[jt2190]

Step 1, "Register a Business" (LLC or LTD) is not something I'd advise on a lark. It costs real money (hundreds if not thousands of dollars), will require an administrative burden (filing of annual reports, filing of additional tax forms, etc, out of state tax forms if you register out of state or move.)

I think a more realistic approach is to review and understand all of the requirements for registering a business: What papers to file, who to file them with, what the deadlines are, and what the costs are. Once you understand that, you'll know when your business generates enough income to at least cover these costs, or the business is risky enough to warrant the liability protection. (Most software is sold "as-is" and is not that risky.)

[mindcrime]

Granted, it does vary by state (and country I suppose, if you're not US based), but here in North Carolina the overhead of an LLC is minimal. And there is something about registering a legal entity that makes things feel more "real" somehow.

I did my own LLC papers and paid the filing fee, which was a whopping 200 dollars or so, and the annual report stuff can be done online and requires a yearly fee of around 125 dollars, IIRC. Tax paperwork is also relatively minimal during the "pre revenue" days.

So is it worth it? Hard to say, but on balance I'm happy that I did it. Even though we'll have to do some extra paperwork later to transition to a traditional corporation when the issue of taking outside funding comes up.

YMMV, of course.