Ask HN: Do you incorporate before monetizing your side projects? - dudul
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shubhamjain
I used to worry how incorporating is almost an inescapable need if you want to
be taken seriously. Surely, you want a professional company label when a
customer goes to bill his subscription. Right? Learning more, I have realised
that you can either chose to build the right thing and try hard to get your
first customer, or fuck around with these pointless tasks. It's possible some
customer may balk at a one-person business but most find it perfectly
acceptable and have zero-issues in buying from you.

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dudul
Thanks for the answer. I guess I'm not really wondering about the "being taken
seriously" aspect. More when it comes to managing taxes and liability. A LLC
would protect your personal assets in case something goes wrong with your
product (let's say you leak the information of your 255 million users), but
when is it worth it?

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shubhamjain
When you're starting out, you're full of optimism about your success. I was
too. But when you get down to actually doing things, you start to realise how
hard it is to get first few paying customers, let alone hundreds or thousands.
I think it's fairly easy to start a LLC in US, so I am not dissuading you from
incorporating one but do realise that it is one of those things that can be
done later; and personally, I feel, if you don't have sure-shot path to
growing revenue, should be done later. I don't think taxes and liability are
much of an issue when you're small.

I wasted ton of time in wondering about these things when I was making
something just two years back, and eventually, I realised how less it would've
mattered.

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matchmike1313
Yes in a way. I have a parent LLC for all of my small ventures. That way, you
don't need to go through the hassle of creating separate legal entities for
every project. If the side project grows at that point you could also just
spin off as a more formal dedicated entity for tax purposes and write offs,
but then again, at that point it may no longer be a side project.

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tixocloud
How much would it say it costs to have the parent LLC set up? factoring for
filing taxes and other administrative costs.

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jetti
If you're in the US then it can vary by state. I used LegalZoom to form an LLC
and it was ~$800 to start. Illinois charges me about $300 each year to keep my
standing and I just use H&R Block software to do my taxes as I don't have much
income coming in for the business and have my LLC tax structure to be
passthrough so it makes tax season super easy.

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tarr11
If you are in California, this will cost $800 / year in franchise fees.

Since most side projects fail, consider waiting until you are actually
generating revenue.

If your business incurs significant liability that you are worried about,
incorporating may make sense sooner.

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muzani
I have a business account for all side projects that involve money. When the
prototype generates money, we move it out of the prototype bank account to a
proper one.

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ak406
What is the scope of said side projects? Apps or other ventures?

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dudul
Could be something very small but generating revenue. Could be a Saas service
for example. I guess I'm wondering at what point either in terms of revenue,
work spent on the project, etc, do people feel the need to incorporate. Either
for tax purposes or to avoid liability.

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newusertoday
how are you taking payment without incorporating? paypal? any suggesions?

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madamelic
Stripe allows it.

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conductr
What does the charge say on your customer's statement?

