Design Limbo

I’m knee deep in testing licensing systems, currently playing with with XHEO’s DeployLX solution and I wanted to shoot out this interim post. This post won’t cover all the solutions I’m working on testing and that will have to wait till the next post. But I wanted to post this right away, as DeployLX was my front-runner it was not a pleasant experience using the software.

But XHEO and DeployLX are probably one of the best known licensing and IP protection systems for .Net software. I’ve tested their software a long time ago and they were one of my first choices again.

Here is a summary of my issues with DeployLX.

1. The Interface is needlessly complex and unintuitive
2. It doesn’t seem to work well with Windows Services applications
3. Activation via web services is flakey at best
4. Did I mention the interface is horrible?

Past that, the entire software seemed clunky and not very configurable. Sure they has a mullion options but the documentation wasn’t helpful, it was pretty complete but it uses a whole lot of words on nothing of value. Additionally I found their online help’s and FAQ’s also unhelpful. In my review of DeployLX I was willing to overlook most if not all that and still give it good marks on feature set and ease of integrating it into my solution but they I ran across this blog post by Ayende, only a few months old.

Basically Ayende bought DeployLX and it was impacting his customers. He asked for a response and XHEO said buy our best and most expensive edition with it’s source and you can fix the issue yourself. Well he did that can then couldn’t get the source to compile with XHEO’s own code protection software. In the end XHEO screwed Ayende out of his time and money. This is extremely troubling and a major point of concern for something so critical as a licensing and code protection system. Ayende is not a slouch and is a brilliant software developer and architect, if he’s having trouble what about me?

At this point I’m disqualifying DeployLX, I’m uninstalling it and I will not recommend any XHEO products to anyone. If they can’t get CodeVeil to work with their own source code for a paying customer then they have some major quality and support issues. None of this is acceptable for a core piece of security software, although it’s shiny there is more to software then a flashing interface, believe it or not.

You have an idea, a product or just want to consult. If your like me it’s something you do on the side in your spare time, or you could be doing it full time. But your ready to take the next step and form an identity for your business, your corporate identity. Or maybe your on the sidelines, not sure if you should take that next step, well here are some of the reasons why I formed my company.

           Liability & Asset Protection

             This was my biggest reason for forming my company. I kept asking myself what if I got sued or my software caused a an issue, they could take my car, house, etc. If your working out in the world this should be in your mind, it’s a sad reality but we live in a litigation world and lawsuits are filed at the drop of a hat.

            Tax Reasons

             Talking to an accountant made me realize that forming a company around my software or consulting business had a number of positive tax benefits that could make it worth it alone. Forming a company could complicate your taxes and if your doing your taxes yourself this could send you to a CPA at tax time. But trust me a good CPA is a life saver, don’t use a tax prep service like H&R Block, find a good CPA by asking others. Typical charges for Federal Tax prep for an Inc is about $250 to $500.

            Multiple Partners

             You may not be in your venture by yourself, you could have one or more people who you are working on your next great idea with. Forming the company and assigning shares or partner status is a wonderful way to ensure that everyone is protected and no one will “run off” with the idea. Talk with all the people your going in with and come up with an equitable structure, it may not be 50/50, maybe it’s more like 80/20, make sure everyone agrees.

             Professionalism

              Let’s face it, Enterprise Widgets, Inc. looks better on marketing, form headers, bills, email’s and websites then Ted’s Widgets Emporium. Forming a company creates your corporate identity that can be difference between someone buying your software or services and not.

So if you are going to form your company the next question is what type of company are you going to form. I stressed about this for weeks, maybe months before I filed my paperwork. Seeming I live in Nevada it was easy for me to file here, but you also needs to choose *where* to form your company. States like Nevada are very good on corporate taxes unlike States like California.

So what type of company, a Limited Liability Corporation (LLC) or an Incorporation (Inc)? If your completely unsure don’t be afraid to talk to someone, like a lawyer or a tax professional. Your not locked into your decision, and filing paperwork can change your status, but that takes time and money.

I choose to go with an Incorporation, because of the marketing value conveyed with an Inc. and also it was far easier to add more people to my company at a latter time, for example inventors. This may not be the best choice for you, and the easiest, by far is an LLC. Inc’s require a lot of paperwork, yearly shareholder and directors meetings (even if it’s just you), director and even shareholder resolutions to open a bank account of perform corporate activities, etc. With an LLC there is none of that mess, and it’s what I would recommend if your not planning to be huge or have investors soon, remember you can always change it latter.

If you choose to form an Inc, what you should also look at is electing S Corp status. A normal Inc is a C Corp, which means taxes are levied and filed under the company itself. With an S Corp taxes work much like an LLC where they transferred to each shareholder of the Inc. This isn’t the most beneficial tax status if your having outside investors, but if your a single person or a small group of people it’s best to elect this and change it to a C Corp at a latter time, a tax professional can explain and help you with that.

One you create your company (LLC or Inc) you should file with the IRS and get a EIN number for your company. This is like a Social Security Number for your company, and will be required to file your companies federal taxes.

Starting your own company is a wonderful experience, but it can also be time consuming and a lot of paperwork. Don’t let that distract you from what you do best, create/sell software or consult. Use your company as a platform to put you best foot forward and brave the business world. The little bit of expense and time you put into your company could save you far, or earn you, more in the future.