Entrepreneurship & Small Business

Launching an app - should I incorporate?

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  • Oct 12th, 2021 10:11 pm
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[OP]
Newbie
Aug 23, 2021
2 posts
2 upvotes

Launching an app - should I incorporate?

Hello All

I'm currently a solo developer residing in Ontario, Canada and will be launching an ios app in the near future. I wanted to get some advice on whether it is worthwhile to setup a corporation vs launching as an individual. I don't expect the app to make much money (at least initially) but thought it could be worthwhile to form a corp just in case I get sued, want raise funds and to protect my privacy.

Hopefully there are some app devs on here who have experience launching individual apps interested in what your approach is
9 replies
Deal Addict
Dec 13, 2007
2026 posts
539 upvotes
Toronto
Don't worry too much about being sued. I mean, TOO MUCH. Chances of you getting sued are proportional to your net worth. So if you are not already rich, nobody will be bothering you unless you really screw someone over. Because you can't squeeze water out of a stone :)
Member
Apr 2, 2020
205 posts
89 upvotes
If someone wants to sue you, a corporation will not protect you from being sued personally.

Also....I hope you're not doing something that might get you sued. Smiling Face With Sunglasses
Banned
Jun 21, 2021
59 posts
36 upvotes
why not incorporate?

what are cons of incorporation for doing this?
[OP]
Newbie
Aug 23, 2021
2 posts
2 upvotes
peterschiff wrote: why not incorporate?

what are cons of incorporation for doing this?
Just time & costs - from my understanding you have to pay fees each year & pay for proper accounting etc

I can launch right away as an individual vs several months as a corp since you need to get a DUNs #
Member
Apr 6, 2019
219 posts
76 upvotes
GTA
propr1 wrote: Just time & costs - from my understanding you have to pay fees each year & pay for proper accounting etc

I can launch right away as an individual vs several months as a corp since you need to get a DUNs #
If you plan to convert this app into something huge in the long run, then yes it's better to have everything in place from the start, i.e. incorporate etc.

If this app is just for fun , you won't make much etc or you are just testing waters and would like to see how it goes, just go with the sole proprietor route.

Legal stuff & suing etc is an aspect but not too big, if you are a law abiding person anyways..
Sr. Member
May 29, 2012
602 posts
244 upvotes
Southern Ontario
Unless your app is something that is legally risky like telling people smoking is good for you or something along those lines I wouldn't worry about lawsuits.

You always have the option later to incorporate and transfer the app ownership to the corporation.

The cons are the cost, $1000+ up front if you dont do it yourself, plus have to file taxes every year for it which could be another $1000+ with an accountant. My business I do the bookkeeping and bank recs and I still get charged $3000 annually from my accountants just to do closing entries, look everything over for major mistakes and file it.
Deal Addict
May 9, 2003
1938 posts
1183 upvotes
Pronoia wrote: If someone wants to sue you, a corporation will not protect you from being sued personally.

Also....I hope you're not doing something that might get you sued. Smiling Face With Sunglasses
This is mostly incorrect.

A corporation will most definitely limit your liability. It is VERY difficult to "pierce the corporate veil" and go after personal assets belonging to individuals in a Corp.

This is one of the benefits of a corporation.
Member
Apr 2, 2020
205 posts
89 upvotes
bizzyseller wrote: This is mostly incorrect.

A corporation will most definitely limit your liability. It is VERY difficult to "pierce the corporate veil" and go after personal assets belonging to individuals in a Corp.

This is one of the benefits of a corporation.
Actually my information isn't "incorrect" as I speak from personal experience.

Just wondering what your background is? Are you a corporate lawyer?
Deal Addict
User avatar
Jan 19, 2007
1317 posts
670 upvotes
Torontario
bizzyseller wrote: This is mostly incorrect.

A corporation will most definitely limit your liability. It is VERY difficult to "pierce the corporate veil" and go after personal assets belonging to individuals in a Corp.

This is one of the benefits of a corporation.
As I mostly agree :) and in support of this under-rated comment

I would say the following: in launching business every time a good strategy is "compartmentalization" - which is equivalently true for both successes and for potential failures.
Not mixing cash-flows and fire-walling liability is important - as ideas arise and different partners come for different strokes of luck and opportunities, you can easier separate such.
And on top it tends to be more tax-efficient even at small scale (SMB tax credit e.g.)

Once you set this disciplined mindset, the easier it is when new things come along.

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