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MenuShall we register our company before testing the MVP?
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I do not believe you should incorporate your company yet as there is a chance you will scrap the idea or iterate on the assumptions after analysis. I suggest you run your initial testing on a very minimal MVP to see if there is interest. I would go further in saying that you should not even allow people to pay only have them click on the payment option because at that point you know that it would be a conversion. The ONLY thing you are proving with an MVP is validation of an idea. Only make the mousetrap front end and see if you can drive users to where you want and stop. Even if you frustrate some people, it was worth it as you now know for sure people will buy or do what it is you wanted. Schedule a call with me to find out more. God knows I have done this enough times.
Good luck
Josh
MVP is a product development methodology - fail fast, fail forward and be agile to customer changes. It is not be confused with a legal entity formation.
If it is a market place, the MVP would still be able to do a transaction. Do you want to tie any liability issues coming from the transaction, or the parties involved to you ?
Company formation is so damn cheap now that you should not be even thinking twice. I would say register it.
MVP is for the product , not for business. If you want to translate the lean approach to business, it would be a lean business. Don't have a company accountant, loyar, hr person etc .. you can use on-demand services.
But you still need to have the corporate functions in a lean way. Say you get $500 in sales. It is still taxable and needs to part of someones book.
You don't have to register a company
- If there is no $ or liability involved
- If you are not raising money now
- If it is just a Proof of concept
If you are launching (even it is MVP), it is better to launch with a trim version of a company (LLC atleast). If it is a B2B market place then the parties / vendors will not work with an individual, you need a company then..
I have had situation in the past, where the company field was mandatory and I had to fake it many many times...
Hey, if you need any kind of help related to technology, feel free to chat. - My expertise are in Solution Delivery, Project management, Technology management, Product architecture, Technology advisory.
Nefin
You are approaching this bass-ackwards. Incorporation is never the goal or a milestone. It's a means to a certain end.
You should not be asking yourself, "are we big enough to incorporate?" Your question should be "What am I trying to accomplish and is incorporation going to help me get there?"
Is your goal to look cool because you have a registered company? Do you have investors knocking on your door hoping to buy shares in your business? Are you trying to shield yourself from some liability that is inherent in your product? Are you looking for a better tax structure for your business?
Until you know WHY you are even contemplating incorporation, you can't answer when is the right time to do it.
This is all very fact specific. Feel free to request a call if you want to discuss
Deciding whether to register your company before testing your MVP involves weighing the benefits and drawbacks. Here are the key considerations to help you make an informed decision:
### Benefits of Registering Before Launch
1. **Legal Protection**:
- **Liability Shield**: Registering as an LLC or corporation provides a shield for your personal assets against any legal claims related to your business operations.
2. **Credibility and Trust**:
- **Professionalism**: A registered company can enhance credibility with customers, partners, and potential investors, showing you are serious about your business.
3. **Compliance and Legal Requirements**:
- **Payment Processing**: If your MVP involves receiving payments, having a registered company simplifies setting up business bank accounts and payment processing systems.
- **Taxes and Licenses**: Operating as a registered entity ensures compliance with tax obligations and necessary business licenses.
### Drawbacks of Registering Before Launch
1. **Cost**:
- **Upfront Expenses**: Registration fees, legal fees, and ongoing compliance costs can add up, which might be burdensome before validating your business model.
2. **Administrative Burden**:
- **Complexity**: Managing the administrative requirements of a registered business can be time-consuming and complex, diverting attention from MVP development and testing.
### Considerations for Delaying Registration
1. **Testing and Validation**:
- **Proof of Concept**: If you are in the early stages and want to validate your business model with minimal costs, you might opt to delay registration until you have some initial validation.
2. **Lean Approach**:
- **Iterate Quickly**: Without the formalities of a registered business, you can iterate and pivot quickly based on user feedback.
### Mitigating Risks If You Delay Registration
1. **Use Personal Accounts**:
- **Temporary Solutions**: Use personal bank accounts and payment processing tools to handle transactions temporarily. Ensure clear records to separate business finances from personal ones.
2. **Draft Basic Agreements**:
- **Legal Documents**: Even without formal registration, draft basic terms of service, privacy policies, and agreements to provide some level of legal protection.
3. **Insurance**:
- **Business Insurance**: Consider getting business insurance to cover potential liabilities during the testing phase.
### When to Register
- **Receiving Significant Payments**: If your MVP starts to generate significant revenue, it’s prudent to register to handle financial transactions professionally and comply with tax regulations.
- **Engaging with Investors**: If you seek or receive investment, most investors will require you to have a registered entity.
- **Legal Exposure**: If your business involves significant legal risks (e.g., user data handling, substantial financial transactions), registering early provides necessary legal protection.
### Conclusion
If the costs and administrative burden of registering now are prohibitive, you might consider testing and validating your MVP first. However, keep in mind the legal and financial risks involved. Use temporary solutions to manage transactions and mitigate risks, and plan to register your company as soon as you have validated your business model and are ready to scale.
Would you like assistance with setting up temporary legal protections or further guidance on when and how to register your business?
Related Questions
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How do I write an NDA with the right jurisdiction/governing law?
From a legal standpoint: an NDA is an agreement - something contractual, and therefore is not limited (by law) to any specific jurisdiction. So, you can select Delaware or California, or India for that matter. From the business aspect, the best jurisdiction to select would depend on: 1. Jurisdictions that are known to be 'friendly' to your type of business. 2. Jurisdictions in which your lawyer is licensed to practice / the cost of lawyers isn't too expensive. 3. Somewhere not to far from where you are physically located - in case you actually have to go to court. Lastly, best to add a required arbitration or mediation clause if you don't have one. Good luckAB
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If I am planning to launch a mobile app, do I need to register as a company before the launch?
I developed and published mobile apps as an individual for several years, and only formed a corporation later as things grew and it made sense. As far as Apple's App Store and Google Play are concerned, you can register as an individual developer without having a corporation. I'd be happy to help further over a call if you have any additional questions. Best of luck with your mobile app!AM
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Where to incorporate a new software as a service busines?
I'll keep try to keep this answer brief, but there are several factors and nuances that can be discussed in more depth. Where you decide to incorporate partly depends on what your future goals are with your company. Companies that plan to seek venture capital or go public typically choose Delaware as the state of incorporation, and usually choose a C-Corp. Delaware has a very well developed body of law surrounding corporate governance and that provides comfort and more certainty to future VC investors. If you're not planning to seek VC money any time soon, an LLC is a smart decision because of the tax benefits it can provide to you as the owner. It sounds like you want to grow your company on your own without outside financing. If that's the case, I would recommend forming your LLC in California. Regarding California vs. Delaware, one benefit to forming your LLC in California is that you can avoid paying a registered agent fee which can cost anywhere from $100-200 a year. If you plan to seek venture capital down the road, you can reincorporate in Delaware.JI
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How do you build a MVP for an innovative tech b2b product? We would need good amount of funding to build a decent MVP and show businesses.
The idea of an MVP is 'minimum, viable' ... If you feel you need a "good amount" of funding, I would challenge if you are minimum enough. Obviously, without knowing the details of your product, your ideal customer, or what need you will solve, it is hard to help expose what is necessary in an MVP and what is a Phase II or Phase III feature. I am happy to help you work through this, or answer specific questions, to get you rolling. Just book a call with some times that will work for you. Regardless, I would love to know more about it and how it goes after launch. To your success, -ShaunSN
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What's the best way to build a MVP web app that handles order management, purchasing, invoicing, supplier management and inventory?
The best way to build an MVP for any SaaS product is to create a landing page that looks like a real product. Here's an example of one I built. http://www.happiily.com In this case, it advertises the primary features of the product and invites people to sign-up. When they do, they are asked for information which qualifies the person and then sends me an email. I built this quickly and very inexpensively and started getting inbound leads from it shortly thereafter. I got on the phone with each person who signed-up and explained the features I wanted to build and was able to do a lot of customer learning based on that. Happy to talk to you in a call if you'd like to talk more about customer development with SaaS products.TW
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