Ask HN: When working on a side project with a collaborator, do you incorporate?

20 points·ang··4 comments

I'm about to start a side project with a collaborator I haven't worked with before and we expect it to generate a small amount of revenue. I'm thinking of incorporating as an LLC once we're done building to protect us both.

In past projects that didn't involve money this didn't seem necessary. Has anyone else done this for their side projects? What about bank accounts?

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I think whether to incorporate early or not depends more not on revenue but on risks of being financially liable. In other words, if it's a straightforward service or product you are going to deliver with your collaborator and you cannot imagine a massive debt or litigation, or explicit contract that deems you liable for a potential financial loss of your customer due to using your product or service — then incorporating can be an extra burden.

Incorporate, only if/when it begins generating revenue. As of the other concerns, I keep separate emails, hosting servers, SaaS subscription, PayPal/Stripe/Payoneer/bank accounts for every side project that might bring in revenue, even negligent.

This is really important.

If possible run all your expenses through a single dedicated personal bank account. Where each of the founders transfers into this first and expenses are paid from here. Saves a tonne of hassle later.

IP ownership comes into play if you don't. iirc you both "own" the IP/source code/etc and things can get very messy if one of you wants to go forward with the idea and the other doesn't.

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