LLCs for the Indie Developer

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An overview on LLCs for independent developers

An overview on LLCs for independent developers

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  • 1. LLCs for the indie developer An introduction to what they are ...and why they matter. Iowa Corridor iPhone Developers Group March 2011Wednesday, March 2, 2011
  • 2. Before we begin... • Read the obligatory big fat disclaimer • I am not a lawyer, so don’t sue me This briefing is intended to provide very general and high level information on the subject matter covered and is offered with the understanding that the presenter is not engaged in rendering legal, financial or tax advice. If legal advice or other professional assistance is required, do not hesitate to contact your appropriate legal, financial or tax professional. The presenter is in no way liable to you for damages. Your viewing of this briefing serves as your consent and agreement to this disclaimer.Wednesday, March 2, 2011
  • 3. In the beginning • It’s just you, some ideas, and a bag of chips • Tendency to focus on development • The carrotWednesday, March 2, 2011
  • 4. Eventually • Assets will accumulate • Acquire more liability • Bad people tend to take noticeWednesday, March 2, 2011
  • 5. The potential for risk grows • Someone may “claim” you are at “fault” • It could be for anything ...even stupid things - you stole something from them - you hurt or damaged someoneWednesday, March 2, 2011
  • 6. Fault == Liability • is this a legit claim vs. ploy for settlement? • If you are found to be at fault, you are liable • But hey, what if I’m not at fault ! ? • The burden of proof alone costs time and $Wednesday, March 2, 2011
  • 7. Limiting the liability to things we care about • Your time as a developer • Savings or investments • Personal assets • Future incomeWednesday, March 2, 2011
  • 8. Options to reducing exposure • Don’t be shady in the first place • Use EULA’s, SLAs, NDAs, and contracts • Operate as a business entity (not yourself) • Acquire good liability insurance early • Acquire good legal counsel earlyWednesday, March 2, 2011
  • 9. Types of formation Legally Financially Tax Type Responsible Responsible Liability You (no formation) You You You Sole Proprietorship / You / You You Partnership Partners Limited Liability LLC LLC You Company (LLC) Limited Liability LLP LLP Parnters Partnership (LLP) C Company Company Company Corporation Subchapter S Shared between Owners Company Company Corporation and CompanyWednesday, March 2, 2011
  • 10. Benefits of an LLC • Creates a separate legal entity • Liability protection of a corporation • PNL’s are “passed through” for taxation • Deduct certain expenses • Establish business credit • SurvivableWednesday, March 2, 2011
  • 11. But what if I’m lazy? • LLC’s are NOT required to file annual reports. (except in Iowa LLCs are Biennial) • !Shares == !Shareholders • Officers, Directors, et al are NOT required • LLC’s don’t file corporate taxesWednesday, March 2, 2011
  • 12. Where do I start? Options Duration Rough Cost PITA Meter File yourself 1-2 Months $50 Online > 1 Month 200 - 300 Service Attorney > 1 Month 200 - 1200Wednesday, March 2, 2011
  • 13. High level steps 1. Clear you business name with the state 2. File “Articles of Organization” with the state 3. Draft an “Operating Agreement” 4. Hold your first “Organizational Meeting” 5. Obtain a Federal Employer ID # (FEIN) 6. Fund a separate bank account for the LLCWednesday, March 2, 2011
  • 14. 2011 Iowa Code for LLCs • Iowa Code • Statutes • Title XII Business Entities • Subtitle 2 • Chapter 489Wednesday, March 2, 2011
  • 15. Clear your business name Iowa Department of State database US Patent and Trademark Office database While your at it... • domain name registrar • social media sitesWednesday, March 2, 2011
  • 16. Articles of Organization You will need: • Your business name • Registered Agent name • Physical street addr of registered agent You will receive: • Certificate of OrganizationWednesday, March 2, 2011
  • 17. Filing Services DIY your attorney (local) ... others, but do shop around and compare!Wednesday, March 2, 2011
  • 18. While True Do ✓Be thorough and consistent ✓Keep your finances separate from LLC ✓Document major activities ✓File biennial report to state of IA ✓Accurately carry through PNLs on taxes ✓Consider E&O and general liability insuranceWednesday, March 2, 2011
  • 19. More Resources, March 2, 2011
  • 20. Questions ?Wednesday, March 2, 2011