indie-business

What this skill does

# Indie Business Operations

Business fundamentals for indie Apple app developers. Covers the non-code aspects of running an app business — entity setup, taxes, revenue tracking, hiring, and financial planning.

**Disclaimer:** This skill provides general guidance, not legal or tax advice. Always consult a qualified accountant or attorney for your specific situation.

## When This Skill Activates

Use this skill when the user:
- Asks about business setup for their app (LLC, S-Corp)
- Wants to understand tax implications of app revenue
- Asks when to form an LLC or incorporate
- Wants guidance on hiring contractors or freelancers
- Asks about financial planning for going indie
- Mentions the Apple Small Business Program
- Wants to understand Apple's payment schedule and revenue tracking

## Process

### Step 1: Gather Context

Ask the user via AskUserQuestion:

1. **Location**: What country/state are you in? (tax implications vary significantly)
2. **Current status**: Full-time employed, part-time indie, or full-time indie?
3. **Revenue level**: Approximate monthly/annual app revenue (or expected if pre-launch)
4. **Business entity**: Do you currently have an LLC or company? Filing as sole proprietor?
5. **Specific question**: What business aspect are you trying to figure out?

### Step 2: Business Entity Options

#### United States

| Entity | Setup Cost | Annual Cost | Liability Protection | Tax Complexity | Best For |
|--------|-----------|-------------|---------------------|---------------|----------|
| Sole Proprietor | $0 | $0 | None | Lowest (Schedule C) | Hobby / early stage / < $10K/year |
| Single-Member LLC | $50-500 (state-dependent) | $0-800/year (state-dependent) | Yes | Low (pass-through) | Most indie developers |
| Multi-Member LLC | $50-500 | $0-800/year | Yes | Medium | Partnerships, co-founders |
| S-Corporation | $100-500 + legal fees | $500-2,000/year (payroll, filings) | Yes | High (payroll + corp return) | Revenue > $80-100K/year |

**Sole Proprietor**
- How: Just start earning. Report on Schedule C of personal tax return.
- Pros: Zero paperwork, zero cost, simplest possible setup.
- Cons: No personal liability protection. Your personal assets are at risk if someone sues.
- When to use: Testing the waters, revenue < $10K/year, minimal risk app (no user data, no health claims).

**Single-Member LLC (Recommended for Most Indie Devs)**
- How: File articles of organization with your state. Get an EIN from the IRS (free).
- Pros: Personal liability protection, flexible tax treatment, professional credibility, separate bank account.
- Cons: Annual state fees ($0 in many states, $800/year in California), must maintain separation between personal and business finances.
- When to upgrade from sole proprietor: Revenue exceeds $10-20K/year, OR you handle user data, OR users rely on your app for health/finance/safety.

**S-Corporation Election**
- How: Form an LLC, then file Form 2553 to elect S-Corp tax treatment.
- Pros: Payroll tax savings on profits above "reasonable salary." At $150K revenue, could save $10-15K/year in self-employment tax.
- Cons: Must pay yourself a "reasonable salary" with payroll, quarterly payroll tax filings, more complex bookkeeping, annual corporate tax return.
- When to consider: Net profit consistently exceeds $80-100K/year.

**When to upgrade entity (decision tree):**
```
Revenue < $10K/year and low-risk app?
├── YES → Sole proprietor is fine
└── NO → Do you handle sensitive user data or have liability risk?
    ├── YES → Form an LLC now
    └── NO → Revenue > $20K/year?
        ├── YES → Form an LLC
        └── NO → Sole proprietor, but plan for LLC soon

Already have an LLC and net profit > $80K/year?
├── YES → Talk to a CPA about S-Corp election
└── NO → Stay as LLC
```

#### United Kingdom

| Entity | Best For |
|--------|----------|
| Sole Trader | Revenue < GBP 50K, simple setup |
| Limited Company (Ltd) | Revenue > GBP 50K, liability protection, tax efficiency |

- Sole trader: Register with HMRC for Self Assessment. Simple but no liability protection.
- Ltd company: Register with Companies House. Corporation tax on profits (25%), then dividend tax on drawings. More tax-efficient at higher revenue.

#### European Union (General Guidance)

- Most EU countries have sole proprietor equivalents and limited liability company options.
- VAT registration thresholds vary by country (but Apple handles VAT on app sales).
- Consider your country's social security implications for self-employment income.
- Consult a local accountant — EU tax rules are country-specific.

#### India

| Entity | Best For |
|--------|----------|
| Sole Proprietor | Starting out, simple |
| LLP (Limited Liability Partnership) | Liability protection, flexible |
| Private Limited Company | Scale, investors, credibility |

- GST registration may be required above threshold (currently INR 20 lakh).
- TDS (Tax Deducted at Source) applies to payments from Apple (check DTAA with Ireland/US).
- Private Limited preferred if you plan to raise investment.

### Step 3: Apple Small Business Program

#### Overview

- Commission reduced from 30% to 15% on the first $1M in annual proceeds.
- Applies to all app and in-app purchase revenue.
- Auto-enrollment: Apple enrolls you when you are eligible. No application needed if under $1M.
- Resets annually on January 1.

#### Impact Calculation

| Annual Revenue | Standard (30%) | Small Business (15%) | You Save |
|---------------|----------------|---------------------|----------|
| $10,000 | $3,000 | $1,500 | $1,500 |
| $50,000 | $15,000 | $7,500 | $7,500 |
| $100,000 | $30,000 | $15,000 | $15,000 |
| $500,000 | $150,000 | $75,000 | $75,000 |
| $1,000,000 | $300,000 | $150,000 | $150,000 |

For year-2+ subscribers, Apple takes only 15% regardless of program enrollment. So the Small Business Program primarily benefits:
- Paid upfront apps
- One-time IAP revenue
- First-year subscription revenue

#### Important Details

- If you exceed $1M in a calendar year, the standard 30% rate applies for the remainder of that year.
- Revenue from all apps under your developer account is combined for the $1M threshold.
- If you have multiple developer accounts (e.g., personal + company), each is evaluated separately.

### Step 4: Tax Basics for App Revenue

#### What Apple Handles (You Don't Need to Worry About)

- **Sales tax / VAT**: Apple collects and remits sales tax, VAT, and equivalent taxes in virtually all jurisdictions. The price users pay includes these taxes, and Apple deducts them before your payout.
- **Tax forms to developers**: Apple provides 1099-MISC (US) or equivalent tax documentation annually.

#### What You Must Handle

**Reporting Income (US)**

Apple pays you monthly. All payouts are taxable income.

| Entity | How to Report | Tax Form |
|--------|--------------|----------|
| Sole Proprietor | Schedule C on personal return (1040) | 1040 + Schedule C + Schedule SE |
| Single-Member LLC | Same as sole proprietor (disregarded entity) | 1040 + Schedule C + Schedule SE |
| Multi-Member LLC | Partnership return | 1065 + K-1s |
| S-Corporation | Corporate return + salary W-2 | 1120-S + W-2 |

**Quarterly Estimated Taxes (US)**

If you expect to owe more than $1,000 in taxes for the year, you must make quarterly estimated payments. Missing these results in penalties.

| Quarter | Covers | Due Date |
|---------|--------|----------|
| Q1 | Jan-Mar | April 15 |
| Q2 | Apr-May | June 15 |
| Q3 | Jun-Aug | September 15 |
| Q4 | Sep-Dec | January 15 (next year) |

**How to estimate:** Take your expected annual net profit, multiply by your effective tax rate (federal + state + self-employment). Divide by 4.

**Deductible Expenses**

These reduce your taxable income. Keep receipts and records for everything.

| Expense | Example | Deductible? |
|---------|---------|------------|
| Apple Developer Program | $99/year | Yes |
| Hardware | Mac, iPhone, iPad for development | Yes (may need to depreciate) |
| Softwar