rshankras/indie-business

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:

# 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/