Thanks for the advice. I think I'm going to hold off on actually making a service and consider doing something like Kickstarter. I want to see if I can get some funds to put together a better product and get a sense of the market / interest level.
Are there any protective steps I should take before doing that? I mean stuff like licenses / patents / trademarks / company formation etc.
One reason you incorporate or patent or trademark is to protect your capital (money) from taxes and lawsuits. If I understand you correctly, you currently have very little capital to protect. Once you've accumulated enough capital that it'd be painful to loose it, it's time to start thinking of protecting it with patents, trademarks, incorporation, etc. For now, just have fun.
1. The OP gives no indication (AFAICT) that he is judgement proof as an individual. Incorporation to avoid liability is thus plausible, though obviously he would have to balance the likelihood of his getting sued against the hassle of incorporating. Additionally, as a non-lawyer, I'm not sure it would be a good idea to try incorporating _after_ gaining assets from the venture: it seems like a recipe for trouble if he had to go to court.
2. Holding off on a trademark would be fine, though finding a unique name _should_ (IMHO) be done at the start, and at that point I'm not seeing a big reason not to trademark.
3. The stuff on patents makes no sense (at least to me) in this context.
That said, I claim no particular expertise on this topic.
If I understand you correctly, you currently have very little capital to protect.
On the contrary. If the OP goes into business without any sort of company as a legal shield and anything goes wrong resulting in legal action against them, then typically everything they personally own may be at risk: house, car, savings for the kids when they go to university, the lot.
> ... and anything goes wrong resulting in legal action
> against them...
Such as?
Without properly weighing the risk of a lawsuit, there's no way that we can conclude whether the risk is reasonable.
So, who might be out to sue you? To summarize an article from nolo.com [1]:
* An employee
* A landlord
* A supplier
* A customer
To mitigate these risks:
* Don't hire anyone
* Don't lease an office
* Don't buy goods on credit. Buy high quality goods when
you can't afford to have a problem with them.
* Have an "as is" end-user license agreement. Be very
cautious about making service quality guarantees.
Don't sell software that can cause damage or personal
injury.
If you have to do any of the above, it's time to incorporate. (For another take on when it's time to incorporate, read "The When to Incorporate Decision-Matrix" by Ryan Roberts, J.D. [2])
> Incorporation? Incorporate when you have a good
> reason to. (I still don’t, but I might do it after I
> go full-time, largely for purposes of dealing with
> Immigration.) If you’re selling B2C software, your
> number one defense against getting sued is promptly
> refunding any customer who complains, and that pretty
> decisively moots the LLC’s (oft-exaggerated) ability to
> limit your personal liability. You’ll be personally
> liable for debts from the business, but since the
> business is fundable out of your personal petty cash
> that isn’t the worst thing in the world. If sales
> collapsed tomorrow I’d be on the hook for my credit
> card bill, which runs about $1,200 a month — not a
> financial catastrophe for an employed professional,
> particularly when the business generates far more
> than that in profits well in advance of the bill
> being due. Sole proprietorship — i.e. merely
> declaring “I have a business” — is the most common
> form of business organization, by far.
)
You've changed your position fundamentally, from saying you have nothing to lose to saying that even if you have something to lose you aren't at much risk of actually losing it.
That may well be true, but for a trade-off of risking everything I own in this world vs. an hour with an accountant/lawyer who actually knows what they're talking about, it's a pretty easy decision.
Also, there are other reasons to consider setting up a formal business entity besides a possible legal shield. You may not be able to access various financial services as a private individual. It may have tax advantages. Simply keeping your personal and business finances separate from day one may save more time and money when it comes to doing your accounts than it cost to set up.
Again, I'm not saying these would necessarily be the case for the OP here. I'm just saying that based only on what we've been told here, no-one in this forum is likely to be in a position to give reliable advice, while a qualified professional who can ask the right questions in their own field of expertise and in the relevant jurisdiction could.
> You've changed your position fundamentally, from saying
> you have nothing to lose...
I specifically used the words "if I understand you correctly" as an invitation to the author to share more information, and to signal to the reader that I was making an assumption about his financial position, i.e. I assume he has very little capital. My exact words:
> If I understand you correctly, you currently have very
> little capital to protect.
Even before a kickstarter, you could set up a landing page detailing the features of a future product using the library and offer a beta signup. Nice way to gauge interest before even involving other people's money.
Are there any protective steps I should take before doing that? I mean stuff like licenses / patents / trademarks / company formation etc.