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Comment by zawerf | Hacker News Reader

Legal compliance is probably the worst part of building a side project.

For example for basic levels of protection, you at least want a terms of service and privacy policy on your site.

You'd think it's just copying and pasting some boilerplate. But say you want to allow user uploads, then you also need to not get screwed if someone uploads a picture owned by some copyright troll. So then you have to figure out how to get DMCA safe harbor status so you're not responsible for user content. And that requires: registering at a copyright office, monitoring email for timely takedowns, and communicating counter notices, etc. All of this work and we haven't gotten to GDPR compliance yet!

At one point you just go fuck it, it's a side project. Just wrap it in a LLC so it can't bankrupt you even if you do get sued. But now you have to deal with company formation laws which is yet another can of worms.

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At one point you just go fuck it, it's a side project. Just wrap it in a LLC so it can't bankrupt you even if you do get sued.

From experience: this is dangerous and completely wrong advice. The corporate veil can be pierced if the LLC is determined to be an "alter ego" of the individual, which isn't a difficult argument for a one-person side project.

I never actually made it to this step because it costs $800 to form a LLC in california.

I went with a more futile attempt to do everything anonymously, pay hosting with bitcoins, etc. But this is basically impossible from an opsec point of view (which should restore some faith in the legal system in the sense that I never figured out a way to opt out of it).

Subpoenas[1] basically cost nothing(<$100) for your typical lawyer to issue. Everything you touch will very eagerly give up all your info when subpoenaed (e.g., your typical domain registrar will spew your name, address, payment information, ip addresses logged in from, etc).

[1] https://en.wikipedia.org/wiki/Doe_subpoena

Form your LLC in another state. California is absurd.

Form it where it makes legal sense, not where you reside. You can also get a forwarding address there as well.

It also would be in your benefit to follow the laws of that area as well.

Not a lawyer but this does not sound like good advise. If you live in California, and the people working on the business are in California, California may decide you have a nexus here and that you’re subject to the tax.

Always consult your lawyer first. There are many reasons for doing the above. However, it's whatever is in your best interest and also field others for advice. You want a quorum.

If you live in California, forming an LLC in another state just means that you are now paying that other state, and California. You also get the joy and privilege of filing two state income tax returns. Oh, and the real kicker is that you're now subject to being sued in either state.

That's the point they're making. "Fuck it, it's a side project" acknowledges that it's not the right move, but that it's too onerous to do things the way they should be done. So you risk it and hope you have the time and money to fix it later before it becomes an issue.

I get the point, but I wouldn't want anyone reading that and taking the conclusion seriously. Forming an LLC in that case is pretty much a waste of time and money that offers a false sense of security.

> Forming an LLC in that case is pretty much a waste of time and money that offers a false sense of security.

Pro tip to people reading this, don't take generic advice about something that might have financial/legal implications...consult a lawyer/accountant.

Except that, realistically, most people aren't going to consult a lawyer or accountant for a small side project. I don't even really know how to hire a lawyer or accountant, or how to assess whether the person I pick is minimally competent to give me good advice, and I don't want to burn a few grand of my own money on a zero-revenue hobby project to guard against risks that will probably never materialise anyway. So instead, I'd chance it.

> I'd chance it.

Without consulting a lawyer, you don't know what you are chancing. I hardly call that a good bet.

Not knowing how to get a lawyer or accountant is not a good excuse for not consulting one.

If you consult a lawyer for 1 project, you do learn from the lawyer and become a bit more knowledgeable for the next project and may not need to consult a lawyer a second time if the new project is similar.

Maybe you could explain how to consult a lawyer or accountant instead. That would actually be really helpful for a lot of people who have never needed to retain a lawyer or accountant, don't know what to look for, and have no idea where to even begin to do so.

ok, good suggestion.

Step 1 - Find a Lawyer:

1a. Ask people you know. For example, if at a company, maybe you can ask the legal dept for a referral for your personal project. Lawyers know lawyers. Even a divorce or real-estate lawyer will know other lawyers in different specialties or reputations of firms. Ask bankers, dentists, any small business people, etc. - they use lawyers too.

1b. Use Google. Call 5 lawyers and setup a meeting to meet them.

Step 2 - Interview them:

Interview them like you interview any potential employee. What is their experience with small IT projects? Are you small potatoes to them? What are their fees? Do they have legal associates to do the grunt work for cheaper than a legal partner (partner will still review and be responsible)? What do they suggest you to do for your side project? Ask why to see if they can explain themselves well. How well do you communicate with them? Do they respond to your emails or telephone calls quickly? Do they have other partners who can cover for them when they go on holidays or are busy with other urgent cases? Can they let you do some of the work such as incorporating and registering a trade name because it is easy (to keep legal fees low)?

Step 3 - Evaluate them:

As they work, get them send you all their documents. Read the legalese and ask more questions. Do they still explain themselves well. How long do they take to do the work? Attention to detail is important. If their work sucks or you don't communicate well with them go find a new lawyer.

...in other words, side projects only for the rich who can afford to hire a lawyer.

(This can't be the actual answer, can it?)

> Not knowing how to get a lawyer or accountant is not a good excuse for not consulting one.

Lawyers and accountants industries are whole mess on its own. When you come to lawyer/accountant, he is really interested to charge you as much as he can, which creates a lot of conflicts of interests, and whatever he is saying to you can't really harm him.

One has to take calculated risks, and do research on his own to not be screwed by lawyers/accountants.

> I don't even really know how to hire a lawyer or accountant, or how to assess whether the person I pick is minimally competent to give me good advice

Reputation is one proxy you can use for trying to gauge competency - ask friends, family, or coworkers if they have someone they're happy with.

Ultimately, there's a few big things they need to do, and you can try to evaluate those things instead or as well:

1) Clearly explain things you need to know. This might be making you aware of paperwork you need to file, tradeoffs between choices, rationale behind why they're suggesting you do something, or what the tradeoff is so you can make your own decisions.

Some (many? most?) lawyers are willing to do a free initial consultation, so you can get a feel for this in person, if you don't have a recommendation or don't want to trust only reputation. Basically: Can they communicate effectively?

2) Keep you out of trouble. There's a limit to what a lawyer or accountant can do of course, but a pattern of surprise financial difficulties, or getting into frequent contract disputes or lawsuits are a bad sign. The IRS frequently correcting an accountant's filings would be another.

3) Stay on top of things. Is the accountant filing taxes late resulting in IRS fines? Paperwork not ready when they said it'd be? Asking for the same information several times because they keep misfiling it? Going incommunicado for months when you have questions?

It seems simpler in practice: It came up in conversation that my friend had gotten his will done. I mentioned I needed to get my will done. He liked his lawyer, and was able to explain some about what he liked about her approach and give me her name. So I scheduled a consult with her on her website after trading some initial questions over email, showed up as scheduled, and then traded more questions at her office. I didn't know all the right questions to ask - mine were mostly of the form "uhh, so what do I do?" - but she was able to volunteer explanations about state inheritance law that put her questions for me into context. And then she had recommendations for things to do and why, as well as things she'd recommend not bothering with and why (and the contexts under which that could potentially change in the future), without being pushy.

Based on my answers, she drafted a will for me, and I was able to come back and sign it a month later when I scheduled it. I think I paid half after the initial signing but before she drafted the will, and the other half after the signing? Now I can recommend her to my friends, or ask her if she has any recommendations for an accountant, or even other lawyers for specialized needs.

Could I have done more to vet her? Sure. But I did enough for my tastes. Can't let the perfect be the enemy of the good enough and all that.

Pro tip as someone who has experience in LLC-busting litigation: an LLC for an individual side project is totally a waste of time and money. In order to maintain the separation of liability, you need to maintain separate bank accounts, financials, everything.

Amended pro tip: consult a lawyer + accountant... and get business insurance.

And then there is no money left for the actual project.

If it's just a side hobby, why should you be getting the benefits of limited liability? The whole point of limited liability is to protect business investment, not hobbies.

And yes, that is the reason that CA charges $800 for LLC registration. Because if $800 is too big of an expense...then you're not running a business.

Definitely retain counsel no matter what for anything important.

I'm just saying I'd be surprised if there were a situation in which a lawyer would advise that registering an LLC is reasonable protection from all legal repercussions of your solo side project.

But would a lawyer ever advise against forming an LLC for a side project that might have liabilities, or just advise on the best language and jurisdiction? To me there is a big difference between "if you really screw up, they could try to pierce the veil and go after you personally" and "if you do everything right and your business still fails, you're automatically personally liable."

Probably not. I'm not saying "don't form LLCs" — it's probably in itself a good idea for any slightly serious project — but rather that it isn't a substitute for complying with the law.

I say this from experience because I once made exactly that mistake (formed an LLC that was otherwise unnecessary specifically to protect against potential legal consequences of a side project, only to find out from a Google Alert six months later that a lawsuit had been filed against me personally).

> find out from a Google Alert

Does this mean there was an article or something online before you were contacted about the lawsuit?

Yep, that one was an interesting surprise.

I am very curious what lawsuit was about..

https://news.ycombinator.com/item?id=5547151

https://techcrunch.com/2013/04/14/napster-fm-is-an-open-sour...

https://www.law360.com/cases/52953cd03fdd847f5200a5c8

All legal repercussions? Definitely not. You're generally personally responsible for torts and crimes you personally commit, even if the company may be too. And personal guarantees around contracts or statutory liability provisions around wages and taxes can increase personal liability further.

But yes, when the proper formalities and separations are maintained, there are many situations where registering and operating through an LLC will limit personal liability.

Example: company signs a contract with no personal guarantee but with a commitment to make 12 monthly payments. The LLC later lacks the funds (contract was signed in good faith). No personal liability.

Disclaimer: I'm not a lawyer, just a law geek layman and former law student. I agree that retaining counsel is the right advice for anything important.

I use to make good money going after contractors who thought their LLCs would protect them when they vanished with client money. Veil-piercing is actually quite simple for one-man LLCs. As a practical matter, the burden is really on the one-man LLC to prove that the veil should not be pierced, since it's usually pro forma for the plaintiff to show some evidence that the proper formalities and separations were not maintained. (For example, paying for a personal expense like lunch with LLC funds, even once, is enough to shift the burden to the LLC to show that the veil should not be pierced. Not having proper receipts for gas. Attempting to claim a business deduction for part of your garage if you're not charging the LLC market-rate rent. It's a really long list of don'ts. )

I think we're agreeing, mostly. The proper formalities and separations need to be maintained, and bad personal behavior is not shielded. I did it correctly when I had a one-man LLC, but you're right many don't.

Misconduct like "vanishing with client money" is a separate personal tort and/or crime (depending on the specifics) and would make it easy to pierce the veil anywhere regardless of formalities and separations.

That said, for more normal situations that aren't about misconduct, different states take different levels of strictness in analyzing the veil piercing question. YMMV.

I am so skeptical of this advice, I have been burned by accountants too.

This is a consequence of enforcing the letter of the law rather than the spirit of the law. Bad actors keep finding loopholes to exploit and politicians fix them with patchwork resulting in overly complex monstrosities of legalese with a million little exceptions. Of course this just adds to the loophole problem.

The only way to reliably fix this is to institute some form of judgment of whether or not an actor was following the spirit of the law. If they weren't they should have any advantages gained by skirting the law removed by force.

Of course this leads to a different set of problems with the potential for overreaching state actors. One way to combat this could be making the judicial branch much more independent than it usually is in most countries.

One person's loophole is another person's right.

The spirit-of-law comes into play at the enforcement level in the form of executive discretion rather that at the adjudication level.

Civil/Social policy behind a law may be brought up during adjudication to help interpret a law -- but if policy is your strongest argument you are usually in a losing case.

A big issue — at least in the US — is that American laws don’t work well because one American party wishes to destroy government to cut taxes on the rich.

Because that is their goal, they want government to work badly. So they obstruct change and improvement. Any system of laws needs to be changed as loopholes are discovered to improve the law. We can’t do that in the US because billionaires own one of our two parties.

Not all change is improvement, and the changes proposed by the (current) minority party are not to "improve the law", but to take more from those who work and give it to those who do not. I challenge you to find that particular sentiment anywhere in our founding documents -- if you think it ought to be there, there's a political process to put it there.

And the generic sentiment about how horrid it is to "cut taxes on the rich" ignores the fact that taxes almost exclusively impact "the rich" as about 40% of the population pays essentially zero taxes. It's very difficult to cut taxes on those who do not pay them.

"The rich" ~= 60% of the population? Yikes. How many percents are you including in your "almost"?

Well that's the question, where do you draw the line.

Income tax is actually quite low for even a significant amount of the 60% above that no-tax line.

It also ignores the fact that a significant amount of those in that 40% actually get paid credits back at tax time that they didn't pay in. That phenomenon is so well known that January-April sees a significant spike in Xbox and big screen TV sales from that money the government injects into the economy using EIC and other refundable credits.

Ultimately I'd rather see people who are investing in building businesses that hire people to get tax cuts, as those can meaningfully impact the economy. Our current tax scheme of high corporate tax and high personal capital gains tax directly disincentivizes investment and economic growth.

Well, I certainly don't draw the line somewhere that makes 60% of the US population definitionally "rich", nor do I think being able to afford an Xbox and a "big screen TV" qualifies one as such.

Personally I would draw it at an income where someone living within their means can afford to raise a happy, healthy, well-educated family and provide all with proper dental and medical care, including responses to unforeseen and serious emergencies, without being financially destroyed, and go on to retire in relative comfort.

Beyond that, you and I have deep ideological differences that I hardly think are worth airing in an internet forum, and I'm not going to bother.

I didn't say that either of those defines "rich". I said that a significant portion of the US doesn't pay taxes.

Most people would disagree with your definition as well, that's normal middle class, not rich. And most of them don't pay much in taxes either.

> I didn't say that either of those defines "rich". I said that a significant portion of the US doesn't pay taxes

Well, I didn't say you said that, so we're good. I'd say I more implied that you implied it.

> Most people would disagree with your definition as well, that's normal middle class, not rich.

Yes, that does sound more like a middle class lifestyle than a "rich" one, doesn't it?

> And most of them don't pay much in taxes either.

Most of who? A hypothetical middle class that meets my (possibly flawed) criteria for richness, or an actual middle class as defined by some percentile spread about the median household income?

What rate of taxation is "much in taxes"?

When I was squarely middle class I normally didn't pay more than about 5k in annual federal income taxes.

That's pretty reasonable. It's also hard to cut a number that small.

When you get into paying 50k, 100k+ in taxes, then a percentage tax cut will appear much larger.

I know plenty of people who have about 2k withheld throughout the year and then get 5k-15k "refunds" at the end of the year. That's what I was referring to with the xbox and tv comment, those refunds are often spent that way.

"Spirit of the law" is a myth. It is something invented by non-lawyers when they want to gloss over something, normally when they dislike how a law is written. Calling for people to comply with "spirit" is simply a call for some arbitor to enforce thier interpretation, thier opinion on spirit. We have judges for that already. Spirit is a dogwhistle for non-lawyers to be involved ... but we have that too. Non-lawyers, elected officials, write and pass the laws. Blame them.

Intent of the law might be a better term, but it is clear that intent of the law makers does matter when it comes to court cases trying to decide the actual extents a law can be applied. Even the most legalese specific law can have major gaps depending upon how you read certain words. I've read court cases where judges had to go back to when a law was written, look at other laws, look at how the law was originally applied, and then take this all into account when determining if a specific action was legal or not under such a law.

That is judges looking to "drafter's intent" to interpret the language used, something often necessary with very old/new laws. It is a standard tool. Spirit is different, grounded not in language and history but in lay opinion and emotion.

IIRC, in Europe it's harder for companies to exploit letter-of-the-law loopholes than in the US. So I think you do have a point, but there's more nuance in practice.

There's loopholes, but there's also boundaries. In Europe there is scope creep where the boundaries of what's legal versus illegal keep getting redefined. A good example is antitrust enforcement against Google. In the U.S., antitrust is pretty clear cut. In Europe, it's this amorphous thing, where regulators can fine you just because what you're doing rubs them the wrong way.

The European system is better at keeping up with the evolution of crime. The US is generally a step (years) behind.

The US obsession with loopholes and "letter of the law" is a historical religious thing. US is protestant, where the language of the bible is made availible to all. Everyone is free to read and invent an interpretation, to find thier own loopholes. Europe follows a more catholic tradition, where biblical language is interpreted through priests. Hence, european judges (legal priests) are given more authority to interpret language and smooth out rough edges. It is centuries-old culture.

Ah yes, Martin Luther, that famous American. Who can forget when he inspired President Henry VIII to break with the Catholic church!

The distinction I’ve heard is called Roman law (continental) versus common law (UK, its colonies and empire).

Exactly, the UK being home of one of the largest protestant traditions (COE). The specifics of biblical language and translation is a cornerstone of English political and legal history (see Henry VIII and associated fiascos).

But when people speak of European colonial law v common law, they are normally talking about French v. British. The Napoleonic tradition followed in former french colonies is very different than the British common law. And there are places (Louisiana and Quebec) where these two legal traditions were forced to merge. When comparing the two we still see the catholic v protestant split, which is expected given the history. The french relationship with language, that there is a government agency to define words, also leans towards a more authoritarian view of legal interpretation. America today doesn't even have an official national language.

I think a big issue you're nodding to is localized definitions.

For instance, why must you legally have a privacy policy? Because of a law in California.

What does that privacy policy entail? ¯\_(ツ)_/¯

You can write a privacy policy that say you are going to go out of your way to make any private information given to you as public as you can or sell it all to the king of Saudi-Arabia and if nobody reads that privacy policy then it's kind of meaningless. And very few people read the privacy policy.

People seem to think, well this is popular... so they can't be doing anything bad or someone would stop them. And with internet properties, that's simply not the case.

There's no implicit privacy or federal/global definition of what privacy rights people should have, if anything the rights are diminished the higher up the ladder you get. So people have to navigate a sea of differing definitions in massive legal documents which they aren't properly trained to do unless they already hold a law degree.

The legal stuff is the difference between playing around and being serious.

Unfortunately, the Internet has made it easy to harm and fuck over people far outside your circle of friends and acquaintances, so playing around isn't a viable option anymore.

I've never had a serious side-project, but what you describe in your comment has always been my main concern. I remember asking a while ago on HN if it was a good idea to incorporate asap when building a side project to make sure you are protected, and most answers were "nah f-it, just build your thing and don't worry about it". Wasn't convinced.

> Just wrap it in a LLC so it can't bankrupt you

There are many ways it can.

On the other hand: the tech industry is/was mostly entirely unregulated so far. For a long time, you could do whatever you wanted. Which other industry is as unregulated as software?

For example, you could make an app that collects arbitrary amounts of personal data. You could "promise" your users whatever you wanted, especially in the health and fitness space.

There is no GDPR compliance requirement for personal, non-commercial, side-projects. You can gather PPI on all the people in the world and use it on your own for non-commercial purposes and GDPR has nothing to say about that.

I think this is completely false. Do you have a source for that?

https://gdpr-info.eu/recitals/no-18/

That doesn't say what you claimed at all, not by the longest stretch of the imagination.

I think a side-project would classify as 'in connection with a professional activity'. This recital basically covers your personal rolodex.

But if you're creating a personal side-project for commercial ends you still need GDPR compliance, right?

Yes, and "commercial" is a pretty low bar here.

In general, this is true, but only if the side-project is absolutely for own, private reasons. As soon as there any economic activity, the GDPR applies, which is a very low bar that even some personal side-projects cross.

I'm so glad that if I had a revenue generating side project, I wouldn't have to worry about that horrible twisted maze of burdensome nonsense as long as I blocked EU countries. It's nice living in the US and having some modicum of autonomy left as someone on the developer side of things.

As a private developer, I agree, yet as a consumer and professional developer, I'm glad things move in this direction. And I assume the GDPR will provide a model for US regulation (just as the DMCA has influenced the European market as well).

BTW: You don't have to block them completely, just don't target them specifically (e.g. accept their credit cards).

As a consumer and professional developer, I feel no desire to wield a power to unfairly bully web services with unreasonable demands about their data pertaining to me.

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