When should I register a LLC/S Corp?


4

I currently have a website in beta. I am not earning anything (for now) with this site. It doesn't have terms of service or the privacy policy listed on it.

It appears that some people's opinion is to not worry about the legal stuff until the website starts making money. Some say, you will need to create a LLC/S Corp even if you are not making money.

Since incorporating and maintaining a business costs a lot of money, should I have to worry about this or not?

Incorporation Legal Website Business

asked Apr 23 '10 at 09:22
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User2306
232 points

4 Answers


3

I asked myself the same question 3 days ago because I just lined up my first client.

My answer was: Before you start making money. Especially with an LLC, you want to have that protection in place before you take money from a client/customer and become liable.

Starting the LLC right away made the most sense to me, but others may have a different perspective.

answered Apr 23 '10 at 10:43
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Robert
80 points
  • I agree with Robert, the best thing to do would start that LLC right away. Depending on where you are, you probably dont have to pay anything yearly...unless maybe you were in CA or NYC. My research was limited to CA and NYC anyways. – Vnchopra 9 years ago
  • Plus when it comes to filing your Taxes, the LLC makes it seem personal and you can do it when you file your income tax. – Vnchopra 9 years ago

2

I believe there is not an answer to this question that applies to every startup entrepreneur.

The question is how much risk you are willing to absorb before you put a legal firewall in place. Right now, you may not have a proper understanding of the risks, so you probably should have an introductory conversation with a lawyer - something that many lawyers offer on a no-charge, no-obligation basis.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

answered Apr 23 '10 at 12:55
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Dana Shultz
6,015 points

2

Just because your site is not making any money it doesn't mean that nobody can sue you. If it is not your personal page, but a site meant to be used by others, consider both steps ASAP.

  1. TOC It is a great idea to put some sort of Terms of service. Don't write it for your users, write it for lawyer that can potentially take you to court.
  2. Incorporation does not cost much but it is important to limit your potential losses even further.
answered Apr 24 '10 at 00:21
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Usabilitest
1,698 points

1

Of all of the different kinds of incorporation, LLC is usually the cheapest and least amount of work. So it doesn't make sense not to go ahead and incorporate right away IF that is the kind of business structure you plan to use. LLC is not always the right choice, though.

Regardless of your business structure, you should definitely get the legal stuff done in advance. Otherwise, what terms are going to govern the transactions with your first customer. And trust me, you don't want to hold up getting paid from your first customer because you are rushing around trying to get you TOS and other stuff done.

answered Apr 23 '10 at 11:39
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Steve Montgomery
179 points

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