I am in the final stages of building up a web application that I have been working on for some time. Like many of you with startups on HN, I would like to start with a paid and free level of access.<p>Since I will be accepting payments, do I need to file as a business / acquire a business license in my state? I want to make sure I am covered if anything goes wrong. I will obviously be using Stripe or another process company to handle all payments. Any tips on money collection would greatly be appreciated!
I'm in the same situation. I'm very close to launching <a href="http://pitcher.io" rel="nofollow">http://pitcher.io</a> ... with all the usual SaaS things - 3 tiers, free trial, maybe a free account level. I have thought long and hard about free accounts though. Here's roughly where I'm at:<p>1. Are free accounts actually worth having? If your service offers enough value to the users that they'll invest time and energy using it then why won't they also invent a token amount of money? Even if it's just $10/year, that's going to be worthwhile for you if there are 5,000 accounts at that level.<p>2. Will a fee really put people off signing up? Putting credit card in to the sign up process definitely will, so don't do that. But people will try software even knowing it's going to cost them eventually if the pain you're taking away is great enough. If you can afford to give them a free account, just give them a long term free trial instead. "3 months free" is effectively the same as a free account to someone trying a new app.<p>3. Remember the popular saying "If you're not paying, you're the product." that people love to quote on HN when they're admonishing Facebook. It has an element of truth to it. If you're planning to make money from users by means other than direct payment, be upfront and honest about it. Tell them that they'll see adverts unless they hand over money. Tell them that you're mining their data. Tell them that you've invented a revolutionary new business model that makes money out of nothing. And tell me. :)<p>4. Consider that if you don't have a free tier you won't need to subsidise your free users, so you might be able to lower prices. But also consider that the price you start with will be the highest you ever charge. Users don't like increases in prices. But you can always grandfather old price points in.<p>5. Ultimately, until you launch, it's all speculation really. Just get it out there and get data to make proper decisions with.<p>I have no tips about money collection because I'm in the UK.<p>Actually I do: "Don't use Paypal."
1. Yes form a limited liability company (I think a C-corp in Delaware. You should probably pay no more than 150-250 bucks but never done this outside UK)<p>2. Be tax efficient / aware. In the UK certainly you are best off drawing the majority of income as dividend. Of salary. If you have a wife strongly consider having her own half the business and draw salary too - this however more applicable of you are a contractor<p>3. Sensibly estimate a portion of your revenue as chafgebacks and related support costs - start at 10% and work down as you get enough real customers.<p>4. If this is B2C ask is it a good idea? It's a tough market<p>5. If it is B2B I strongly suggest not doing a free plan - in fact start at something like 49.99/ mth and discount at rly and yearly. Basically you want people who have both money a d are serious enough that they will not email you to fix things the very second they cannot get it working<p>6. A stripe self publish book has just come out - may be worth while<p>7. Build a mailing list. Do this by creating a landing page that just has your main selling point on it and a "sign up for a Pre launch discount code". Mail these people something interesting you have written each week / fortnight that's related to you.<p>Publicise this - HN, Reddit, forums related to your product. Just get google used to you as eay as possible<p>If you really cannot stop yourself from giving free access try giving away a private beta access. This is easier to shutdown and lets you test the waters as it were. Use landing page for that.<p>A lot of this is stashed in different parts of HN<p><a href="http://m.techcrunch.com/2013/08/24/the-ultimate-cheat-sheet-for-starting-and-running-your-business/" rel="nofollow">http://m.techcrunch.com/2013/08/24/the-ultimate-cheat-sheet-...</a>
It sounds like your main questions are regarding accounting. Therefore I recommend you talk to an accountant. Find someone (preferably by referral) who has experience in this area, get a free consultation, depending on your advice (and your state law) potentially hire them to incorporate a S-corp, C-corp, LLC, or whatever is appropriate. Ask them about liability, taxes, etc.<p>You don't need to have everything ironed out before you start, but if you start making money beyond couch change, you will probably want to talk to someone before the tax year ends.