Setting up a generic LLC to test products?
Hi, I have a technical background and have become interested in entrepreneurial side-projects in part via the Indie Hackers podcast. I have a few product ideas and I'd like to start validating ideas based on observable purchase behavior (i.e. I want to see if people will actually pay for the products I am imagining).
Stripe Atlas seems to make it easy to setup an online business, and start accepting payments. I am wondering: is there any disadvantage to setting up a generic LLC name (e.g. SomethingSomethingLabs) and using that structure to test different products and business ideas (which might be quite different from one another). It seems strange to have multiple LLCs, one for each product. Do people tend to do this when they are first starting out? Are there any real disadvantages? (Aside from the $500 for setting up the company, which seems fine).
If you're a solo founder it's a great way to go IMO. I have a single LLC that I use for my consulting work (my primary source of income) but I also use it for other projects I'm experimenting with. It's nice to be able to experiment, accept payments (if the project even gets to that point) and not commit to the time and cost of a new LLC each time.
If you go this way, I'd just suggest tracking and income and expenses from various projects separately. You'll still need to roll it all up for tax purposes, but even simply adding a tag or note on each line item with the name of the project is enough for your own records. It will not only help you understand how a given project is doing financially, but if you ever decide to break it off it will be a lot easier from what I'm told.
As another commented mentioned, it might be pain down the line to break off a project into a separate LLC but consider that a good problem to have if you get there!
That is exactly how I do it. I am the sole owner of Collective Core LLC., which is the legal parent company for all of my side hustles.
Same here. I set up an LLC and put a few grand into a business bank account. I'm considering it play money, trying to build stuff and learn as I go.
Totally fine to run (or experiment with) multiple products via the same entity. Also much cheaper and less admin headache. Once one of your products takes off and you want its own entity, you can worry about e.g.
That will also be some hassle, but likely a lot less than dealing with multiple entities (and the cost and admin overhead of running them) right away.
This is a good question and I look forward to hearing additional responses. My thoughts are that there is not if it’s a single owner LLC. By pooling the projects under a single company entity, you are mixing risk. But if it’s owned by one person, i.e. you, then you’d be taking on that same risk under multiple entities anyway. If you start a new project with someone else, they may not want to mix the risk with that of your other projects , and so forming a separate entity would make sense. I’m no expert and have little experience in such matters, so take my thoughts with a grain of salt. 😁