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I'm a programmer, I have an idea, I know how to implement it, it will be a website, and that site will be my business.

My question is very basic: where in timeline must I register my business as an official Company (ie, according Government laws)?

Here there are some options to debate or to help answer me:

  1. Now - or as soon as I have the idea;
  2. When looking for investors (e.g., when a prototype or business plan is ready);
  3. When implementing the website;
  4. At site's launch;
  5. I must launch the website as a personal informal business and, when the business gets success and turns into a more solid and self-running one, only then I must formalize it;
  6. It doesn't matter; I can create the company when I want.

Nobody talks about that. If I just have an idea, must I run into an office to create a Company? I don't think so. When I'll look for investors, the Company must to pre-exist? Or will the Company be formed with the investor?

I'm looking for a generic, country-independent answer, but may the answer for your country can be useful to me. I'm Brazilian, and I believe that the country doesn't matter to this question.

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2 Answers

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In most countries you can operate as a sole trader (ie. in your own name without a fomal structure). You can operate your business this way forever if you like and there are advantages, disadvantages and tax implications of doing so.

Using a company structure gives you a few benefits. The major one is that in a company structure, you are not personally liable, therefore your personal risk is limited and your personal assets (such as your home) can be protected. The other advantages can have to do with tax and credibility.

Therefore you should put the business into a company structure when

  • you need to take considered risks, which you wish to protect yourself from personally
  • it is advantageous from a tax point of view
  • you need to to appear credible to your customers or suppliers.

The application of this will obviously be different for every business.

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In the US, you must register as a business when you start functioning as a business. As far as the government is concerned, this is when you either (1) you start taking money from customers or (2) when you want to start claiming business expenses on your taxes.

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