Small mobile development start up looking for advice on becoming an LLC and paying freelacers.

January 30, 2009 12:57 PM

Small mobile development start up looking for advice on becoming an LLC and paying freelacers.

A couple friends and I have been working on a mobile application development project for quite some time. We're now looking into incorporating into an LLC (for obvious financial and legal reasons). I know there are a ton of websites out there to help facilitate the process of forming an LLC, so I was wondering what you folks thought of those websites -- helpful or a total rip-off? We were looking into Incorporate.com -- does anyone have experience with this website? I know there are also government based small business sites, but can they provide us with the complete experience (ie: pre-filled legal documents) like Incorporate.com can? If so, can you provide any resources you might have used?

Also along the lines of kicking off the project, we're in the midst of hiring a freelancer to code the app for us. He has requested that we pay him $100 upfront, essentially for collateral, which makes sense. From our phone conversations he seems like a good guy and he has some great reviews on MacYenta.com (developer forum), but I just wanted to see your insight or how you go about paying freelancers. Unfortunately for us, he's in Canada and we're in the US, so I'm not sure how much that plays into anything. Have any of you folks found a decent way to pay e-freelancers (eg: some sort of escrow site with a low fee, etc), or is the best solution still Paypal?

Thanks in advance for all your advice!

posted by drkrdglo to work & money (5 comments total)

To date, all of my clients have paid me by check. Of course, they're all referral business...

If you're concerned about delivery of service, develop an agreement/scope of work that lays out terms for delivery and payment.
posted by sadiehawkinstein at 1:24 PM on January 30

There's no reason to pay anyone to incorporate for you; I just followed my state's Corporation Commission website instructions, completed the three or four forms they provided, including the name check, then published my articles of organization in the paper. Done and done. Total cost, including Arizona Corp. Commission fees and pleading publication? <>
These forms aren't particularly difficult or challenging. Look up "forming LLC in {your_state}".

As for freelancers, you can use somewhere like guru.com or rentacoder, but they'll take some off the top--more than paypal, though rentacoder, for example, provides protection and arbitration services in escrow if the guy fails to deliver.
posted by disillusioned at 1:32 PM on January 30

I was happy with LLC Maker software from Nolo Press, but it turned out that my state had a simple questionnaire online that did the same thing as the software to create the official documents. So you might first look at the site your state uses to register LLCs and see if it does the work for you. (My state charges about $87 to create, stamp, and file the paperwork, all of it done online.)

Re paying freelancers: It's common for a freelancer to give an estimate for the project and then request 50% up front, so your guy asking for just $100 is a deal. I've used PayPal for US and Canadian contractors with no problems, usually paying half up front and the remainder on completion. If you'd like to use an escrow to protect both of you, you might look at Guru.com.

You'll definitely want a contract specifying exactly what the contractor does and when it should be delivered. The contractor might provide this as his official estimate. You'll probably also want a non-disclosure agreement ("I promise I won't tell anyone else private details about your company or product") and maybe a limited non-compete ("I promise I won't develop a competing product within [reasonable time frame])." You can find boilerplate for the last two on the web, though a lawyer is a much better idea.
posted by PatoPata at 1:54 PM on January 30

Oh, and the contract should specify that you own the code.
posted by PatoPata at 1:56 PM on January 30

I can only speak for myself, but I get paid for my freelance work via PayPal. It's simple and it works internationally (I'm a U.S. developer; my main client is in Singapore). Be aware that PayPal does take a cut of some transfers, though, so for sizeable payments your developer may want a different method instead. (Certified checks between the U.S. and Canada work fine, although it can take a week or two for the funds to completely clear - but at least nobody's taking a percentage).

For payment, I work 50% up front and 50% on completion, and I've never had any problems with it. And yes, you'll definitely want a contract. My first few jobs were done with no kind of a contract at all, and while it worked like a charm in my case, there are about a million ways for it to have gone wrong. :-)
posted by theslarty at 2:18 PM on January 30