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Thanks! This is my first foray into business of any kind and I’m really looking for the liability protection offered by being a registered business entity. Si

by swman 5y ago

Thanks! This is my first foray into business of any kind and I’m really looking for the liability protection offered by being a registered business entity. Since I don’t have any revenue yet should I then dip into my amount set aside for this business to pay for those? You said if I can’t afford that the business isn’t viable, so just trying to understand. Thank you!

brudgers 5y ago
How to treat it as a business decision: What liability do you actually have? How will a forming a business entity protect you from actual liabilities? What additional liabilities will forming a business entity incur? How does the ongoing cost of maintaining a business entity effect cash flow from the business? I'd put it this way. Building an app isn't usually a path to forming a 'real' business. Most apps don't generate any cash flow. Very very few generate the few hundred dollars a year it costs to incorporate in California. Forming a business entity is easier than finding a revenue model. And finding a revenue model infinitely more important. Be in a hurry to make money. Don't be in a hurry to spend it. Cash on hand is critical. You can always form a business entity later. It is not urgent. Who would sue you? Why?
- swman 5y ago
  I see. Thanks for all these points to consider! In my case since it is a social app where people can meet virtually and also in person, the biggest risk I’m afraid of is people doing bad things that are against the TOS and I’m on the hook. I appreciate those questions to ask self.
  - brudgers 5y ago
    Don’t make a vehicle for bad behavior.
    - swman 5y ago
      It’s really not meant to be, more of an app to find interesting things. I tried looking up how dating or events app do things and most of those seem to have very structured business entities around them (like IAC)

by swman 5y ago

brudgers 5y ago

How to treat it as a business decision: What liability do you actually have? How will a forming a business entity protect you from actual liabilities? What additional liabilities will forming a business entity incur? How does the ongoing cost of maintaining a business entity effect cash flow from the business? I'd put it this way. Building an app isn't usually a path to forming a 'real' business. Most apps don't generate any cash flow. Very very few generate the few hundred dollars a year it costs to incorporate in California. Forming a business entity is easier than finding a revenue model. And finding a revenue model infinitely more important. Be in a hurry to make money. Don't be in a hurry to spend it. Cash on hand is critical. You can always form a business entity later. It is not urgent. Who would sue you? Why?

swman 5y ago
I see. Thanks for all these points to consider! In my case since it is a social app where people can meet virtually and also in person, the biggest risk I’m afraid of is people doing bad things that are against the TOS and I’m on the hook. I appreciate those questions to ask self.
- brudgers 5y ago
  Don’t make a vehicle for bad behavior.
  - swman 5y ago
    It’s really not meant to be, more of an app to find interesting things. I tried looking up how dating or events app do things and most of those seem to have very structured business entities around them (like IAC)