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If I Launched a Startup - Cheat Sheet

startuplawyer.com

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Re: If I Launched a Startup - Cheat Sheet

#11

Post by tptacek »

idlewords wrote: post #7

Can't resist giving a shout-out to the sole proprietorship without outside funding. It's pretty amazing how much cheaper it has gotten to start a whole range of software businesses in the last three years.

Can you get insurance? Have you had trouble invoicing people without them withholding taxes on your behalf? Is your company liable for your bandwidth, hosting, and office expenses, or is your mortgage?

Lots of smart people seem to use sole proprietorships, but I don't understand why. I mean that seriously, not rhetorically: this is something I don't understand. LLCs are comically easy to set up.

Re: If I Launched a Startup - Cheat Sheet

#12

Post by phil »

idlewords wrote: post #7

Can't resist giving a shout-out to the sole proprietorship without outside funding. It's pretty amazing how much cheaper it has gotten to start a whole range of software businesses in the last three years.

Are you personally liable for the services you provide? That seems scary, to say the least.

Re: If I Launched a Startup - Cheat Sheet

#13

Post by idlewords »

tptacek wrote: post #11
idlewords wrote: post #7

Can't resist giving a shout-out to the sole proprietorship without outside funding. It's pretty amazing how much cheaper it has gotten to start a whole range of software businesses in the last three years.

Can you get insurance? Have you had trouble invoicing people without them withholding taxes on your behalf? Is your company liable for your bandwidth, hosting, and office expenses, or is your mortgage? Lots of smart people seem to use sole proprietorships, but I don't understand why. I mean that seriously, not rhetorically: this is something I don't understand. LLCs are comically easy to set up.

I told myself I would set up an LLC as soon as it had some practical benefit to me, and five years later...

I don't mean that to be flippant. I can see many good arguments for it, including the ones you list, but in my specific circumstances (no clients to invoice, clear line between personal and business expenses) it has been simpler to remain a sole proprietor.

That said, what I wanted to stress was the idea of not taking outside funding, however you choose to structure things.

Re: If I Launched a Startup - Cheat Sheet

#14

Post by tptacek »

idlewords wrote: post #13
tptacek wrote: post #11

Earlier quoted context omitted.

Can you get insurance? Have you had trouble invoicing people without them withholding taxes on your behalf? Is your company liable for your bandwidth, hosting, and office expenses, or is your mortgage? Lots of smart people seem to use sole proprietorships, but I don't understand why. I mean that seriously, not rhetorically: this is something I don't understand. LLCs are comically easy to set up.

I told myself I would set up an LLC as soon as it had some practical benefit to me, and five years later... I don't mean that to be flippant. I can see many good arguments for it, including the ones you list, but in my specific circumstances (no clients to invoice, clear line between personal and business expenses) it has been simpler to remain a sole proprietor. That said, what I wanted to stress was the idea of not…

We are very much on the same page regarding funding, which is one of the things militating my LLC advocacy. If you think you can just get starting without goofing around with admin details and funding pitches, LLCs are great.

Re: If I Launched a Startup - Cheat Sheet

#15

Post by chc »

tptacek wrote: post #5

Note that while these are probably the best practices for a company that knows it is immediately going to take funding , LLCs and S-Corps are valid choices for companies that aren't sure or that are going to be making money before they take funding. The S-Corp in particular has some attractive features: it simplifies equity grants to employees compared to an LLC, and taxes are easier to deal with in a C-Corp (there's…

> you can probably get one via 1-click on Amazon now

That is almost literally true, only it's Nolo instead of Amazon.

Re: If I Launched a Startup - Cheat Sheet

#16

Post by idlewords »

phil wrote: post #12
idlewords wrote: post #7

Can't resist giving a shout-out to the sole proprietorship without outside funding. It's pretty amazing how much cheaper it has gotten to start a whole range of software businesses in the last three years.

Are you personally liable for the services you provide? That seems scary, to say the least.

I am, but I guess I don't find it so scary.

Re: If I Launched a Startup - Cheat Sheet

#17

Post by tptacek »

idlewords wrote: post #16
phil wrote: post #12

Earlier quoted context omitted.

Are you personally liable for the services you provide? That seems scary, to say the least.

I am, but I guess I don't find it so scary.

This sounds totally reasonable since you've thought it through, and you can always get an LLC before you do any kind of business that would change that calculation.

I just want to advocate for the stance that, if you're not sure, you should err on the side of having limited liability. Your business is probably going to fold, and when it does, it's probably going to have liabilities.

Re: If I Launched a Startup - Cheat Sheet

#19

Post by idlewords »

tptacek wrote: post #17
idlewords wrote: post #16

Earlier quoted context omitted.

I am, but I guess I don't find it so scary.

This sounds totally reasonable since you've thought it through, and you can always get an LLC before you do any kind of business that would change that calculation. I just want to advocate for the stance that, if you're not sure, you should err on the side of having limited liability. Your business is probably going to fold, and when it does, it's probably going to have liabilities.

Even though it's completely hypocritical I wholeheartedly join you in your LLC cheerleading. Fast, easy, not expensive.

What I've found by far the hardest as a one-person business is finding a lawyer and an accountant. It's hard to know where to start looking, and there's so much startup money sloshing around that it crowds out smaller fish like me.

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