I am gearing up for releasing a web application, targeted at a small audience where I'd like to sell monthly/yearly subscriptions. I am wondering what kind of a legal structure do I need to have in place in order to do this properly. Specifically, I want to (1) limit my liability and (2) make sure that customers trust it enough to sign up. And of course, I'd like for it to not cost an exorbitant amount to set up.
Also, I am deciding between PayPal and Google Checkout for the payment processor. I have little experience with integrating either, and while PayPal is more widespread, Google's documentation seems to be clearer. Any recommendations?
Not sure if this matters, but I am doing all of this as a side-project, and have a full-time job.
Thank you.
EDIT: I am in North Carolina, US. There is nothing about this service that's region specific. Ideally, I'd be able to have international sign-ups. So far, I have had as many hits from Europe + Asia as from the US.
You will probably find that no B2C customer actually cares about the structure of your business, legally. Your website design matters 10,000 times more in terms of trust gained. Your mileage may vary if you sell B2B, particular B2BigFreakingEnterprise.
With regards to liability: your main defense against liability is not your corporate structure or your terms of service. It is not pissing anyone off so bad that they decide to sue you.
You can, if you choose, get an LLC and create a Terms of Service. These are more to allow you to sleep better at night than insurance against catastrophe: no matter what you do right now, if you get sued, life is going to suck.
You want to sell subscriptions? Paypal Website Payments Pro + Spreedly. You can do it in two hours of coding and about two days or so in time it takes Paypal to review your business. I do not recommend doing yearly subscriptions until you have history: doing so increases your risk profile.
Your main regulatory issue for the typical SaaS app is simple: you owe income taxes on it, both to the US and to North Carolina. Luckily, you will have very good records of sales (because you'll be able to grab them from Paypal). If you want to deduct expenses, make sure to record them and keep proof of them (generally, receipts work fine -- for e-receipts, print to PDF and put it in your Dropbox so that you don't lose it).