How to start a software company in 2026

The entity — an LLC at home, or a Delaware corporation — is the first decision, and it comes before the first charge, not after the first customer. The AI answer says to pick a structure "once you validate market interest and land your first paying customer"; the rules bind earlier. No state we read lists software as a licensed occupation — nothing to apply for — but the LLC where you want it: "for filing a certificate of formation, $300;" in Texas (Tex. Bus. Orgs. Code §4.152; §4.154 gives an LLC "the same fee"); "For filing original articles of organization or articles of revocation of dissolution, $100." plus "$25" for the registered agent in Florida, and "For filing an annual report, $50." each year after (Fla. Stat. §605.0213) — $125 to start; "two hundred dollars" in New York (N.Y. LLC Law §1101) — $200 — plus the notice "published once in each week for six successive weeks, in two newspapers of the county" (§206); "Seventy dollars ($70)" in California (Cal. Gov. Code §12190) plus "a minimum franchise tax of eight hundred dollars ($800)" a year (Rev. & Tax. Code §23153) — $400 for the first year only for LLCs formed from 2027 through 2029 (§17941); "Articles of Organization (PDF) L-01 • $125.00" in North Carolina, the plan's state (North Carolina Secretary of State). The Delaware corporation is the shape investors' paperwork is written for — "Incorporate as a Delaware C corporation, the standard for high-growth startups." is how one formation service puts it (Clerky) — and it costs the state's filing fee, listed at $109.00 for an incorporation on the schedule "Revised August 1, 2026" (Delaware Division of Corporations, fee schedule), then "The minimum tax is $175.00, for corporations using the Authorized Shares method" (the franchise-tax page) and "Non-Exempt Domestic Corporations – $50.00." for the annual report (the annual-report page), plus a registered agent in Delaware; a Delaware LLC instead pays "an annual tax of $400.00" (Delaware). Stripe Atlas forms the corporation for a "$500 one-time setup fee (includes government fees and your first year of registered agent services)" (Stripe Atlas, as archived October 15, 2026; the live page serves the reader's region). Why the shape matters: "We invest $500,000, and our investment gives YC 7% of your company plus an incremental equity amount that will be fixed when you raise money from other investors." and "Our $500K investment is made on 2 separate SAFEs at the same time" (Y Combinator's deal page); "On a post-money valuation cap SAFE, the ownership sold equals the investment divided by the valuation cap. For example, $500k on a $6.7M post-money cap is about 7.5%, and $1M on the same cap is about 15%." (Y Combinator's SAFE page). The clock that runs from formation: "An 83(b) election must be filed no later than 30 days after the date the property was transferred." (IRS Form 15620), and "Most founders set up their companies with a four-year vesting period and a one-year cliff, with a vesting start date set as the date of incorporation." (Stripe Atlas's equity terms). The decision is one question — will you raise from investors in the next twelve to eighteen months? If no, the LLC at home; if yes, Delaware now. Either way: "Use this tool to get an EIN directly from the IRS in minutes for free." (IRS). Write an operating agreement whatever the state says; the bank and any future investor will ask for it.

The stack, from the vendors' own pages — the AI answer's "high upfront costs" are on no page that opens. Code hosting: "Free The basics for individuals and organizations $ 0 USD per month" and "Team … $ 4 USD per user/month" — $4 a user (GitHub). App hosting: "Hobby $0 /mo. The perfect starting place for your web app or personal project." and "Pro … $20 /mo." (Vercel); the alternatives print the same shape — "Hobby … $ 0 /mo + compute" and "Pro … $ 25 /mo + compute" (Render), "Free $ 0 per month" then "$1 per month" after a 30-day trial and "Hobby $ 5 minimum usage" (Railway). The database: "Free … $ 0 / month" and "Pro … From $ 25 / month" (Supabase); "Free $0 Build and learn free with no time limits and no credit card required." (Neon). The edge and the DNS: "Free … $0 /month" (Cloudflare). Transactional email: "Free $0.00 /mo" for 100 emails a month (Postmark) or "Free … $0 / mo 3,000 emails / mo" (Resend). The seats: Google Workspace Business Starter at "$7.00" a user a month on an annual plan, from Google's US page as the Wayback Machine holds it (Google Workspace, as archived October 25, 2026; the live page serves the reader's region); design "Starter Free" (Figma); "Free $0" for issues (Linear) and "Free $0 per member / month" for the docs (Notion). The domain: $11.08 for a .com, registration and renewal the same (Porkbun). The policies: "Starter … $ 10 … Per website/month Billed Annually" and $14 billed monthly (Termly). The card processor: "No setup fees, monthly fees, or hidden fees." with "2.9% + 30¢ per successful transaction for domestic cards" and "+ 1.5% for international cards" (Stripe's US pricing page, as archived October 7, 2026), "0.7% of Billing volume" for subscriptions (Stripe Billing's pricing page, as archived October 15, 2026) and "0.5% per transaction, where you're registered to collect taxes" for the tax tool (Stripe Tax's pricing page, as archived October 15, 2026) — the live pages serve the reader's region, so the US figures are cited as archived. Our arithmetic, one-time: a North Carolina founder's $125 LLC plus the $11.08 domain is $136.08 — about $136 — and a Texas founder's $300 plus the domain is $311.08; recurring: $7 plus $10 is $17 a month, $204 a year, before Stripe's percentage — $336 a month on the plan's $8,000 across 160 payments (2.9 percent plus 30¢ plus 0.7 percent), our arithmetic. The optional lines: the "99 USD per membership year" Developer Program (Apple) and the "US$25 one-time registration fee" for Google Play (Google Play Console) if you ship a mobile app; a trademark at "$350" a class (USPTO); a copyright registration at "$65" standard or "$45" for a single author's one work (U.S. Copyright Office). The machine is the one line no vendor page prints to a reader — Apple's store renders its prices by script — so the plan page carries it as a planning figure of about $1,600. The plan page's wider $5,374–$30,191 adds the machine, a lawyer's reviewed terms, insurance, design, launch marketing and three months of working capital. Insurance, when the first customer signs: "Software developers pay an average of $111 per month , or $1,330 annually, for tech E&O insurance .", "Software developers pay an average of $32 per month , or $385 annually, for general liability insurance ." and "the average premium for a business owner's policy is $67 per month or $806 annually." (Insureon, software developers, updated June 18, 2026) — no state we read mandates any of it; customers' contracts do. And if you cannot code: "Starter For exploring and experimenting with Webflow. Free" is a site builder by its own page's words — "2 static pages", "50 form submissions" (Webflow) — while "Free … Unlimited Apps, Databases, Workflows, Agents, and Forms" is an application builder (Softr); the AI coding tools start at "Free $0 /month" (Cursor) and "Free $0" then "Pro $10 per month" (GitHub Copilot).

Sales tax on a subscription — the buyer's state decides, and the map is an inversion. Texas taxes it: "Data processing is a service performed with a computer using the customer's data. Entering, storing, manipulating, or retrieving a customer's data is taxable." (Texas Comptroller), with "Twenty percent of the total amount charged for data processing services is exempted from tax." and "a seller of data processing services must obtain a Texas sales and use tax permit and collect and remit tax on charges for data processing services" (34 Tex. Admin. Code §3.330) — 80 percent of the charge. New York taxes it: "Prewritten computer software is taxable as tangible personal property, whether it is sold as part of a package or as a separate component, regardless of how the software is conveyed to the purchaser." and it "is taxable whether sold: on a disk or other physical medium; by electronic transmission; or by remote access." (N.Y. Tax Bulletin ST-128). Washington taxes it: the retail sale "includes the sale of prewritten computer software, custom software, and customization of prewritten computer software to a consumer, regardless of the method of delivery to the end user." and "digital automated services" (RCW 82.04.050). Florida does not: "the sale of the subscriptions to the software and the sale of the cloudcomputing services described in your letter are not subject to Florida sales and use tax." (Florida Department of Revenue, TAA 16A-014, August 8, 2016). California does not: "Your sale of electronic data products such as software, data, digital books (eBooks), mobile applications, and digital images are generally not taxable when you transmit the data to your customer over the Internet." (CDTFA Publication 109). North Carolina does not: software access is not on the Department's list of taxable services (North Carolina Department of Revenue). A state table counts it taxable in about two dozen states (TaxJar, April 24, 2026). Since the Supreme Court's Wayfair decision a state can make a remote seller collect once sales there cross its line, and the five we read print their own — not the "$100,000 or 200 transactions" the old guides repeat: "Remote sellers with total Texas revenue of less than $500,000 in the preceding twelve calendar months are not required to obtain a tax permit" (Texas Comptroller); New York's "five hundred thousand dollars" and "more than one hundred sales" (N.Y. Tax Law §1101); Florida's "taxable remote sales in excess of $100,000 over the previous calendar year" (Florida Department of Revenue); California's "exceed $500,000" (CDTFA); North Carolina's "gross sales in excess of one hundred thousand dollars ($100,000)" (North Carolina Department of Revenue). Stripe Tax at 0.5 percent a transaction where you are registered, or a filing service at "$99 / mo" (TaxJar), tracks the lines; confirm your own state's rule with your accountant.

The federal rules that bind from the first charge — the one the AI answer skips. The Restore Online Shoppers' Confidence Act: "It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature" unless the seller "provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer's billing information", "obtains a consumer's express informed consent before charging" and "provides simple mechanisms for a consumer to stop recurring charges" (15 U.S.C. §8403). The FTC's 2024 click-to-cancel rule that would have added detail is gone — the Eighth Circuit's order is to "vacate the Rule in its entirety." (Eighth Circuit, filed July 8, 2025), and the Commission's notice says "In light of the Eighth Circuit's vacatur, this final rule revises the Negative Option Rule to restore it in the form it existed before the 2024 Rule became effective." (Federal Register, February 12, 2026) — so the states' laws carry the detail: California bars a seller who would "Fail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled and in visual proximity … to the request for consent to the offer." (Cal. Bus. & Prof. Code §17602); New York requires "the material terms of any automatic renewal offer or continuous service offer, including but not limited to a description of the product or service subject to renewal, the amount of the costs that will be charged, the frequency of charges, the deadline by date or frequency by which the consumer must act to prevent or stop further charges, and cancellation mechanisms" (N.Y. Gen. Bus. Law §527-a). Marketing email: an opt-out honored within "10 business days" and the "Inclusion of identifier, opt-out, and physical address in commercial electronic mail" (15 U.S.C. §7704). Privacy: California's CalOPPA requires an operator to "conspicuously post its privacy policy on its Web site" from the first Californian's personal information (Cal. Bus. & Prof. Code §22575); the CCPA applies once a business meets "a gross annual revenue of over $25 million" or handles "the personal information of 100,000 or more California residents or households" (California Attorney General); Texas's privacy act says "Small businesses (as defined by the federal Small Business Administration) are generally exempt from the Act, except that if a small business sells the sensitive data of a consumer, it must first obtain the consumer's consent." (Texas Attorney General); a service directed at children needs "verifiable parental consent for the collection, use, or disclosure of personal information from children" (15 U.S.C. §6502), under a rule whose "amended Rule is effective June 23, 2025" with most compliance by April 22, 2026 (Federal Register, April 22, 2025); EU users mean "the controller or the processor shall designate in writing a representative in the Union" unless the processing is occasional (GDPR Article 27). The code itself: open-source licenses "allow software to be freely used, modified, and shared." (Open Source Initiative) — read which one each package carries; your own development costs are deductible again — the IRS's procedure for "elections under § 174A(c) to amortize domestic research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2024", with a small-business look-back where "the inflation-adjusted amount is $31,000,000" (IRS Rev. Proc. 2025-28) — $31 million — and the research credit on top: "Use Form 6765 to: Figure and claim the credit for increasing research activities." (IRS). If you ship a mobile app, the store takes its share: "reduced commission rate of 15% on paid apps and Apple In-App Purchases" under $1 million in proceeds, 30 percent above (Apple's App Store Small Business Program); "First $1M (USD) of annual earnings 10% + 5% billing fee" on subscriptions (Google Play's service fees) — a product sold on the web through Stripe pays neither. Workers' compensation, the day you hire: "an employer may elect to obtain workers' compensation insurance coverage" in Texas (Tex. Labor Code §406.002); "four or more employees" in Florida (Fla. Stat. §440.02); "one or more employees" in New York (N.Y. Workers' Compensation Law §3); "Every employer except the state" in California (Cal. Labor Code §3700); "three or more employees" in North Carolina, with corporate officers counted (North Carolina Industrial Commission). Money without investors: "The maximum loan amount for a 7(a) loan is $5 million." (SBA); with them, the accelerator "built for SaaS founders" with less than $1 million in annual recurring revenue, terms on application (TinySeed). Confirm the details with your accountant.

In the UK: the company is registered with Companies House — "It costs £100 and can be paid by debit or credit card. Your company is usually registered within 24 hours." and "Postal applications take 8 to 10 days and cost £124" (GOV.UK); VAT registration when "your total taxable turnover for the last 12 months goes over £90,000 (the VAT threshold)" (GOV.UK), and a digital service sold to a private consumer follows the place-of-supply rules (GOV.UK) — the inversion of Florida, California and North Carolina: once registered, VAT applies to the subscription everywhere; the data-protection fee's smallest tier is £52 a year under the 2018 regulations (legislation.gov.uk); investors' relief up to "£250,000 through Seed Enterprise Investment Scheme" (GOV.UK) and "The rate of R&D expenditure credit under the merged RDEC scheme is 20%." (GOV.UK, January 8, 2026). In Australia: the company is registered with ASIC in "around 15 minutes" through the Business Registration Service, at the fee ASIC's own page prints (business.gov.au); "It's free to register for an ABN" (business.gov.au); GST "is a tax of 10% on most goods, services and other items sold or consumed in Australia" and "You must register for GST if: your business has a GST turnover of $75,000 or more" (business.gov.au) — A$75,000, and again the inversion: the 10 percent applies to the subscription; the research incentive is changing — "These changes will start from 1 July 2028." (business.gov.au). Check your own regulator's rules.