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I'm not a laywer, but this scared me: " There’s really no need to worry about setting up the business logistics from the onset since these are all secondary act

I'm not a laywer, but this scared me: " There’s really no need to worry about setting up the business logistics from the onset since these are all secondary activities in comparison to what really matters: the business. Also, no need to initially worry about incorporation, but do assume that anything government-related will take longer than expected." You're already pulling in $70K in 6 months and you're clearly operating what looks to be a company. Seems to me you're putting yourself up to some serious liability if something were to go wrong. Also, getting all your IP and other legal issues sorted out will save you massive headaches later on. Sure if this fails and no one cares to fight over equity, IP, and no customers sue, you might be fine. But what if it's a rousing success? You could be setting yourself up for some undue stress and some tax ramifications that outweigh putting it off.

kevinyun 13y ago
Thanks for calling this out. When I started this, I really had nothing to lose (no personal assets of significance). Since there's something to lose now, I can definitely assure you the business will (very) soon be an entity with liability protection.
- jacalata 13y ago
  If you haven't already, you should consult an accountant ASAP to check whether you need to pay estimated taxes before year-end to avoid a penalty.
- jonathanjaeger 13y ago
  I see what you're saying and I used to think like this. But you can't think about what you have to lose now, you have to think about you could lose in the future. For example, I'm reincorporating my company and talked to a startup lawyer this week. Did you know that if you incorporate in this calendar year, if you hold on to your stock in your company for 5+ years, you pay no capital gains taxes up to $10 million. Basically, if you ever sell your company many years from now, you have some big upside. It's not guaranteed that Congress will grandfather in 2014 for this rule. Once again, I am not a lawyer and only paraphrasing. It's this example and dozens of other things you might not know and could potentially hurt you in the future. But glad you're getting it taken care of.
- blisterpeanuts 13y ago
  I have always understood that setting up a corporation (LLC or S Corp or C Corp) was the first thing one should do, not the last. Perhaps there are tax/revenue/productivity disadvantages to corporations that I'm unaware of? Just as a trivial example of what the lack of incorporation can cause, my neighbor decided to open a dance studio, foolishly signed a 5-year lease for a space that was unrealistically expensive, and proceeded to fail. She was threatened with a lawsuit to collect the rent. Rather than declare personal bankruptcy which would drag her husband down as well, she negotiated a deal to keep paying some portion of the rent, and had to find a part-time job to raise the money. No more business, and now indentured to some sleazy landlord, all because she didn't think to form an LLC at the outset.

kevinyun 13y ago

Thanks for calling this out. When I started this, I really had nothing to lose (no personal assets of significance). Since there's something to lose now, I can definitely assure you the business will (very) soon be an entity with liability protection.

jacalata 13y ago
If you haven't already, you should consult an accountant ASAP to check whether you need to pay estimated taxes before year-end to avoid a penalty.
jonathanjaeger 13y ago
I see what you're saying and I used to think like this. But you can't think about what you have to lose now, you have to think about you could lose in the future. For example, I'm reincorporating my company and talked to a startup lawyer this week. Did you know that if you incorporate in this calendar year, if you hold on to your stock in your company for 5+ years, you pay no capital gains taxes up to $10 million. Basically, if you ever sell your company many years from now, you have some big upside. It's not guaranteed that Congress will grandfather in 2014 for this rule. Once again, I am not a lawyer and only paraphrasing. It's this example and dozens of other things you might not know and could potentially hurt you in the future. But glad you're getting it taken care of.
blisterpeanuts 13y ago
I have always understood that setting up a corporation (LLC or S Corp or C Corp) was the first thing one should do, not the last. Perhaps there are tax/revenue/productivity disadvantages to corporations that I'm unaware of? Just as a trivial example of what the lack of incorporation can cause, my neighbor decided to open a dance studio, foolishly signed a 5-year lease for a space that was unrealistically expensive, and proceeded to fail. She was threatened with a lawsuit to collect the rent. Rather than declare personal bankruptcy which would drag her husband down as well, she negotiated a deal to keep paying some portion of the rent, and had to find a part-time job to raise the money. No more business, and now indentured to some sleazy landlord, all because she didn't think to form an LLC at the outset.