Where would you locate the IP in the following case?

[cuno]

You are really overthinking it for those amounts.

Can you explain what you would do with those amounts ? curious to see some solution for people like OP ?

 

[daniels27]

Can you explain what you would do with those amounts ? curious to see some solution for people like OP ?

People like OP?

He has a business idea for a software with a potential of 10k to 100k per year.

I know a guy in about this situation. You get hired after university and then run it aside. You look for programmers in South America or Africa and make sure they will be around for updates and fixes. You whole company goes down if they vanish because they are either too good (and get hired at Microsoft) it too bad (get hired as Microsoft as janitor).

You then try to keep support requests at a minimum while providing basic support to your paying customers.

Pretty much any cent you spend on corporate setup is wasted. As he is uniquely targeting US customers, he needs a payment processor / PayPal. If he trusts the Algerian dude he wants to find as intern, he can have him use a company in Algeria and then try getting a US PayPal for it. It he uses a US LLC owned by either him or the Algerian guy.

If the Algerian guy owns the US LLC, he can get all profits as dividends and most likely Algeria won't come after him fit tax. If there is anything left, he can invoice his friend's company to draw some profit.

I don't know how he wants to cooperative with the university. Open a US LLC and make big claims and promises may do your job. But without any connections, no idea. If OP is Algerian, go there talk to the professor and the students. Probably he can motivate some guy at a frat party.

But nobody wants to pay 1000 for some corporate setup if there is no proof it will ever work.

And just to be honest, I personally would recommend finding motivated people on the ground or online myself and avoid any university relation. There are enough capable students that have time and motivation. They will be available to do the job due little too nothing for a 50% profit share. Any university relation makes such projects often complicated as the students need to build something of academic value rather than something that can run for decades without much maintenance.

 

[GodsGiftToThisGroup]

Can you explain what you would do with those amounts ?

Sure, let me explain what I would do with the lower end of my 95% confidence interval, $10k/year to $100k/year in steady state (let's say starting in 2035, after the service has been around for five years). The Algerian SARL (SARL is French for LLC) won't have to wait until 2035 to generate $10k+/year. I have a temporary solution to get to $10k/year faster. Let's say by 2032.

Digression: my current thinking is that, as long as the revenue is below $25,000 a year and there is at least one merchant account processing provider able and willing to deposit money into an Algerian bank account, the only entity we will use is an Algerian SARL/LLC ("Goofer Software").

According to investigative journalist Abdou Semmar (

), the average salary in Algeria is about $300/month. The average salary of people with university degrees AND work in jobs that require a university degree AND more than five years of experience is about $600/month. According to him, that's the figure of the Algerian National Office of Statistics, a government agency.

I don't know how much money fresh Computer Science graduates earn in Algeria. My working assumption is between $400/month and $500/month. That's roughly between $5,000/year and $6,000/year.

So, $10k/year would pay for Yacine's salary, the maintenance fees of an Algerian SARL/LLC, and various subscriptions (a server, various low cost software, company contribution to Yacine's payroll taxes, etc.).

$10k/year means about 100 customers. So, Yacine would be able to do the whole thing by himself: software maintenance, customer support, social media marketing, email marketing, IT work, dealing with the Algerian bureaucracy, etc.

The main thing I get out of it is that, I might have in my shelf a trained and experienced software developer that I might be able to pull into more money making projects, and, if needed to free up his time, partially replace him at Goofer Software by another fresh graduate. By "partially replace him", I mean he would still continue doing software maintenance, and software and data backup. While another fresh graduate takes over all the other functions.

Anything I get above $10k/year is gravy.

The main risk is, as Daniels said, after he has a couple of years of experience, or maybe even before, that he will get hired by Microsoft as a software developer if he is good, or as a janitor if he is bad. Both positions pay more than he would be getting paid in Algeria. Actually, the Algerian version of that is to move to France and get a job for tens of thousands of dollars a year salary. That's one of the many reasons I plan to offer him a salary of only $1 for the whole year he is developing an MVP. If he is already thinking that it's at least somewhat likely that he will move to France after graduation, it will occur to him that that one dollar might well be the whole lifetime compensation he will get from the venture, and he will say no. I would much rather him saying no now, then doing the MVP, moving to France after graduation, and leaving me with half ownership of a piece of code that I might never use.

 

[JustAnotherNomad]

I'm outta here.
Tax planning does not make sense until you have at least $100k in annual profit, and that's the absolute bare minimum.
$10k is not worth even talking about. You should probably just get a job somewhere, instead of thinking about this.