Sole proprietorship or LLC?
I always keep testing new ideas to find the best opportunity for me. At some point, I got confused about at which stage should I register a company? and What's is the best legal structure for an online business?
I always keep testing new ideas to find the best opportunity for me. At some point, I got confused about at which stage should I register a company? and What's is the best legal structure for an online business?
The moment you start making significant amount of money ($10k+ per month).
At that time ask an accountant what is the best legal structure for taxes based on your circumstances and goals (because there isn't a single "best" for everybody).
Until then DBA (if you want to bill people under a name different than yourself) or nothing at all.
Thanks for the advice ;)
This is the approach I am taking as well. I used to stress about this but it's silly until you're a bigger player in the market.
I suggest you form an LLC. Provides basic liability protection and a place for your expenses so you can write them off come tax time.
Forming an LLC is straightforward -- usually just a matter of filling out a few lines on a form and paying a nominal filing fee (there are ongoing, annual fees however depending on the state).
If you're in CA, I wrote a step by step guide to forming an LLC here.
With regard to the legal structure, if this is a fairly serious endeavor for which you eventually hope to raise outside capital (VC), I know YC generally recommends Deleware C-Corp. I've had a good experience using Clerky (https://www.clerky.com/). This is not legal advice. Good luck!
@branmcf I thought about Deleware LLC. But I have to register it in California too and pay $800 (min. for CA LLC). In this case I have to pay tax for two states.
Clerky will be helpful at some point. Thanks anyway.
Go for Stripe Atlas if you want to get things moving quickly. Especially if it's just you. In the future you can worry about how to do something else (convert to C-Corp, etc) but if you're just testing ideas its best to create a simple liability shield. Atlas comes with the added benefit of a bank account/card and a few other perks AWS credits.
I'll check it out. Do you have an invite code for Atlas?