Initial Startup Costs?
Hi everyone! I have been working on a side project for the past 6 months. My CTO and I have finally reached a point where we are ready to launch our initial product (we have roughly 20+ customers who are already willing to pay as soon as we finalize).
Before launching our product we want to know if we need to establish an LLC or C-Corp? I also put together our "startup costs". Below are a few line items that we have thought of. Would love to get the communities feedback/thoughts on additional line items/things to consider:
Stripe Atlas (Incorporation): $500
Stripe (Payment Processing ): 2.9% + $.30
AWS Server Space: not 100% sure on this one
Gsuite (Email) $10/month
Zoom (Web Conferencing): $15/month
GMass (Email Automation): $20
Landen (Website Hosting): $15
Our software will be pulling user insurance data so we will need a strong privacy policy. Is this something we can create on our own or do we need a lawyer?
Thanks again for all the IH community support!
You mention requiring a "strong privacy policy", which seems to imply the data you are handling is relatively sensitive? If that's the case, there may be some cost implications from having to take a stronger "security posture" than, say, your usual run-of-the-mill website.
E.g. there may be additional AWS infrastructure you'd want provision (e.g. a bastion host, elastic search for log aggregation/storage etc). Also keep in mind the additional time for designing, building and maintaining such a platform.
That said, if you're targeting AWS you can leverage some of their "higher level" services to help circumvent some of the common pitfalls - e.g. not running EC2 infrastructure, use fargate or lambdas etc and let Amazon deal with that for you.
You can create a privacy policy, but a lawyer can likely create one that will actually protect you. They can always be changed, meaning, write it yourself for now but once the risk is too great/concerning and you have some real revenue pay the lawyer to improve it. It'll likely be cheaper if you've written it already and they're just improving it.
My 2 cents at least... not a lawyer.
Thanks Cam! Would you suggest forming an LLC/C-Corp before taking payments?
LLC/C-Corp will help protect you... but depending on your product, customers, how sensitive the data is, the likely hood might be very low that you'll have any issues (like someone suing you) with only a few hundred (or even thousand) customers. I'm not sure if this is the case for you or not--but if it is, consider the risks of going without an LLC/C-Corp vs not for the short term. In my opinion, the only reason not to pull the trigger is if you aren't sure you'll make any real revenue and you're on a tight budget and can't afford it.
Also, at least from what I understand, go C-Corp (or S-Corp) if you ever might want to accept VC funding or give equity to non-founder employees. Otherwise LLC should get the job done.
Again, no expert here. Just what I've come to understand with my own projects.
Domain name(s), annual fees for your business (100-1000 per year?), minimum wage for the employees/cofounders if you form a c-Corp, some sort of marketing and/or analytics