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I'm interested in projects like Indiegogo and Kickstarter. Basically they are doing the same thing - helps to get money from the people who likes your idea.

So when I'm raising money and asking for the help, of course I promise something to the people who give me the money and I can fulfill that, without a problem, but there are also questions which for me doesn't have clear answer:

  • Do I need company registered to be able to get money through pages like those?
  • What happens after I raised enough money and collected them, should I worry and pay some taxes additionally to the ones I pay for idiegogo or kickstarter?
  • Should I think about hiring professional accountant or lawyer before getting cash to my account to deal with some problems?
  • Do those pages require later some documents, papers to prove that I spent money on the thing I promised or after I get money, pay them, they don't care (just asking if I need to deal with them longer than the period to raise money)?

Anyone already did that? Maybe you have some advices?

Thanks guys!

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Here's one of the answers on this topic, which links to another one. answers.onstartups.com/questions/41474/… – littleadv Sep 24 '12 at 7:47
Will check, thanks! – Ignas B. Sep 24 '12 at 7:48
By the way, I do assume you're in the US, or asking about the US tax laws. As you profile says you're from Estonia, you should definitely also check your local laws. – littleadv Sep 24 '12 at 7:59
I'm not from US, so yes, definitely need to check local laws. Thanks! – Ignas B. Sep 24 '12 at 8:48
Another one on the topic. Putting it here to keep them all linked, as this one will probably come up the most in searches. answers.onstartups.com/questions/42105/… – littleadv Sep 24 '12 at 22:14

1 Answer

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I'm not familiar with Indiegogo, but I've answered a bunch of questions about Kickstarter, and I'll reiterate here these answers (I know its too much to expect from people to look whether the questions have been asked before).

Do I need company registered to be able to get money through pages like those?

To the best of my knowledge - no. You can definitely carry business activities as a sole proprietor.

What happens after I raised enough money and collected them, should I worry and pay some taxes additionally to the ones I pay for idiegogo or kickstarter?

Yes, you should worry and you should pay. The money you raised is income.

Should I think about hiring professional accountant or lawyer before getting cash to my account to deal with some problems?

I don't know what you mean by "hire", but you definitely should get a consultation.

Do those pages require later some documents, papers to prove that I spent money on the thing I promised or after I get money, pay them, they don't care (just asking if I need to deal with them longer than the period to raise money)?

I don't know if they verify, but your pledge is a contractual obligation, and you may be sued if you fail to deliver.

I'll emphasize again: You should get a proper legal and tax advice before taking action. My (or anyone else) answer here is not such advice. No answer here was intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.

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