Ask HN: Best Legal Entity to Create for a Single Founder Non Profit? | Hacker News Reader

Ask HN: Best Legal Entity to Create for a Single Founder Non Profit?

2 pointsmaresca4 comments

I have been working on a startup over the past 2 years now. After a lot of consideration, I have decided that the success of the startup is more important than monetizing the startup. Because of this, I want to start some type of non-profit legal entity for my startup. I have done research on non profit organizations, and they require a board to be formed. I have a very distinct vision for this start up and don't want to give control away to other people. Also, I could not take a developer's salary if I were to start an NPO. I have no want of monetizing this startup. I have no plans of running advertisements on my website, as they would actually be detrimental to my vision for a startup. I don't plan on trying to get funding from capitalists or angels because they usually want a stake in the company and I'm not after money. I do plan on taking donations. I want to use the donations on hosting, and if the site takes off, a developer's salary for myself, so I can work on it full time. I plan on running this startup until my last breath, and there is not an amount of money it can be bought for.

What is the best type of legal entity to form for a person in my situation?

Is creating a successful startup without any goal for riches just a pipe dream?

> What is the best type of legal entity to form for a person in my situation?

Is it remotely possible that what you're doing might result in legal action taken against you by one of your users? If so, I'd go with an LLC to separate your personal liability from your corporate liability. If not, you might be fine treating it as an S-Corp. I would suggest the LLC, though. [This is not legal advice. I am not a lawyer.]

> Is creating a successful startup without any goal for riches just a pipe dream?

Not at all. What would lead you to think it's unreasonable?

Do you think the costs involved in hosting a large scale web application could be paid for entirely from donations?

I would doubt that a "large scale web application" would be covered by donations, unless it were truly exceptional, like Wikipedia. I certainly wouldn't want to bank on it. But it's possible.

I was interpreting your comment about not having an eye for "riches" as meaning that you weren't looking for the big exit that many of the founders at HN are looking for (see the conversations a few weeks back about how retiring on $4MM might not be "possible"). "A successful startup" could just mean that it covers its own costs and teaches you something along the way. At least, I'm open to that interpretation. Some at HN would describe that dismissively as a lifestyle business.

Bottom line: I don't know what your needs are for launching and maintaining the app. At some point, you'll need to decide who's going to pay for the costs: you (out of pocket), the users (through donations or subscriptions), or a third party (advertisers or data miners). Without some external source of funds, it'll fall back to you. That might not be a bad thing, but if you truly are talking about a "large scale web application" along the order of ... well ... even modest successes like Quora or Outright or something ... well ... the money's going to need to come from somewhere. I wouldn't count on donations being the source. But that doesn't mean you shouldn't try.

I should qualify my comment about "modest successes" ... I have no idea what Quora or Outright look like from the inside. They could be wildly successful based on whatever metrics they have in place. I was just trying to differentiate that level of success from the Facebooks and Twitters.

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