Founding SaaS

[Gummibeer]

Hey,

I've no idea if anyone could help here but I still try.^^
Has anyone experience in founding a SaaS company? I'm a bit scared because of all the regulations and the financial risk (not the servers or anything but taxes and law regulations including fines.
Everything sounds this complicated only to earn 100€/month (including taxes). Are there any ways to reduce the risk?

@Adam how do you manage the premium plan in financial and law terms?

@m1guelpf how easy was/is it to found sitesauce?

 

[m1guelpf]

Hey,

I've no idea if anyone could help here but I still try.^^
Has anyone experience in founding a SaaS company? I'm a bit scared because of all the regulations and the financial risk (not the servers or anything but taxes and law regulations including fines.
Everything sounds this complicated only to earn 100€/month (including taxes). Are there any ways to reduce the risk?

@Adam how do you manage the premium plan in financial and law terms?

@m1guelpf how easy was/is it to found sitesauce?

I'm afraid I can't help you here 😅. Sitesauce isn't incorporated anywere and I don't have to do any kind of takes (yet) due to being a minor & having an income that's less than 10.000€. Check back in a year and I'll probably have figured something out tho 😅😅

 

[ek1]

Echoing what @m1guelpf said, in Canada at least you don't need to do taxes on a business unless it earns more than 12k a year. I'm sure your country has similar laws. Maybe cross that bridge when you get there :)

 

[Gummibeer]

Yes, Germany has something similar. And would be fine to limit my business. But how about the law part? All the regulations how to handle data, privacy terms, imprint, invoices and so on? Have you hired a lawyer for this?
My major problem is that all the things that doesn't belong to code itself overwhelm me. 😵 It's not my business and will never be. And there are a lot of stories out there that make me fear doing a single mistake and getting sued. 😖

 

[tom]

You can reduce the risk by opening a GmbH or UG (GmbH light) as then you are not solely liable anymore.
BUT for receiving only 100€ per month that's not really feasible as the costs for the company would surpass the income by XX. Trying to find an existing company who you can work with would basically be better and reduce costs, though you'd have to share your earnings with them.
What you could try is the Stripe Atlas (initial costs ~1k USD) with doing taxes in Germany or form a company in Estonia (initial costs ~400€) and do taxes in Germany and Estonia (Double taxation exempt after filling a form, though paying yourself a salary is quite expensive again). Also when you're thinking about Estonia, have a look at Xolo GO. The system behind it is pretty easy, it's not your company, you work for Xolo, they pay you a monthly salary and do all the other stuff for you. Though you'd have to ask them how you'd be able to get paid as in the overview you're not able to sell your services. Maybe an e-mail to them would give you more information. Xolo (previously LeapIN) are great. I've been working with them for the past 1.5 years and their support is really fine.

For the imprint, privacy terms there are online services where you can rent up2date terms for ~15-20€/month in multiple languages. Invoices do have basic contents that need to be printed on, nothing really fancy.
An accountant would be a good idea, there are some good freelancers out there and also online services that do this for a monthly fee. You can try doing it on your own, but IMHO it's better to let people who know these things also do them.

The business stuff in Germany and Austria is bonkers for small startups and/or tiny SaaS companies as you have to follow everything that a huge business has to follow and have the same costs as everyone else even though you are not established or have thousands of dollars for your idea to spend.

Oh and for the "no taxes" thing... This only works as long as you are under a specific limit (yearly earnings and revenue/turnover) and if you're self employed. Being self employed has all the liabilities on you and you are fully liable if anything happens.

 

[adam]

You can set up a limited liability company (GmbH) in Germany which in the very unlikely scenario you were successfully sued would protect you personally financially to an extent.

Based on what @tom has said the UK seems super simple in comparison! We have an office dedicated to tax simplification (OTS) even. I fill out one short online form each year with one number in income, one number in expenses and a couple of things like charity and bank interest then they tell me how much to pay. 🤷🏼‍♂️

Personally at the moment I am just registered as a self-employed person and pay for professional indemnity insurance with withjack.co.uk. I use that as an umbrella for everything I do, mainly freelance but here also. Perhaps you could look for some similar insurance in your country? Would give you that peace of mind.

‘Upgrading’ to a Limited company gets a little more complicated and requires a chartered accountant to submit taxes but is still fairly simple for businesses with straightforward in/out.

I don’t have to worry about VAT until I earn £85k a year, yours may be different.

For your terms and any other compliance the best thing you can do is pay for a few hours of a lawyers time to get yourself started!

 

[Gummibeer]

Thanks so far!
Related to the company I will stick to the "Kleinunternehmerregelung" (small entrepreneur scheme) in germany. No taxes and only a simple in/out calculation as long as I stay below 17.500€/year.

The withjack insurance sounds good. Will check out if I can find something similar in germany. Even if I want to reduce my fix costs to an absolute minimum. For me it feels just unfair and discriminatory that you have to fulfill every single law in the same way the big players have to do.

I even don't want to start a real company. Atm it's a project with some friends and we throw some money together to pay domain, server and so on. It's the same in and out and we all know each other and the service isn't public.
Now the first friends ask if they could get access - so we need a bit more straight forward payment process (SaaS like plans/subscriptions). Even if I keep the service closed it will earn more money than the servers cost and thats the definition of a business for profit - so we have to register the business, get a real privacy agreement, ToS and so on. Just to earn 100-200€/month from friends of friends.
I mean I know every single line of code, what happens with the data and so on. So if anyone has any questions I would be happy to answer them. But all this legal stuff doesn't benefit anyone. Our users don't care if there is Google Fonts/Maps used or not and they even don't understand what all this stuff means. If I would explain them from human to human they would understand what happens and why.

 

[tom]

One thing that you could think about is if a club/"Verein" would be a better fit for this project. Then you'd save on costs and though have a legal entity. 🤔

 

[adam]

Thanks so far!
Related to the company I will stick to the "Kleinunternehmerregelung" (small entrepreneur scheme) in germany. No taxes and only a simple in/out calculation as long as I stay below 17.500€/year.

The withjack insurance sounds good. Will check out if I can find something similar in germany. Even if I want to reduce my fix costs to an absolute minimum. For me it feels just unfair and discriminatory that you have to fulfill every single law in the same way the big players have to do.

I even don't want to start a real company. Atm it's a project with some friends and we throw some money together to pay domain, server and so on. It's the same in and out and we all know each other and the service isn't public.
Now the first friends ask if they could get access - so we need a bit more straight forward payment process (SaaS like plans/subscriptions). Even if I keep the service closed it will earn more money than the servers cost and thats the definition of a business for profit - so we have to register the business, get a real privacy agreement, ToS and so on. Just to earn 100-200€/month from friends of friends.
I mean I know every single line of code, what happens with the data and so on. So if anyone has any questions I would be happy to answer them. But all this legal stuff doesn't benefit anyone. Our users don't care if there is Google Fonts/Maps used or not and they even don't understand what all this stuff means. If I would explain them from human to human they would understand what happens and why.

Does Germany’s information department have any guides? Might be worth checking their website. The UK ICO says that the best way to write a privacy policy is like you have just said in a human way explaining what stuff does.

Sorry I can’t be more help with your specific situation.

The principles

The GDPR sets out seven key principles. These principles should lie at the heart of your approach to processing personal data.

ico.org.uk