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Ask HN: Can I sell a SaaS service without a company?
45 points by emplier on Jan 11, 2015 | hide | past | favorite | 35 comments
Planning on launching a small SaaS service, and don't know what are the implications. Also if I needed to create a company, would it hurt my chances of getting a full-time job?

Even if you carry on launching this service 'just as yourself', that's being self-employed, or a sole-proprieter, you are the legal entity that is the company, and are personally liable for it. People setup separate legal entities 'companies' because it keeps their liability separate from their personal lives.

People can own many companies and it has no bearing on if they have a full time job with someone else. In your case you would setup a 'Limitada' (Ltd) company and this can be done online at https://www.portaldaempresa.pt

I'm from the UK, setting up a company is easy, cheap. Each year I need to submit a small set of accounts, and a tax return. The first time you do this might seem hard, but it's basically form filling, and after the 2nd time it's much easier and simple.

Concentrate on your product, when you take on investment or make profit, look into setting up a company.

I believe it's common for a developer to have their own company to use to sell all their products over their carears.

Wow, are tax regulations simple enough in the UK that you can reasonably do your taxes yourself for a simple Ltd?

I'd love to see that in my native Belgium!

Yes I believe doing tax/accounts yourself is simple if your tax affairs are simple. All the online book keeping software nowdays is quite sophisticated. I just have to type in what I bought or sold.

The VAT I pay each quarter is just a sum of the VAT I typed in on entry. So generating and submitting the VAT return is literally just one click.

End of year tax is just the difference been costs and sales (profit). In the UK, HMRC, provide you this PDF form where you input the total sales etc, they calculate the tax for you. So it really is just form filling.

I believe being a native Belgium there is nothing stoping you from forming a UK company, nor taking it's profits back to Belgium?

A lot of company regulation in the UK is tiered - there are 'micro', 'small', 'medium' and 'large' categories which need different accounts and auditing, sales thresholds below which you don't need to register for VAT and things like that. The idea being to make it easy to start a company.

However, if you want your income from the business to be counted as your income for purposes of a loan or mortgage, you'll have a much easier time if an accountant can certify that the business really exists! And for a small business you can get the accounts done for £200-300 a year, so I doubt many people do their own :)

They most definitely are, although I've never really seen the problem with taxation requirements for BVBAs or even NVs myself. (BVBAs are roughly Belgium's idea of Ltds, NVs are public companies.)

yep takes around a week for a full LTD

when my Father set up his consultancy the main concern of HMRC was that he could do the complex task of calculating VAT (sales tax) correctly.

BTW I am being ironic it is not that hard to calculate 17.5%

20% VAT now but there's the flat rate scheme and other complexities to consider...

On the legal side, you might look at the "Legally Lean" page I maintain for my students and others. [1] It contains a lot of links to further reading about financing, IP issues, etc., including a number of prior discussion threads here on HN. The page is geared to U.S. startups but you might well run into similar legal issues in Portugal.

[1] http://www.OnContracts.com/legally-lean

It will certainly not harm your chances of getting a job but it will harm your ability to receive unemployment benefits from the government as they will consider the business equivalent of a full-time job.

You can start a sole trader business easily (and cheaply). In many EU countries there is a scheme where students or full time employees can start side businesses as sole traders and not be liable for VAT and social security taxes. I am not sure if this exists in Portugal but you can check with your local bureaucrats.

Activity like this will increase your employability in most companies. It can be an issue in government regulated businesses such as insurance but they are used to telling employees to shut it down.. it's a non-issue for hiring.

That depends if your company employs you as long a you are paying your taxes you should be eligible for benefits.

You may own your employer but you are still an employee.

IMNAL - but if you will be generating revenue and will have paid customers, at the very least you should incorporate as an LLC or equivalent in your country to protect yourself from personal liability.

You did not tell what country you live in. If you start a business Germany without founding a company first, your business will have the default company form called GbR (Gesellschaft bürgerlichen Rechts - company under civilian law). This is often something you !NOT! want, because of tax and legal protection.

In Germany I would advise on an uGmbH, in US on a LLC and in UK on a LIC. Those are easy to fund, e.g. a Tennessee LLC cost only $100 annual franchise tax. Other states charge no franchise tax.

UG in Germany seems like a totally pain in the ass. I was looking at it for side projects to limit liability, but 25% of the profit have to remain in the company until 25k€.

And you can't just pay yourself a salary which varies every month, you can change it once a year. You can pay yourself a variable bonus, but it can be a maximum of 35% of the salary. So paying yourself $1 salary a year and the rest as a bonus doesn't work.

UG is quite good if you have a stable business, but for everything else it seems a bit complicated.

No idea about Portugal, but in some countries you don't need to register a company or any other legal stuff unless you do more business than a certain threshold. Find out in your country what this amount is. Later on, if you cross this threshold then hire an accountant to setup the business as a proper legal entity. If you make enough money you can hire an army of people to help you out. If you don't and assuming the service is cheap, and if a customer goes nuts then just refund. Set aside a small amount as the risk you are willing to take and do not cross it i.e. do not sell more than this amount. Check out how you will accept the money, and if your payment processor imposes any restrictions w.r.t. legal status of the business. Good luck and congratulations for making something that you are confident that people will pay for.

It all depends on the country. In Canada you can register as self employed where the government gives you special tax numbers (one federal and one provincial). You use them to add tax charge on the service and report the money back to government. It's very simple bit of paperwork and it does not require any money. The registration itself takes an hour of filling up the forms.

At this point you are a registered freelancer and can run one person business, no employees, but you could have subcontractors. There is also no company, no .Inc.

You can go one step farther and register a company where you do establish legal entity with the .Inc attached to it. For simplicity you get the number/name and you can associate other branding name or names to make it marketing sexy. It's also rather simple, takes another hour and costs about $250 for starters, although I believe there are some variations where incorporation costs a bit more, but still a few hundred dollars.

Once you are incorporated the accounting becomes slightly more complicated. While being a registered freelancer you can pretty much do your own number adding for taxes, having the company means us are better of hiring part-time accountant to deal with the paperwork.

A lot of people in the technology/design/multimedia fields work as registered freelancers because there is no limit to income related to it, paperwork is simple and in Canada there is not culture of businesses suing each other all the time like in the US. So, there is no need to have separate legal entity to protect yourself. It's very convenient and many small businesses in the first year or two of existence run as a freelancer who hires other freelancers. Only once the business truly starts becoming a company and wants to provide perks and benefits to employees and also start looking 'bigger' on the market it is being registered as proper corporation.

I think it's a very valuable system for stimulating small business growth. The cost to try is very low and simple to do.

I'm not going to comment on legality, but if your service is targeting the larger companies, they will not do business with you unless you have a viable company. They probably won't do business with you even if you do have a company, but only employ yourself.

Also with regards to your chances of getting a full-time job. That depends. Most companies won't have a problem with that, but some might. They might not look kindly on the time commitment they think you'll have to put on your own company. A company that's operating in the same field as your company obviously would not most likely not hire you, because of your competing interest.

"Most companies won't have a problem with that, but some might"

Always read your contracts and look for clauses regarding this. Most companies require you to disclose the fact that you work for another company / are doing contract work outside of your normal work time. Some companies forbid this (unless you ask them to change the contract, and if you explain the situation, many companies will oblige).

Depending on your target demographic, and the nature of the SaaS, incorporating to give the appearance of stability and scale may be beneficial if not essentially a requirement. If you're trying to sell something any largish company might come to depend on, expect them to look askance at "some dude with a laptop". They see liability in dealing with a person, security in dealing with a corporation.

just my 2 cents, ignore if your market is something else.

Legal and Accounting Basics for Startups (lecture 18 from Sam Altman's course): http://startupclass.samaltman.com/courses/lec18/

Here in sweden there are companies that handle all company related things for you. Technically you become their employee, and you send invoices in their name. They charge some 6% of profits, I think.

When you sell something, legally you have to invoice it. If you find a solution for invoice, of course, you can do it.

everything depends on the laws in your country, where do you live ? what day job do you have ? how do you spend your free time ? do you have access to a legal advisor ?

I'm still a student with three semesters ahead of me, and I'm in Portugal.

I don't know much about Portugal, but every country I seen so far have something called sole proprietor type of business: it is usually single guy doing some work and filling taxes by himself.

Too much trouble - go Bitcoin.

I don't know about Portugal, but in the UK one of the big reasons to start a company is to get limited liability. If someone successfully sues your company, that's bad - but if you don't have a company then they'll sue you and take all your possessions, like your house - much much worse. Bitcoin does absolutely nothing to avoid that scenario. (IANAL etc).

I am wondering about Spain, but I assume the liability aspect is the same in all european countries?

no each European country has its own laws and even EU directives can vary widely as to how they are applied compare TUPE in the UK and Spain

What makes you think that?

Using bitcoin will only have the effect of restricting the OP's potential number of customers, with no effect whatsoever on the OP's liability if the laws of the country are violated.

Rule for code formatting doesn't exist in this article. http://i.imgur.com/OzaBVdw.png

I think you're in the wrong HN story.

Thanks very much for the helpful advice.

Focus on doing whatever you are doing, deal with this stuff later.

Corporations are all about liability and ownership. As a student, you likely don't have any assets to protect. Once you take investment or add a partner, you'll need to do somethingn!

"don't know what are the implications." [sic]

You should inform yourself.

In the US, Nolo[1] is a good place to start. So is BusinessUSA[2]. After that, you should find out the laws regarding running a business in your state, running a business in your county/parish, and running a business in your city/locality. Depending on your business structure, all four may have different requirements, forms, licenses, fees, filing dates, taxes (fed, state, county, city), etc.

It's not an insurmountable amount of work to handle on your own, especially if you choose a simple structure like a sole proprietorship or LLC, but you should do your homework before you jump in and contact a professional with any concerns you have.

Also, you should talk to a lawyer if you are worried about liability. The suggestion from some commenters that you are separated from liability if you run an LLC or other partnership is inaccurate. Liability is limited, but you can still be sued personally for fraud, negligence, and a host of other sins.


[1] http://www.nolo.com/legal-encyclopedia/llc-corporations-part...

[2] http://business.usa.gov/

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