
Ask HN: When is the appropriate time to start a company - xhra01
I want to work on and create a app&#x2F;cloud service. Do I need to create a small company for this purpose or doing work independently should  be sufficient. What would be the criteria to start a company?<p>Thanks
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nostrademons
I assume you mean "incorporate" by "start a company"? You can "start a
company" in the colloquial sense just by working on it.

The best rule of thumb I know of is "When a.) you are about to handle money or
b.) you're doing something that might expose you to liability." Obviously, if
you're doing something that might get you sued, you want the liability
protection that a company provides. But less obviously, many business bank
accounts require an actual business to open, payroll requires an EIN and
federal tax ID, you need to collect & report sales tax, if you want to take
equity investment you need to be able to issue shares, and basically
everything involving money in business gets easier if there's an entity other
than your personal checking account.

If you're just doing the two most important activities for a software startup
though - coding & talking to users - you can do those without a corporation.
It'll save you several thousand dollars in associated fees and a bunch of
administrative hassles, and very often your idea morphs or you decide not to
found the company after all.

