Building and selling before incorporating
One key question everyone has is "would someone pay for this?", but most people mention that one must incorporate before taking payments.
I really want to delay this step as much as possible. I would rather incorporate only when I have proof that an idea is good. Being able to see people willing to pay is a very good signal I would like to have before incorporating.
Originally I saw Paddle, but it seems one must already have a registered business to receive payments. My next thought is Patreon, which looks like the answer for solo makers without a running company. Ideally I would like having a proper merchant of record to cover the sales tax mess.
Do all indie founders need to incorporate before validating their ideas with some income?
Mostly I am wondering where is that line where one can build something and validate with payments without incorporating too early. I know this is a tricky question because of the risk / liability factor. Is there a sane middle ground? Are all indie hackers supposed to be company owners?
If you're in the US and founding solo, look into sole-proprietorships and "fictitious companies" (IIRC; it's a person operating under a business name) -- The long story short is if you pay taxes on your business earnings and file them on your personal annual return you're more or less okay for the moment, but need to look into registering with your state soon.
By the time it makes sense to register (sometime after validation) I'd personally be looking at LLC instead of sole-proprietor to help separate the risk while keeping taxes simple
(I'm not a lawyer nor CPA; I've read a bunch of the Nolo books, founded a non-stock company, and am working towards launching a microSaaS side project)
It depends on local regulations as well.
For me I started developing and validating without a company, when I knew I would continue and had validation i made my company. That was at the start of 2023, now I made my first revenue in december, but I could put expenses on the company for the whole year already, which will reduce taxes I have to pay.
Also here in Austria (EU) it is tricky to basically act like a company trying to make profit without incorporating. The state or tax bureau will not find or hunt you down unless you already make big money, but if someone wants to hurt you ( a competitor or your ex) they could probably get you in trouble quite easily.
Not the answer you are looking for, but it is what it is.
You might want to look into Lemon Squeezy, I'm pretty sure you can start accepting payments as an individual.
That's tough. In most countries, you need to register your business first and then iterate.
It makes it tough to validate your idea first.