• Subscribe
  • Should I register my startup or wait for prototype to finish before registering it?

    Paxshal
    2 replies
    We have started working towards our hardware prototype. Should I wait to register for my startup?

    Replies

    Michael Lachar
    The short answer: Set up the company as soon as you need it and not a moment before. The long answer: There are many considerations here, including whether or not you need to register your startup in order to protect your IP. Those legal questions should be presented to a lawyer. Other considerations might present themselves as well. Does your product require payment processing? You might need to set up a company in order to do that. Do your partners require written agreements solidifying their equity splits and vesting schedules? You'll likely need a company for that. Do you have investors that need to be issued legal agreements with a formal legal entity? Company. Those issues aside, and speaking in general, you might want to wait to register your company until you have some minimum viability established with your prototype. This follows the principle of working as efficiently as possible and reducing overhead. Registering your startup will inevitably create some overhead and additional expenses. You need to properly assess any risks of waiting to register your startup against the benefit you will gain by keeping your focus on developing and launching your product. You would surely want to avoid a situation where you set up a company yet are not able to bring your product to market. Then, in addition to the overhead of establishing the company, you would have the additional overhead of winding it down. Of course you'd hope that none of that ever happens and that your company will immediately succeed. And if that is the case, great! Set up a company when you actually need it and then work hard to make it grow.
    Richard Gao
    I always abide by the quote: "The best time to start was 20 years ago, the second best time to start is now" If you can get it done, then get it done. To give an example of a pitfall you might fall into if you don't you can see my blog post here: https://www.indiehackers.com/pro...