At what point should one form an LLC? I mean, let's say a project is not yet generating enough income to even pay the fees to incorporate, should the entrepreneur wait?
Just curious.
Just curious.
It's a spectrum of risk, with coding alone with no customers on one end and a full fledged startup on the other. When you start signing contracts, you want the company to be on the hook for any breach of those contracts. And you'll probably want a separate bank account and a professional looking name on the signature line anyway. More importantly, if someone else is working with you, you need to make sure there's an entity that will own all the IP, and that ownership is clearly defined, with everyone subject to vesting to protect you from the co-founder walking away from the business.
disclaimer - I'm a startup lawyer but not your lawyer...
I completely understand and I respect that you're willing to even post anything at all.
The truth is if you're just living paycheck to paycheck it's pretty unlikely you'll get sued there's nothing to win. Blood from a stone and all that.
The key to assessing risk is figuring out what kind of damages your client can incur which is what they can recover via a suit.
One other note LLCs are not the preferred structure for taking investment S and C corps are better for this.