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I know you can sell apps using your own personal tax information, but what if there are several people working on the app? Our plan is to just have one of us register for the Google Merchant account and then we'll privately divide up any revenue that comes to the PayPal account.

Is this legal? Or do we need to actually create an LLC and have a payroll, etc?

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    Keep in mind that the person who registers the account owns it, and has undivided control over the moneys in it. Dividing revenues privately sounds very nice and all, but if one of the partners goes rogue, you have no recourse; same goes for two partners colluding against the third one. If you are talking of even somewhat significant amounts of money, you will be better protected if you register a partnership or even a corporation.
    – Sergey Kalinichenko
    Commented Oct 23, 2012 at 15:29
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    Always take professional, qualified advice before making a decision that you might later regret.
    – DaveP
    Commented Oct 23, 2012 at 15:33

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In short, yes your plans is good to go with a simple agreement between partners. You may consider that agreement to define basic rights of each of you in the project.

However, if you are planning to grow the business and hit some point of substantial sale/revenue then you may probably want to consider registering business as LLC or Inc.

The rule of thumb is - when your revenue is the main source of the income, at that point you better register a business. This was advice of an accountant that makes my taxes in USA.

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  • That figure is not in law, or somewhere. My answer applies to US only.
    – Yusubov
    Commented Oct 23, 2012 at 15:07
  • @ElYusubov - How did you come up with the 100k revenue figure then?
    – Ramhound
    Commented Oct 23, 2012 at 16:40
  • That was given as an example, the rule of thumb explains it in general sense.
    – Yusubov
    Commented Oct 23, 2012 at 17:17
  • @ElYusubov: I don't think that's good advice. LLCs are cheap and easy to create in the US, and whenever you have business partners, having some amount of formalism in the agreement between you prevents a LOT of heartache later on. While there's certainly no need to incorporate at this stage, the LLC will force the OP to set down rules on division on profits, which will really help keep things on an even keel.
    – Michael Kohne
    Commented Oct 23, 2012 at 17:22
  • @MichaelKohne, it looks like you did not understand my point in answer. Read it once again plz. I am not opposing the creation of LLC or Inc.
    – Yusubov
    Commented Oct 23, 2012 at 17:23
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Its not required, but it is a good idea.

By not creating a separate company whoever registers to put apps on the app store assumes 100% of the liability and is also not required to actually divide any revenue you get unless you create a separate contract stating those requirements.

Creating a simple LLC is quick and cheap, the potential headaches in the future when it comes time to distribute revenue or worst case legal action is taken against you are more of a pain than the ~$100 it takes to avoid them entirely.

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