Don’t underestimate the potential of a side project (or “side hustle” as they’re commonly known): many multi-million dollar companies started as side projects. Twitter, Craigslist, Slack, Groupon all started as a side project.
Typical Side Company Setup
Most people simply work on their side project while they still have a job and then if it takes off or at least becomes “ramen profitable” (where you are able to at least feed yourself with your side hustle income) then they create a company (register an official business).
However, there are risks with doing it this way, especially if you have many business ideas. First, since your initial work isn’t within an official incorporated business (a Corporation or LLC, an entity that is separate from yourself) you might expose yourself to liability.
For example, you might have some beta users or first customers of your side business but since you aren’t an incorporated entity yet, you may be held personally liable for the business and these customers may be able to come after your personal assets in a lawsuit (home, cars, etc.). This is the infamous “customer slipped on your driveway then sued you” nightmare scenario (or if your technical product messed up their computer or network, for example). Continue reading “How to Create a Company to Manage (and Protect) Your Side Projects”