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Ask HN: What is legally required to run a small service-based web application?

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Re: Ask HN: What is legally required to run a small service-based web application?

#21

Post by patio11 »

IgorPartola wrote: post #16
patio11 wrote: post #11

You don't need a legal structure to charge people money. Sole proprietorship is the most common form of business in the United States -- by quite a large margin. For example, BCC is structured as a sole proprietorship: when someone pays me for bingo cards, they're really paying me for bingo cards. You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website de…

Thank you for a detailed reply. What do you recommend as a source for the Terms of Service. Is it worthwhile to get it from a lawyer or is there a sort of "industry standard"?

You have permission to rewrite (any of) mine, if you want them. Wordpress also has theirs available under a very permissive license. NOLO presumably has one available in their books.

If you pay a lawyer $1,000 to draft terms of service, your lawyer will have $1,000 more in his pocket than he otherwise would.

Re: Ask HN: What is legally required to run a small service-based web application?

#22

Post by kmanlives »

IgorPartola wrote: post #18
kmanlives wrote: post #10

I'm in the US (Georgia), and the first thing I did to limit liability is to form an LLC (simple overview: http://en.wikipedia.org/wiki/Limited_liability_company )

I realize the laws are different between the two states, but how expensive and time-intensive was the process?

I had an independent accountant do the majority of the work for me for a total of $750. This included virtually all the setup, including verifying the name wasn't taken, filing the paperwork (state and local), all the official docs, getting TaxID, etc.

The process only took a few weeks from start to finish, which was a nice surprise.

Re: Ask HN: What is legally required to run a small service-based web application?

#23

Post by messel »

patio11 wrote: post #11

You don't need a legal structure to charge people money. Sole proprietorship is the most common form of business in the United States -- by quite a large margin. For example, BCC is structured as a sole proprietorship: when someone pays me for bingo cards, they're really paying me for bingo cards. You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website de…

I'd just like to add that there are costs to doing business that you can claim that are well within your right. I'm not a tax or legal specialist but things like servers, shipping costs, and your unpaid time may all be deductible to balance against your revenue.

It's worth it to hire an accountant to make sure your business is crystal clean, and that you're not penalizing yourself unnecessarily.

Re: Ask HN: What is legally required to run a small service-based web application?

#24

Post by bradleyland »

patio11 wrote: post #11

You don't need a legal structure to charge people money. Sole proprietorship is the most common form of business in the United States -- by quite a large margin. For example, BCC is structured as a sole proprietorship: when someone pays me for bingo cards, they're really paying me for bingo cards. You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website de…

You're 100% right from a technical standpoint, but I disagree with your opinion on the liability issues. I know it seems inconceivable when you start your business, but being sued is a possibility for just about anyone. It's entirely possible for your business to be sued because of the actions of an employee, for example. If that happens, and you're a sole proprietor, you are the one being sued.

This might sound like paranoia, but I'm living it, and you're right about another thing. It sucks. We have a corporation, one person in the organization did something none of the other members were aware of, and now we're being sued. The plaintiff even went so far as to try and sue all of the partners personally. Fortunately, the courts set the bar really high for breaching the corporate firewall. Being sued personally is no joke. If someone gets a judgement against you for some exorbitant sum of money, it's hard to resolve. It can follow you around for a long time.

Setting up a corporation is so simple, and so inexpensive that I don't understand why anyone wouldn't do it. I respect the fact that you've built a very successful business entirely on your own, and entirely organically, but operating without a corporation seems like flying trapeze without a net.

Re: Ask HN: What is legally required to run a small service-based web application?

#25

Post by patio11 »

messel wrote: post #23
patio11 wrote: post #11

You don't need a legal structure to charge people money. Sole proprietorship is the most common form of business in the United States -- by quite a large margin. For example, BCC is structured as a sole proprietorship: when someone pays me for bingo cards, they're really paying me for bingo cards. You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website de…

I'd just like to add that there are costs to doing business that you can claim that are well within your right. I'm not a tax or legal specialist but things like servers, shipping costs, and your unpaid time may all be deductible to balance against your revenue. It's worth it to hire an accountant to make sure your business is crystal clean, and that you're not penalizing yourself unnecessarily.

your unpaid time

Not deductible in the US. It isn't a close question, either.

Re: Ask HN: What is legally required to run a small service-based web application?

#27

Post by mgkimsal »

Where abouts in NC are you? I'm in Raleigh, and would be happy to meet up and show you some of how I'm setup. I charge yearly subscriptions for digital content, as well as one-off sales. I use both GC and PP for checking out - no sense in limiting yourself too much, imo. I have sales from around the world, and GC and PP have covered the overwhelming majority of those sales.

EDIT: Ahh... you're in Durham. I've got to be in Durham this afternoon. If you'd like to get together, ping mgkimsal@gmail.com. Also, I'll be at the tripug PHP meeting in Carrboro next Wed evening at 6:30 if you'd care to meet up and review stuff in more detail.

Good luck.

Re: Ask HN: What is legally required to run a small service-based web application?

#28

Post by arethuza »

kmanlives wrote: post #22
IgorPartola wrote: post #18

Earlier quoted context omitted.

I realize the laws are different between the two states, but how expensive and time-intensive was the process?

I had an independent accountant do the majority of the work for me for a total of $750. This included virtually all the setup, including verifying the name wasn't taken, filing the paperwork (state and local), all the official docs, getting TaxID, etc. The process only took a few weeks from start to finish, which was a nice surprise.

In the UK setting up a limited company costs under £100, can be done online and takes a few hours.

Re: Ask HN: What is legally required to run a small service-based web application?

#29

Post by mgkimsal »

IgorPartola wrote: post #18
kmanlives wrote: post #10

I'm in the US (Georgia), and the first thing I did to limit liability is to form an LLC (simple overview: http://en.wikipedia.org/wiki/Limited_liability_company )

I realize the laws are different between the two states, but how expensive and time-intensive was the process?

Setting up an LLC in NC is $200 initially, then $200 every April. I didn't quite grok that at first, because I'd filed my LLC paperwork in March, then needed to pay the $200 again in April - should have just waited until May.

Getting an EIN from IRS is free and took about 10 minutes.

Not sure about any local paperwork you'd need to file in NC - I didn't have to file any in Franklin county.

Re: Ask HN: What is legally required to run a small service-based web application?

#30

Post by damoncali »

IgorPartola wrote: post #16
patio11 wrote: post #11

You don't need a legal structure to charge people money. Sole proprietorship is the most common form of business in the United States -- by quite a large margin. For example, BCC is structured as a sole proprietorship: when someone pays me for bingo cards, they're really paying me for bingo cards. You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website de…

Thank you for a detailed reply. What do you recommend as a source for the Terms of Service. Is it worthwhile to get it from a lawyer or is there a sort of "industry standard"?

There are boilerplate documents, but they need to fit your business. Go find a good, efficient lawyer who specializes in this sort of thing and you can get the whole thing done for under a grand or so. LLC, TOS, PP, and any corporate docs you need.

It's not difficult stuff, but if you're going to do it (and I would), do it right.

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