6 ms·

Random question, when does one need to incorporate? I'm building an app slowly and only have a few $10s to spend every month. Clearly, I can not afford extra

by npk 19y ago

Random question, when does one need to incorporate? I'm building an app slowly and only have a few $10s to spend every month. Clearly, I can not afford extra expenditures. My friends will see a private beta, and then I'd like to start looking for some funding. Will I need to be incorporated before that point?

sabat 19y ago
From what I understand, you don't necessarily have to be incorporated to seek funding. That would happen as a matter of course if you got a deal. The main reason to incorporate or LLC is to protect yourself from legal liability. If someone sues you, you want to protect your personal assets from being part of that lawsuit. If you're not even going to be live, then you may not have anything to worry about.
- pg 19y ago
  Another reason to incorporate is so that, when you have multiple people working on something, there is an entity for the code to belong to.
  - nostrademons 19y ago
    I'm curious - if individual founders write a significant amount of code before incorporation, do they then have to legally sign over rights to the code to the corporation once it's been formed? Are there persistent legal problems that might arise from working first and incorporating later, or can everything be solved by a good lawyer? (Assuming a good working relationship between cofounders...if there's no legal framework and then things get sour, I'd imagine there're lots of problems that might arise...)
    - pg 19y ago
      It's not so much legal problems you have to worry about. When the code belongs to a company the founders collectively own, they have more incentive to cooperate. Till you have such an agreement, any founder could bail and take his code with him, as supposedly happened with Facebook. Arguably any startup whose founders would do such a thing would be doomed anyway, but even in startups where the founders can trust one another, having the company own the code tends to make them cooperate more, as I've heard marriage does vs. just going out.
eli 19y ago
Well, for one thing it insulates you from the company. If the company gets sued, you might lose the business, but hopefully not your house.

by npk 19y ago

sabat 19y ago

From what I understand, you don't necessarily have to be incorporated to seek funding. That would happen as a matter of course if you got a deal. The main reason to incorporate or LLC is to protect yourself from legal liability. If someone sues you, you want to protect your personal assets from being part of that lawsuit. If you're not even going to be live, then you may not have anything to worry about.

pg 19y ago
Another reason to incorporate is so that, when you have multiple people working on something, there is an entity for the code to belong to.
- nostrademons 19y ago
  I'm curious - if individual founders write a significant amount of code before incorporation, do they then have to legally sign over rights to the code to the corporation once it's been formed? Are there persistent legal problems that might arise from working first and incorporating later, or can everything be solved by a good lawyer? (Assuming a good working relationship between cofounders...if there's no legal framework and then things get sour, I'd imagine there're lots of problems that might arise...)
  - pg 19y ago
    It's not so much legal problems you have to worry about. When the code belongs to a company the founders collectively own, they have more incentive to cooperate. Till you have such an agreement, any founder could bail and take his code with him, as supposedly happened with Facebook. Arguably any startup whose founders would do such a thing would be doomed anyway, but even in startups where the founders can trust one another, having the company own the code tends to make them cooperate more, as I've heard marriage does vs. just going out.

eli 19y ago

Well, for one thing it insulates you from the company. If the company gets sued, you might lose the business, but hopefully not your house.