---
name: rshankras/indie-business
source: https://app.decimal.ai/s/rshankras-indie-business@1/SKILL.md
source_sha256: 10ad60dcc9bb
---

# 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."
- Cons: Must pay yourself a "reasonable salary" with payroll, quarterly payroll tax filings, more complex bookkeeping, annual corporate tax return.

**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

- 15% commission (vs. 30% standard) on the first $1M in annual proceeds, applying 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 |

Year-2+ subscriptions are already taxed at 15% regardless of enrollment, so the program's benefit concentrates in:
- Paid upfront apps
- One-time IAP revenue
- First-year subscription revenue

#### Important Details

- 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) |
| Software | Xcode is free, but design tools, analytics, etc. | Yes |
| Hosting | Server costs, API services, CDN | Yes |
| Design | Freelance designer for app icon, screenshots | Yes |
| Marketing | Ad spend, press kit costs | Yes |
| Home office | Portion of rent/mortgage (if dedicated space) | Yes (with rules) |
| Conference travel | WWDC, local meetups | Yes |
| Education | Courses, books, tutorials for development skills | Yes |
| Professional services | Accountant, lawyer fees | Yes |
| Internet | Business portion of home internet | Partially |
| Health insurance (US) | Self-employed health insurance deduction | Yes (if self-employed) |

**International Considerations**

- If you sell apps globally, Apple handles international tax collection.
- US developers: file W-9 with Apple. Non-US developers: file W-8BEN or W-8BEN-E.
- Tax treaties between your country and Ireland/US may reduce withholding.
- Some countries require you to report worldwide income, including Apple payouts.

### Step 5: Revenue Tracking and Bookkeeping

#### Apple's Payment Schedule

- Apple pays monthly, approximately 33 days after the end of their fiscal month.
- Apple's fiscal months don't always align with calendar months (check your agreement).
- Payments are made via direct deposit to your bank account.
- Minimum payout threshold varies by region (often $10-150 depending on country).

#### Bookkeeping Setup

**Option 1: Spreadsheet (Free, < $50K revenue)**

Track monthly:
```
Month | Gross Revenue | Apple Commission | Net Revenue | Expenses | Net Profit
Jan   | $1,200        | $180             | $1,020      | $150     | $870
Feb   | $1,350        | $203             | $1,148      | $99      | $1,049
...
```

Categories to track:
- Gross revenue (total sales)
- Apple commission (15% or 30%)
- Net revenue (what Apple pays you)
- Development expenses
- Marketing expenses
- Tools and services
- Professional services
- Net profit (net revenue minus all expenses)
- Tax set-aside (25-35% of net profit)

**Option 2: Accounting Software ($50K+ revenue or if you want automation)**

| Software | Cost | Best For |
|----------|------|----------|
| Wave | Free | Simple invoicing and tracking |
| QuickBooks Self-Employed | $15/mo | US sole proprietors, auto-categorization |
| QuickBooks Online | $30/mo | LLCs and S-Corps, full accounting |
| Xero | $13/mo | International, clean interface |
| Bench | $249/mo | Full bookkeeping service (they do it for you) |

**Tax Reserve Rule**

Set aside 25-35% of net revenue (after Apple's cut) for taxes.

| Tax Component (US) | Approximate Rate |
|--------------------|-----------------|
| Federal income tax | 12-37% (bracket-dependent) |
| Self-employment tax | 15.3% (on first ~$160K) |
| State income tax | 0-13% (state-dependent) |
| **Combined effective rate** | **25-40%** |

Open a separate savings account, transfer ~30% of every payout in, and use it only for quarterly tax payments.

### Step 6: When to Hire

Hiring too early burns cash. Hiring too late burns you out. Use these guidelines.

#### Designers

**When to hire:**
- Your app icon looks amateurish compared to competitors
- Users comment on visual design in reviews
- You have maxed out SF Symbols and system UI components
- You need a marketing website, press kit, or App Store screenshots

**What to pay:**
- App icon: $200-1,000 (one-time)
- Full app design: $2,000-10,000 (one-time)
- Ongoing design: $50-150/hour (contract)

**Where to find:**
- Dribbble, Behance (portfolios)
- Twitter/X indie design community
- Referrals from other indie developers

#### Customer Support

**When to hire:**
- You spend > 5 hours/week on support emails
- Response time > 48 hours (users notice)
- Support is taking time away from development

**What to pay:**
- Part-time VA: $15-30/hour
- Dedicated support: $2,000-4,000/month

**Where to find:**
- Online communities for virtual assistants
- Referrals from other indie developers
- Start with a part-time contractor, not full-time

#### Marketing

**When to hire:**
- You have confirmed product-market fit (good retention)
- You know your acquisition cost and LTV
- Growth is limited by awareness, not product quality

**What to pay:**
- Freelance marketing: $50-150/hour
- ASO consultant: $500-2,000/month
- Content creator: $100-500/post

#### Contract Developers

**When to hire:**
- One-time platform expansion (watchOS, macOS port, widgets)
- Feature that requires expertise you lack (ML, AR, accessibility)
- You want to ship faster for a specific launch window

**What to pay:**
- iOS developer (contract): $75-200/hour
- Specialized (ML, AR): $100-250/hour
- Fixed-price project: define scope clearly, include revisions

#### Budget Rule

Do not hire until you can pay for 3 months from app revenue. Do not use personal savings to hire for a side project. The app should fund its own growth.

```
Can you pay this person for 3 months from app revenue alone?
├── YES → Hire (start with a trial project / 1-month contract)
└── NO → Wait until revenue supports it, or do it yourself
```

### Step 7: Insurance and Liability

#### Professional Liability Insurance (Errors and Omissions)

- Covers claims that your app caused harm due to errors, bugs, or bad advice.
- Cost: $500-1,500/year for indie developers.
- Consider if: your app gives health, financial, or safety-related advice.
- Providers: Hiscox, Hartford, biBERK, general business insurance brokers.

#### Cyber Liability Insurance

- Covers data breach costs (notification, credit monitoring, legal defense).
- Cost: $500-2,000/year depending on data volume.
- Consider if: you store personal user data on your servers.
- Less relevant if: your app is fully offline / on-device only.

#### LLC as Liability Shield

- An LLC separates your personal assets from business liabilities.
- If someone sues your app business, they cannot (generally) take your house or personal savings.
- Must maintain separation: separate bank account, do not commingle funds, sign contracts as the LLC.
- An LLC does NOT protect you from personal negligence or fraud.

### Step 8: Financial Planning for Indie Sustainability

#### Before Going Full-Time Indie

Checklist:
- [ ] 6 months of personal expenses saved (emergency fund)
- [ ] App revenue covers at least 50% of personal expenses (and growing)
- [ ] Health insurance sorted (US: marketplace, spouse's plan, or COBRA)
- [ ] Tax situation understood (talked to CPA)
- [ ] Spouse/partner on board with the plan and timeline
- [ ] Defined a "go back" threshold (if revenue drops below $X for Y months)

#### Revenue Milestones

| Monthly Net Revenue | What It Means | Action |
|--------------------|---------------|--------|
| $100-500/mo | Hobby money | Reinvest in tools, keep your day job |
| $500-2,000/mo | Side income | Cover app-related expenses, start saving |
| $2,000-5,000/mo | Part-time viable | Could reduce day job hours (if flexible) |
| $5,000-10,000/mo | Full-time viable (LCOL) | Full-time possible with lower cost of living |
| $10,000+/mo | Full-time viable (most areas) | Sustainable indie business |

Note: These are NET revenue figures (after Apple's cut and expenses, before taxes). Adjust for your location's cost of living.

#### Multiple Revenue Streams

Do not depend on a single app for your entire income. Strategies for diversification:

| Stream | Effort | Revenue Potential | Risk |
|--------|--------|-------------------|------|
| Second app | High | High | Platform risk |
| Consulting/freelancing | Medium | Medium-High | Time-limited |
| Technical writing | Low-Medium | Low-Medium | Consistent |
| Course/tutorial creation | High (upfront) | Medium (recurring) | One-time effort |
| Open source sponsorship | Low | Low | Unpredictable |
| Conference speaking | Low | Low (+ networking) | Seasonal |

**Recommended portfolio for sustainability:**
- 1-2 apps generating recurring revenue (primary income)
- Part-time consulting/freelancing (stable fallback)
- Content creation / writing (builds authority, generates leads for consulting)

#### Runway Calculation

```
Monthly personal expenses:        $______
Monthly app net revenue:           $______
Monthly consulting revenue:        $______
Total monthly income:              $______

Monthly surplus/deficit:           $______ (income - expenses)
Emergency fund balance:            $______
Runway (months):                   emergency fund / monthly expenses = ______ months

Sustainability ratio:              monthly income / monthly expenses = ______
                                   > 1.0 = sustainable
                                   > 1.5 = comfortable
                                   > 2.0 = thriving
```

## Output Format

Present business guidance as:

```markdown
# Indie Business Assessment: [User's Situation]

## Current Status
**Location:** [Country/State]
**Entity:** [Current entity type]
**Revenue:** [Approximate level]
**Status:** [Full-time employed / Part-time indie / Full-time indie]

## Recommendations

### Business Entity
**Recommendation:** [Entity type]
**Why:** [1-2 sentences]
**Action items:**
1. [Step 1]
2. [Step 2]
3. [Step 3]

### Tax Obligations
- [ ] [Specific tax obligation based on their situation]
- [ ] [Another obligation]
**Estimated tax rate:** [X-X%]
**Quarterly payment amount:** ~$[X]

### Financial Health
| Metric | Current | Target |
|--------|---------|--------|
| Monthly net revenue | $X | $X |
| Expense ratio | X% | < 30% |
| Tax reserve | $X | $X |
| Emergency fund | X months | 6 months |
| Sustainability ratio | X.X | > 1.5 |

### Next Steps (Priority Order)
1. 🔴 [Most urgent action]
2. 🟠 [Important but not urgent]
3. 🟡 [Plan for this quarter]
```

## References

- **analytics-interpretation/** — For understanding if your metrics support business decisions
- **monetization/** — For pricing strategy and revenue model selection
- **community-building/** — For organic growth that reduces acquisition costs
- Apple Small Business Program: https://developer.apple.com/app-store/small-business-program/