Ask HN: The Legal Side of Business & Hacking? | Hacker News Reader

Ask HN: The Legal Side of Business & Hacking?

4 pointsVuongN4 comments

Hi all: I am bootstrapping a web service/product (business?) at the moment and I am at a point where I need to look into making it official with incorporating, trademark etc. But since I am mostly the producer (design+development), I find the whole legal side of business very terrifying.

So, while I understand the whole bit about not taking law advices from the internet, I am simply trying to accomplish the followings in this post:

1) Confide to my (hacker) community the anxiety and fear I am going through as I try to get a business off the ground

2) Seek advices from those who went through this process before I did.

So here are my thoughts:

1) Fear & Anxiety: I have this great fear that as soon as I launch my business, someone is going to sue me for violating a patent that I haven't heard about. It drives me nuts.

2) I am so tired of going back between which to choose: LLC, S-Corp and C Corp. I have a few lawyer friends who are offering to do the incorporating for free. But then I have a fear that, what if my product actually make it big(!), they might change their mind and will want a lot of money later. My irrational fear of trusting anyone and everyone scares me.

3) I don't know whether I should incorporate a company just for the product I am building, or do I incorporate 1 business and then treat the product like a "made by BUSINESS-NAME"; that way, I can build more products in the future and not having to start a new business each time.

With all these fear and anxiety, I push forward. I hope I can get some words of advices, honest feedbacks, frank insults and most of all encouragement. Venturing on your own path sure feels lonely sometimes. But I remain enthusiastic about tomorrow :)

Thank you, everyone.

Hey - fortunately, your problems aren't actually too bad.

Of course, you can take my advice with a 'boulder of salt' ;)

1. Afraid of patent trolls? Well, there are a few ways to get rid of this fear. First, if your product isn't successful, no one will care if you are infringing - even patent trolls (unless you are a big company/name I am not aware of). Second, Let's say you do become successful and a patent troll sues you and is in the right - your product is successful, be happy about that. You'll most likely be able to come to an agreement to use the technology or be able to build your own tech around the patent at that point and stop using the patent's tech.

2. This is an easy one. When do you think you will be taking on investment? If your product is a success and you think your company will take on investment in the near term, then make it a C corp. Why? Because you have to be a C corp to take on a certain amount of investment and who can invest in you. I believe it is 1mm - but I could be wrong. Bottom line - most successful companies eventually have to become a C corp. But, let's say your timeline is for the long-term. You can become an S-corp and skirt some tax laws, favorably. An S-corp automatically turns into a C corp when taking on certain investment, growing to a certain size, or falling out of their definition of an S-corp. It's cool if you think you need the tax savings, but if not then why bother with the headache. LLC is the easiest to setup yourself. It gives you full control, good tax laws, and you can easily convert into a C-corp by merging it with one when you need to be labeled as such.

3. You incorporate your business. Your product will go under so many evolutions, changes, iterations, that you may not even recognize it 1 year from now.

Try to think of it this way; these are all technicalities at this point. Get these out of the way so that you are not putting effort towards these resource sucking details. Put your attention back into your product and focus on building something great!

Thank you so much for your words. I will definitely keep them in mind as I continue my research.

In term of your suggestion about incorporating the business, I assume that I need to trademark the product's name and taglines? Is that enough protection?

Again, thank you so much for your advices--very helpful!

Np - let me just say though that I am not a legal expert, I've only gone through the process before is all and can share my own advice.

Trademarks are always a good idea if you have certain intellectual property that is unique to your service (logo, taglines, ect).

Unfortunately, I cannot give you a specific suggestion for your situation.

However, I would say that if you expect to take on outside investment in the near future then you can save yourself a lot of headache by just starting as a C corp.

If you are going to build your company slowly, bootstrapped, growth all in-house - an LLC is probably your better option.

Actually, I am currently haven't the same struggle with question #3. My partner and I started an LLC and then later developed a product. Do we start a new business for this product? If so, do we dissolve the first business? Should the LLC start a new business? Use a DBA for the product? There are so many questions that aren't easy to research because of their specificity. It would be great for some experienced business hackers to weigh in.

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