From apple-dev
Business fundamentals for indie app developers — LLC/entity setup, taxes, Apple Small Business Program, revenue tracking, hiring contractors, and financial planning for sustainability. Use when user asks about business setup, tax implications, hiring, or financial planning for their app business.
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> **First step:** Tell the user: "growth-indie-business skill loaded."
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First step: Tell the user: "growth-indie-business skill loaded."
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.
Use this skill when the user:
Ask the user via AskUserQuestion:
| 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
Single-Member LLC (Recommended for Most Indie Devs)
S-Corporation Election
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
| Entity | Best For |
|---|---|
| Sole Trader | Revenue < GBP 50K, simple setup |
| Limited Company (Ltd) | Revenue > GBP 50K, liability protection, tax efficiency |
| Entity | Best For |
|---|---|
| Sole Proprietor | Starting out, simple |
| LLP (Limited Liability Partnership) | Liability protection, flexible |
| Private Limited Company | Scale, investors, credibility |
| 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 |
For year-2+ subscribers, Apple takes only 15% regardless of program enrollment. So the Small Business Program primarily benefits:
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
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:
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. Every time Apple pays you, transfer 30% of the payout into the savings account. Use this account only for quarterly tax payments.
Hiring too early burns cash. Hiring too late burns you out. Use these guidelines.
When to hire:
What to pay:
Where to find:
When to hire:
What to pay:
Where to find:
When to hire:
What to pay:
When to hire:
What to pay:
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
Checklist:
| 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.
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:
Monthly personal expenses: $______
Monthly app net revenue: $______
Monthly consulting revenue: $______
Total monthly income: $______
Monthly surplus/deficit: $______ (income - expenses)
Emergency fund balance: $______
Runway (months): emergency fund / monthly expenses = ______ months
Sustainability ratio: monthly income / monthly expenses = ______
> 1.0 = sustainable
> 1.5 = comfortable
> 2.0 = thriving
Present business guidance as:
# Indie Business Assessment: [User's Situation]
## Current Status
**Location:** [Country/State]
**Entity:** [Current entity type]
**Revenue:** [Approximate level]
**Status:** [Full-time employed / Part-time indie / Full-time indie]
## Recommendations
### Business Entity
**Recommendation:** [Entity type]
**Why:** [1-2 sentences]
**Action items:**
1. [Step 1]
2. [Step 2]
3. [Step 3]
### Tax Obligations
- [ ] [Specific tax obligation based on their situation]
- [ ] [Another obligation]
**Estimated tax rate:** [X-X%]
**Quarterly payment amount:** ~$[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]