iOS Poll: Liability Protection for iPhone developers?

[craig1410]

Hi guys,

I'm getting to the stage where I'm ready to sell my first iPhone app and was about to sign up the paid applications contract. I was wondering whether other developers out there have protected themselves with some sort of liability protection either indemnity insurance or if they have gone for the limited liability company route.

I would be most grateful if you would let me know what you have done. I'm currently set up as a sole trader but would probably purchase some liability insurance to protect myself to some extent. However, I am not keen to go the LLC route at this stage as I am still employed full time and thus the tax advantages are not so great, and I don't want to incur accounting costs until my revenues/profits can justify it.

Many thanks for your time,
Craig.

 

[dejo]

I'm getting to the stage where I'm ready to sell my first iPhone app and was about to sign up the paid applications contract.

If you think you are going to sign-up as a company rather than an indiviudal, try and make a decision as soon as possible, since it can some time (days, weeks, ...) for all the paperwork to be taken care of by you and Apple before you can even submit an app for sale. Then you'll still have approx. 14 days (for currently 87% of apps) sitting in the review queue before your app goes live.

 

[craig1410]

If you think you are going to sign-up as a company rather than an indiviudal, try and make a decision as soon as possible, since it can some time (days, weeks, ...) for all the paperwork to be taken care of by you and Apple before you can even submit an app for sale. Then you'll still have approx. 14 days (for currently 87% of apps) sitting in the review queue before your app goes live.

Hi,
I'm hoping not to - as I mentioned, I want to test the water first and start to ramp up some income before considering switching to a Company a bit later. I just don't want to find that I am one of a very small minority who are selling apps as individuals either with or without insurance. However, if lots of people are just working as individuals then the fact that I've not heard of any court cases involving iPhone developers getting sued is hopefully a sign that the risk of legal action is small.

As far as I'm aware the worst that can happen is that you have to give a full refund although I think Apple are entitled to keep their 30% so you can certainly lose money if you are deemed to be selling goods not fit for purpose. Not that I'm planning on doing a bad job but you know how people can misunderstand what your apps does and then make a big deal about why it doesn't do this or that. I work as an IT Consultant as a day job so I've come across this from time to time...

Thank for your help,
Craig.

 

[bredell]

As far as I'm aware the worst that can happen is that you have to give a full refund although I think Apple are entitled to keep their 30% so you can certainly lose money if you are deemed to be selling goods not fit for purpose.

It can get a lot worse than that. If you get sued for copyright or patent infringement it can cost you huge amounts of money. If you're developing and selling software you really need to be protected.

 

[craig1410]

It can get a lot worse than that. If you get sued for copyright or patent infringement it can cost you huge amounts of money. If you're developing and selling software you really need to be protected.

Yeah fair point, however, from what I have read you are unlikely to be sued unless you fail to comply with the initial request by the copyright owner to stop doing what you are doing. Also, if you are not actually using someone else's material (pics, videos, IP) then you are very unlikely to be sued I would have thought.

Having said all that, I respect your advice and opinion. That's why I asked the question after all...

 

[ethana]

I HIGHLY recommend people forming an LLC or Corporation when conducting business.

Think about it.... one personal lawsuit for whatever stupid reason ("so and so's app crashed my phone" or "you're using my image and/or text") can ruin you financially.

Do you really want to risk your cars? your house? your lifestyle? garnish your wages? file for bankruptcy? Just because you lost a lawsuit over an iPhone app???

LLC and Corporations will protect you. That is why they are there.

 

[icewing]

Funny, I was going to post the same type of question. I'm in the US; how many US developers have gone the DBA route, LLC, etc?

 

[Troglodyte]

AFAIK we don't have LLC or similar in the UK. In general terms you're either a company or you're not. There's little tax advantage to being a company and a lot more agro and paperwork. Your finances would however be separate in that event. Anyway, to answer the question I'm a sole trader and I have liability insurance. I got mine from Hiscox, it only covers me in the UK though. I guess if you wanted US cover that would be a LOT more expensive.

 

[jnic]

AFAIK we don't have LLC or similar in the UK.

http://en.wikipedia.org/wiki/Limited_company

A limited company in the United Kingdom or Ireland is a corporation whose liability is limited by shares.

[...]

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the US) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid).

 

[VMMan]

Doing business in the U.S. without liability protection is reckless. Whether you get sued or not does not need to be based on anything with merit. You can get sued for any reason that any individual wishes.

You, however, will have to defend yourself from any lawsuit.

The less capable you are in being able to defend yourself with more assets at risk, the greater you empower the plaintiff. You make a choice in being an easy target as an individual.

I would look at the cost of setting up your LLC as a necessary business expense, as you would perceive having to purchase a Mac to program for the iPhone.

 

[Troglodyte]

A limited company in the United Kingdom or Ireland is a corporation whose liability is limited by shares.

[...]

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the US) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid).

I know what a limited company is. My understanding is that the US LLC is somewhat different.