Should I create an L.L.C to sell iPhone apps on the app store? Or should I save my time and paperwork and sell them under my own name? What are the pros/cons here?

There are some things that you need to consider. First, you need to think about your app. What type of app is it? Is there any possibility that it has some way of leaking data from the user’s smart device? Is there any possibility that it would somehow damage the phone? Does it rely on user generated content? If it does, you need to make sure that your Terms of Use includes a clause about user generated content. What I am getting at here is whether your app has the potential to get you sued.

Next, you need to think about the state that you’re in. As it was pointed out earlier, California (for example) LLCs must pay a tax of $800 even if no sales occurred. Go to the Secretary of State website for your state and do a little reading on the formation of LLC. Why the Secretary of State website? Because it is going to be up-to-date. A third-party website may have outdated information. If you relied on that information, you could be in for a nasty surprise. On the Secretary of State website, you’ll find the LLC forms. You can learn about the filing fee and any other information that you need to know.

An LLC is a pass-through entity. This means that the profit your app business makes passes through to the owner. You would report income from the LLC in your personal taxes. So, it can make taxes easier if you’re just a one-person operation. There aren’t as many regulations as other corporate formations, either. An LLC can help protect you from personal liability in the event that you are sued, too.

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