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Yes, agreed. No need to incorporate just to get together and hack on a project. That said, I would certainly consider (at the very least) signing an agreement w
by hberg 10y ago
Yes, agreed. No need to incorporate just to get together and hack on a project. That said, I would certainly consider (at the very least) signing an agreement with your hacking buddy before launching anything that might generate revenue.
I've seen and heard multiple co-founder friendships fall apart once things started to get "real". Good luck!
- _RPM 10y agoI want legal agreements in place before I start writing code with a non technical co founder. We've agreed upon a 50/50 equity split.
- hberg 10y agoOne reason to incorporate as a C or S-corp is that it's easy to add 4-year vesting to founder shares. This protects you if your co-founder walks away after 6 months. It's much harder (if it's even possible) to vest "shares" in an LLC. In your case of a 50/50 split, make sure your agreements also have a clause that deals with disagreements. IT's likely you'll come to a point in your business where you do not agree and 50/50 ownership can make your business stall. Codify how those disagreements are solved before you get there.
- jahewson 10y agoWrite that fact down on a piece of paper and both sign it. Then get it stamped by a public notary. Right now you're looking to make an agreement, not operate a company. Most likely your only ownable asset for the foreseeable future is copyright, which you can agree to share equally with just a piece of paper - having a business entity won't actually help you unless you have either income or are ready to take on investors.
- throwaway_xx9 10y agoAgreements in a failed partnership/business are worthless. I recommend programmers retain copyright in the software they write (and add a header to each source file) until the other cofounders meet certain tangible milestones, like sales or funding.
- ryandrake 10y agoYes, please take this advice. It's worth noting that California imposes a MINIMUM tax of $800/yr on LLCs (even if you have zero revenue), which, if you're on a true shoestring budget or are only half-serious about the business, is significant. This effectively encourages you to not form a company in CA if it's only expected to produce a tiny amount of income.
- _RPM 10y agoThe company would be started in Delaware, not CA.
- ryandrake 10y agoSee my other comment about having a 'nexus' in California (which is the topic here).
- gk1 10y agoIt doesn't matter where the company is incorporated, you will have to register it as a foreign entity in your state (in this case, CA). Take the time to read about this before doing anything. One impulsive action could lead to thousands of dollars in annual fees and even more in filing costs (accountants, lawyers).