Ask HN: SaaS MVP – form company before or after getting paying customers?

[Jackypot]

I'm in the UK if it makes any odds.

I am about to release the MVP of my first ever Saas product which (hopefully!) will have paying customers. I know I'll need to deal with the business sides of things at some point - form a company, create a company bank account, track money in/out for tax purposes. Should I do all of this before getting a paying customer? Or afterwards..?

The MVP philosophy would surely be afterwards but perhaps for legal reasons this is undesirable. What did you guys do?

[chdaniel]

I'm from the UK as well and it's very very relevant that you've mentioned that.

UK is the perfect place for you in this situation. US people might give you advice based on their legislation so be careful who you listen to

1. Set up as a sole trader with the HMRC (the equivalent of IRS for US readers that are curious) 2. Declare your profits 3. You'll pay taxes (and everything is legal as well) on the following brackets: https://www.gov.uk/government/publications/income-tax-person...

Scroll down to the chart to see what I'm talking about but here is the highlight:

Any profits between £0 and £12,500 are untaxed — you have to declare them though.

So I'd say yes, don't form a company yet. Godspeed

[ElBarto]

It's not more complicated or more expensive to form a company.

For a Saas trading as a sole trader does not make much sense to me, as you are personally responsible, not a company. And you'll likely want to move to a company sooner than later, anyway.

[chdaniel]

That goes without saying, yes.

Dude asked for the leanest version, that'd be it — I'd go sole trader and have it legal, all while seeing whether the SaaS lifts itself off the ground or not

[ElBarto]

>That goes without saying, yes.

It's arguably not the leanest, then.

IMHO, with payments processing to be setup and legal liabilities it is a good idea to completely separate that from your personal finances. On a more subjective note, it also projects a more profesional image.

It would be good if Jackypot would reply to comments so we could understand what is his issue with setting up a company.

Note, btw that it is not accurate to say that for a sole trader profits up to £12.5k are untaxed as this is the "personal allowance": This amount relates to your personal income as a whole.

[sharemywin]

How would they pay? your personal account. seems like a pain to change later.

[ElBarto]

I'd do it right before releasing the product if you don't need to do it earlier.

You should track money in/out now, don't wait until the company it setup. You can claim expenses on the company even if those expenses were incurred before the company was formed.