Ask HN: Starting a bootstrapped startup | Hacker News Reader

Ask HN: Starting a bootstrapped startup

3 pointsgawker12 comments

Hi HN peeps! HN's been an amazing place and over the past couple of months, I've learnt so much from you guys.

Anyway, I'm interested in starting a web service. I'd like to start a company but I'm uncertain about the procedures to do so. My company will be building a web service but I would like everything to go through my company's name. Is that feasible? Also, would I have to incorporate to open a bank account under my company's name?

Basically, I'm not sure if I need to incorporate to build a web startup or would I be able to just create a sole proprietorship?

Thanks!

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Answer varies by location, but in much of the US you can do a sole proprietorship with a DBA (Doing Business As) and put the DBA on accounts and the like. This does not require incorporation - your county issues a DBA on a simple form filing, possibly requiring an ad in the paper. (Many banks will let you get a business checking account with a DBA, seeing as sole proprietor is the most common type of business in the US.)

FWIW, BCC has run for 4 years under my name in a pair of personal accounts without incident. I just formalized it with a Japanese DBA two weeks ago.

Sounds like a good plan - how do you manage all the finances and so on? I'm guessing that all income earnt through sole prop gets added on to your existing income?

Thanks!

Edit: Never mind--the following applies in the U.S.

Correct, this is "Schedule C" income on your individual tax return. You'll need to make quarterly estimated tax payments.

http://www.irs.gov/businesses/small/article/0,,id=110413,00....

Big Disclaimer: I'm not an accountant and you should probably talk to one to get accurate and current information.

Yes, so for tax purposes, in the us at least, it gets taxed as regular income. You can look into the hobby rules with the IRS if it is relatively small.

I wouldn't worry about this right now. Your biggest challenge is building your webservice and making into something people want. But to answer your question, it's a matter of how much paper work you want to go through now versus later. To create a sole propiertorship and get a bank account under your name requires very little friction. Any income is just personal income and it's all simple & straight forward. This is how I started all of my startups (well one was as a partnership, but still similar procedure). Once you start generating some real income and from a taxation point of view, it's worth incorporating, then do so.

Based on my experience in Ontario (Canada). YMMV.

I'm actually in Ontario so your advice would be great!

If I go for sole prop., does this mean that when users sign up for my web service, they checkout through Paypal and it will show my name or can I have a business name show up instead?

Sorry, didn't check this thread earlier.

Yes, when you create your PayPal account and enter your business information, you can enter whatever you like and that will show up on their invoice.

One of the things that's posed this question is whether users would sign up for a web service, then head to Paypal only to find that they are being billed under my name instead of a company's name.

Perhaps I am being extremely confused over the differences between sole proprietorship and a corporation so any clarification on that would be good too.

Consider using amazon payments. They let you put in an arbitrary business name, I beleive, but verify. I think google checkout is the same way.

I wouldn't use paypal anyway with their propensity to steal money. They tried to steal from me years ago, and I haven't used them- to make even a payment- since.

Seems like amazon payments doesn't serve Canada yet so I won't have much options.

As with so many things, it depends.

Where are you?

I'm in Ontario, Canada.

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