Ideas and Validation July 10, 2020

Looking for advice: I’m developing a web app, should I start a business?


Looking for advice: I’m developing a web app, should I start a business?

Should I create a limited business for my web / mobile app that I am developing? I already own a separate ltd company for selling on Amazon etc but am I best to keep these completely separate from each other?

The product I am developing is an online service for connecting people to personal trainers and general fitness advice with the intent of developing a community. I will need to handle payments and subscriptions as part of this.

Any advice will be appreciated. TIA

  1. 2

    I would keep it under one company for as long as possible, not sure there is a need to do it separately unless you were partnering up with someone, or getting funding of some sort.

    Also, it would be a huge pain in the butt to start a company and then your project doesn't actually generate revenue.

    1. 1

      I agree. Having one company will be more simple from an accounting/tax perspective. If it takes off and you want to spin it out into its own brand you can do that later. Even then it might make sense to keep it under one parent company.

      But hey I'm no lawyer or accountant 😁 I'd ask one of them if it starts to become an issue for you.

  2. 1

    Hello, @Oldbury, I've formed hundreds of companies for my clients, some of them were with intricate structure of shares and co-ownership and legal rights different sides had.

    If you are taking anyone in as a co-founder, ideally, the project has to come as a separate venture. In UK you can form a partnership where you describe your relationship in a partnership agreement. UK company costs £12 to form and you can sign a co-founder agreement with your co-director. In case you are a single founder it does not make sense to form a separate entity before you even start taking money, you can form a company any time when you feel the business is picking up. In case you are planing to exit or go to investors, or both, you will be better off with a properly set legal entity, whatever form it is.
    Good luck with your new business.

    P.S. This is not an offer of any kind of service. I do not do it anymore, but can help you with some free advice on legal entities in UK as a good member of IH community.

  3. 1

    Best to keep separate - you risk ltd for Amazon being sued by webapp users and vice versa.
    Don't know how much does it cost to get new ltd registration in your state, but filling LLC in Delaware is like $200, then about $350 a year for tax and registered agent.

    If you can't afford it then do it under one, spin off when you have cash for llc.

  4. 1

    Not until you have paying customers. Then you can split it out and market it as a separate entity imo.

  5. 1

    It depends. There are pros/cons.

    If you already know that you are going to get to product-market fit with the web app, and you will get a lot of traction (clients, payments, etc), I would separate the two businesses. It's always best to do it as you avoid cross-product legal claims, etc

    If you are still in the research and discovery phase, I would keep them under one company as the other makers suggested.