

Ask HN: How should I handle making money in the App Store? - Itaxpica

Hey HN, forgive me if this has been asked a million times before - I assume it has, but I've been Googling for the last couple of days and haven't found much of anything. I've got an iOS app that I've been working on for some time, and I'm finally getting close to ready to push it to the app store and hope for the best. I've decided to make the app free (and iAd-supported), but I'm not really sure how to go about setting up iAd in the first place. I don't mean the technical stuff; that all seems fairly straightforward; I mean the business stuff. Apple wants banking and tax information - should I just use my personal info? Or should I do this as a company, and start a single proprietorship, or a one-man LLC, or something like that? Is there a decent guide to this stuff anywhere out there? What are the things that you wished you had known before you started making money (or at least trying to) on the app store?
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ronyeh
You are already a sole proprietor. That's the default designation in US tax
law [1]. I'd at least start a one-person LLC. There are liability benefits,
and probably some tax benefits (I'm not an accountant). In my case, I started
an S-corp.

Either learn enough about bookkeeping and accounting, or hire an accountant.

I remember having to fax some company info over to Apple. There are online
services where (for about $2) you can submit a PDF and have the service fax
Apple for you.

You can start by setting up iAds. But in my next update, I'd also add AdMob.
iAds fill rate is terrible outside of the USA. Its fill rate is "meh" inside
of the USA. AdMob fill rate is about 99%.

Good luck!

[1] [http://www.irs.gov/Businesses/Small-Businesses-&-Self-
Em...](http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Sole-
Proprietorships)

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scottchin
I have registered three developer accounts on the App Store (two for companies
and one as an individual). Disclaimer: This was some time ago though.

If you have already registered a developer account, you will have already
decided on whether it is for an individual or a company, in which case, your
tax/banking need to follow that.

If you want to register a new dev account for a company, you should give
yourself a few weeks since you will need to do some back-and-forth paper work
with Apple. It's not that complicated but it takes time. Plus you will need to
actually do the incorporation stuff for your government.

The following are things that I wish I had done from the start. If you go the
company route, I would recommend that you consult a lawyer to get all of the
incorporation paper work done correctly, and consult an accountant to learn
about your financial reporting responsibilities. It will give you peace-of-
mind down the road. Also, be on-top of your accounting. Again, for peace-of-
mind down the road. It's easy to put off.

One more tip. Don't rely on iAd alone. Do backfill to something. Admob for
example.

Also, have a realistic expectation for a purely ad-supported app. They do
work, but require significant activity. E.g., let's say you get $1.50 per 1000
ad impressions (cpm) on 60s ad rotations. How many total user minutes per day
do you expect? You can use this to get a very rough estimate.

Best of luck to you!

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Itaxpica
Thanks, this is great stuff! I have a developer account registered as an
individual. Does that mean that I can still charge/add ads, as long as I
provide my own personal banking and tax information?

Also, yeah, I have no illusions about making a ton of money from this app.
It's mostly just something I started putting together while I was learning
iOS, and then kept polishing once I was comfortable with iOS because I liked
the idea. If I can't get the money stuff squared away I'll probably put it up
for free anyway; I just figured that if I'm gonna release it to the world I
might as well see if I can get some beer money for doing so.

~~~
FlyingAvatar
I should also mention from experience with a niche app which has a few
thousand users, I ended up making $1.50 in revenue over the course of a year.

I released an update this December, and am now charging $1.99 and doing
thousands of percent better, and I haven't put any effort into promoting the
app yet.

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FlyingAvatar
If you start an LLC/LLP/Corp, you will be paying some amount of money in fees
and taxes each year to keep it in existence. Where I am in Rhode Island, USA,
this is $500 for minimum corporate tax (applies to LLC/LLP as well), and a $75
filing fee for an annual report.

You will also may want to hire an accountant to prepare your corporate / LLC
tax return / schedules, especially in your first year.

In short, if you are going the LLC/Corp route, expect to add $1000 per year in
overhead, plus at least a dozen hours in time.

I personally would wait (you are already a sole proprietor by default) and
then if you start making some decent money look into it again. It is possible
to transition an app from a individual to a company account, but there is some
footwork involved.

Keep in mind, you will not be reaping any tax benefits of incorporating until
you are making actual money. Your decision to incorporate / form an LLC at
this point should be driven only by the amount of risk you are personally
taking on in potential liability. I would suspect for most free applications,
you won't have much to worry about. But if you're sitting on a pile of money
and are writing an app that some how might inspire someone to sue you, you
might want to think about it.

