Ask HN: When do you need to get incorporated?

Formation of an entity, whether a corporation, partnership, or LLC, is usually driven by three concerns:

1) liability protection; 2) tax compliance and structuring; and 3) establishment of ownership.

1 - Whether the first factor is a major concern for you is going to depend on where you live and work, where your customers reside, and the nature of your business. Compared to a trucking company, manufacturer, or other brick-n-mortar business, the need for liability protection is likely to be less if the primary product is a web service. Of course, if your ebook is titled "how to build a rail gun in your back yard with toothpicks and electricity" you might want a little more liability protection :)

2 - Tax advantages are very individualized decisions and you'd probably want to consult an accounting or tax professional in your area to determine how this affects you. But in general, if you plan to start out small this will be a less important consideration.

3 - Establishment of ownership is crucial when you have more than one founder. But if this is just you, the concern about structuring ownership is reduced.

Ultimately, it's a personal decision as to whether the benefits of having a formal structure are worth the cost in time and money to have one prepared. But if any of the factors listed above are important to your business, then you'll want to at least consult an attorney and weigh your options.

I would say, if you're selling a pure product and not a service, you could wait to incorporate. Liability is more of an issue if you're working directly with clients or have a product that is intrinsically more risky.

I just want to put in a pre-order for "how to build a rail gun in your back yard with toothpicks and electricity"!