Legal, Tax, and Accounting August 8, 2020

Serial-preneurs: Do you register every company/product separately?

Michael @michaelmesserli

I wonder how people are handling incorporating their 'small' side projects. Especially if you have many projects it seems very expensive to properly register all of your products separately.

How are you handling it?

  1. 3

    Most people put them all under one roof and 'spin them out' if they end up showing real traction revenue wise. The reason to spin them out of your singular Delaware C Corp or LLC is to mitigate risk. If you have revenue traction you have customers. If you have a lot of customers there is a chance of getting sued. Spinning out into a new entity help mitigate risk. It also helps keep things clean come tax time.

    1. 2

      That makes sense. I was wondering about the risk of having them under the same name, but once a company is stable enough and has enough customers it makes sense to create it's own corp, etc.

      Thanks

      1. 1

        Exactly! Hardest part is starting and building up that customer base and revenue to the point where this is even a concern!👏

  2. 2

    This is specific for the Netherlands but might apply to other countries perhaps. The dutch chamber of commerce allows you to add a trade name (handelsnaam). You can then use that trade name as an official company name, using the same chamber of commerce id. Also you can have invoices for TradeNameA with their own logo and numbering, and another TradeNameB can have their own invoices with their own logo and different numbering.

    Personaly this works fine for me, but if you work with a team of co-founders and/or investors and/or are planning on fast growth and exit within 2 years, then a separate business entity might be better.

  3. 1

    If you bundle the projects together make sure you leave yourself a way to prise them apart, tag the revenue and expenses (for reporting), use a separate URL for a license server (if you have one) etc. Think about what dependencies on your overall business structure you have.

    Do some homework on "build to sell", even i you don't intend to sell. Don't use this an an excuse to hoard domain names, though. Oops.

  4. 1

    You can also set up an entity and then spin various products/brands out of it as DBAs. It’s less expensive but has its own risks, both for taxes and liability.

  5. 1

    I have a single corp for general "development" activities, and once a product earns a certain amount I put them in a separate corp. This also makes it much easier to sell your projects.

    1. 1

      Seems to be the common practice. Did you set up the corp yourself, use a CPA, or another service like Stripe Atlas?

      1. 1

        I use something like a CPA (my accountant sets all of this up with a notary), it costs more but I don't want to get into these kind of things since they take too much time and are not that interested to me.

        Stripe Atlas looks interesting but never used it.

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