, aggregates levy, climate change levy, and also offers in-house technical updates to the legal profession.

In addition to his tax specialism, Alan leads our Education Sector Group, ensuring that that team meets all the needs of the sector – from audit, to advisory and across all the services the firm provides.

Angela Whyte

Angela provides audit services to commercial clients, ranging from small to large corporates, across an assortment of sectors including publishing, retail and construction.

She also manages a portfolio of Further Education Colleges across Scotland, providing external audit services, as well as managing a range of accounting and management accounts assignments.

Angela trained and qualified with MHA Henderson Loggie.

Stephen Bain

Stephen is Finance & IT Partner at MHA Henderson Loggie and is responsible for accounting and tax requirements for a wide variety of SME businesses.

He is head of our Games & Digital Sector group, with a particular focus on start-up games companies.

Stephen specialises in Accounting Systems, using technology to ensure that businesses receive good quality Management Information.

He has acted as non-executive or interim Finance Director for a number of businesses and is vastly experienced in equivalent type roles.

Steve Cartwright

With an extensive experience of working with owner-managed businesses, Steve’s main priority is working with clients to assist them in achieving their full potential in terms of growth and profitability and maximising the value of their business. This includes strategic and business planning and business improvement, as well as risk and lean management, helping clients reduce costs and inefficiencies.

Steve has been working with independent video games developers in Scotland since the late 1980s and is supported by a team with significant knowledge of the sector.

Steve is also involved in MHA Henderson Loggie’s Business Leaders Group. A group for Chief Executives and Managing Directors of owner managed businesses in Scotland. The group meets on a quarterly basis, giving members access to a wealth of business and continuous improvement tools and processes and networking opportunities both locally and globally, via our partnership with Mindshop International (a strategic leadership training organisation which operates globally).

As well as being a member of the Institute of Chartered Accountants of Scotland, Steve is currently the Vice Chairman of the Tayside branch of the Institute of Directors and is one of the longest serving UK members of Mindshop International.

Gavin Black

Gavin is an experienced auditor with strong technical skills. He also brings significant commercial experience, having worked with a wide range of international and UK groups and owner managed businesses.

Gavin spent over ten years working in Edinburgh, where he trained and qualified. Gavin’s specialisms include manufacturing and distribution, infrastructure, professional practices, retail businesses and student associations.

Originally from Forfar, Gavin is a graduate of Dundee University.

Avril Craig

Avril Craig is manager of the Payroll Department in Dundee, covering payroll and automatic enrolment processes for our payroll bureau clients, and payroll support for clients who handle their own payroll. She oversees the timely delivery of weekly, fortnightly and monthly payroll and automatic enrolment pension processing, RTI submissions and net salary payments for a large variety of clients ranging from two employees to several hundred.

Having spent the vast majority of her career working in accountancy practice, she has specialised in payroll for the last twelve years, and in more recent times, automatic enrolment pensions.

Avril has experience in a large variety of industries and particular enjoys supporting employers in complying with the requirements of HMRC and The Pension Regulator.

Ashleigh Thomas

Ashleigh joined Henderson Loggie in 2007 and trained and qualified as a Chartered Accountant in 2010.  After a short time away gaining experience in business support and accounting she returned in 2016 and now manages the accounting and business solutions department providing accounting and independent examination services to clients including sole traders, partnerships, companies and charities across various sectors.

Ashleigh oversees the provision of various accounting services to our clients including the preparation of statutory accounts, preparation and review of management accounts, VAT returns, bookkeeping, budgeting, forecasting and payroll.  She is also responsible for overseeing various company secretarial responsibilities.

Ashleigh is a certified Xero user and also has experience with other accounting packages including Sage, KashFlow, FreeAgent and Quickbooks.

Ashleigh is a key member of the firm’s Agriculture & Rural and Games & Digital Sector Teams. Ashleigh enjoys working across a diverse range of sectors and her clients value the cross sector experience she brings.