We are a startup about to soft launch our app within the next month on iOS. We are currently bootstrapped and will launch very quietly for a few months as a public beta. Eventually we would need to incorporate, but who knows when.
Do I need to form at least an LLC since we will be public? There will be posting from external sites onto our app, and we want to limit liability from that. Also, the app is focused on interaction between strangers and we want to limit liability from any issues that can arise with that. But once again, our initial goal is to launch very quietly and try to get to just a hundred engaged users.
As lawyers have jumped in already with lawyerly advice, I'll offer you a different perspective to your question. Apple allows two types of publishers into the app stores. Individuals and Corporate Accounts.
Corporate Accounts require a Dun & Bradstreet number which of course, require a corporation to be formed in order to get a D&B number.
Transferring an app from an individual developer account to a corporate account post release in the AppStore is a bit of a pain (they require you to prove you are a founder / cofounder of the company you are transferring to) and depending on the kind of app you're building, a corporate presence might make an incremental impact in the user trust of the app.
You should definitely have some sort of incorporation with a corporate book so that you are protected from liability should anything go wrong. The reasons you incorporate are for 1. liability purposes 2. tax purposes 3. it holds you out as a business much more professionally and will change how you treat the business as well.
If you are looking to fundraise at some point I might suggest a corporation. you are looking at about $2,000 for incorporation, corporate book and veil protection which would include all of your by-laws, minutes, stock issuance, IRS docs, etc. Also prepare yourself to pay an annual LLC or Corp. fee of $800.
Whether you "need" to or it is advisable are different matters.
I agree with the original reply and would add that when you say "we" it makes me think that more than one person is involved. Yet, another reason why incorporation would be highly advisable.
There are numerous scenarios where you might later wish you had taken the time to incorporate or form an LLC. Clearly you aware of several given your concerns that you list about liabilities. I will go a step further and suggest that you not go "the one-size fits all route" of online legal services and spend a comparable amount of money speaking with an attorney to make sure that your interests, business model and objectives are accurately reflected in any operating agreement that is drafted.
Feel free to contact me, I can answer any questions you may have and ask you a few additional questions that may help you make a decision whether this is something you want to deal with sooner rather than later.
