The Reason Indie Hackers Can’t Incorporate Startups Fast (It’s Not What You Think)

Your demo hits Product Hunt. The upvotes roll in. You wake up to 5,000 signups. Your server costs just jumped. You’re answering questions in the comments. People want to pay.

Everything is going to plan (for once). So you’ve been testing with Stripe in test mode and now you click “Activate payments.”

Then the payments start flowing: $47. $97. $197. Your first real revenue. You refresh the dashboard compulsively. By the end of day one, you’ve made $3,200.

Day two brings another $2,800 and if this holds steady, you’re looking at $50k+ in the first month.

Then you get the email.

“Action Required: Verify Your Account”

“We’ve noticed increased payment activity on your account. To continue accepting payments, please provide the following documents within 7 days…”

You read the list:

• Certificate of incorporation.
• Tax identification number.
• Proof of business address.
• Owner identification.

(Sign up here if you want to hear about fast business creation)

You have none of these because you don’t have a business. You have a side project that just accidentally became a real product.

Now your pay-outs are on hold. The money is in your Stripe balance, you can see it, but you can’t access it. New customers can still pay, but the funds just pile up in limbo. You have 7 days to provide documentation you don’t have, for a business entity that doesn’t exist.

Welcome to legal limbo. The place where early traction goes to die.

KYB vs KYC: What Payment Platforms Actually Want

Most founders understand KYC (Know Your Customer). It’s how platforms verify that you are who you say you are. Passport, driver’s license, proof of address. Individual verification.

KYB (Know Your Business) is different. It’s how platforms verify that your business is real, legitimate, and compliant with financial regulations.

Here’s what each requires:

KYC (Know Your Customer)

What It Proves: You are a real person

What You Need: Government ID, Proof of address, Selfie verification

When It’s Required: Opening any financial account, Small transaction volumes

KYB (Know Your Business)

What It Proves: Your business is legitimate

What You Need: Business registration certificate, Tax ID number, Business address proof, Beneficial ownership documents, Business bank statement

When It’s Required: Operating as a business, Higher transaction volumes, Corporate accounts

When you first set up Stripe as an individual, you go through KYC. They verify your identity and you can start taking payments.

But the moment your activity looks like a business (regular transactions, multiple customers, volume above hobby-level), they require KYB. They need to verify the business itself.

This is where indie hackers get stuck.

You’re not an individual selling your old laptop. You’re running a software business and the transaction pattern makes that obvious. Stripe’s compliance team knows it; that’s why their automated systems flag it.

And once flagged, you can’t just stay in individual mode. You either complete KYB verification or lose access to payments.

The Consequences of Operating in Legal Limbo

Frozen funds

This is the immediate problem. Your Stripe balance shows money, but you can’t transfer it out. Pay-outs are paused pending verification. You might have $5k, $10k, or $50k sitting there, completely inaccessible.

Worse, the clock is ticking. Most platforms give you 7–14 days to provide documentation. After that, they may close your account and hold funds for 90–180 days during a “review period.”

You need that money. You have server costs. You might have contractors to pay. You were counting on this revenue, but it’s locked behind documents you don’t have.

Can’t open a business bank account

You want to separate business and personal finances. Smart move. You go to open a business bank account.

The bank asks for your business registration documents. Your tax ID. Proof of business address.

You don’t have them. Application rejected.

You’re forced to keep mixing business revenue with personal finances, creating tax complications and making accounting a nightmare.

App store rejections

You built an iOS app. You want to sell it or offer in-app purchases. The App Store requires a D-U-N-S number, which requires a registered business entity.

Without it, your app either:

• Can’t be published as a business (limiting monetization options)
• Can’t access certain Apple services
• Gets rejected during the review process

Same issue with the Google Play Store for certain features. Same with the Microsoft Store. The major platforms all have similar requirements once you want to operate as a business.

Payment processor alternatives don’t help

You think: “I’ll just use PayPal instead.”

PayPal has the same requirements. Once your volume increases, they require business verification. Funds get held. Same problem, different platform.

You try Paddle or Gumroad as a merchant of record. This works, but they take 5–10% of your revenue on top of payment processing fees. You’re paying a premium to avoid dealing with business registration.

And even then, you’re building on someone else’s infrastructure with limited control and higher long-term costs.

Loss of momentum

You launched. You have traction. Users are excited. This is the moment to push hard, double down on what’s working, respond to feedback, capitalize on attention.

Instead, you’re researching business entity types. You’re comparing Delaware LLCs vs. Wyoming LLCs. You’re trying to understand EIN application processes. You’re stuck in government web portals that don’t work properly.

Your competitor launches something similar. They’re shipping while you’re dealing with paperwork. They’re getting users while you’re waiting for formation documents.

By the time you sort out your legal structure (if you do), the window has closed. The momentum is gone. What could have been a successful launch turns into a missed opportunity.

Why Developers Miss This

Technical founders are good at solving technical problems. You understand APIs, databases, deployment pipelines, and scaling infrastructure.

Legal compliance isn’t taught in coding bootcamps. It’s not covered in most CS degrees. There are no YouTube tutorials on business entity formation that rank well in search results.

The information gap exists:

You know: How to ship code fast, iterate based on feedback, deploy globally in minutes.

You don’t know: That payment platforms have verification timelines, that business registration takes weeks, that KYB is different from KYC, that your individual Stripe account isn’t meant for business use.

By the time you discover these requirements, you’re already in violation of terms of service. You’re already at risk of account freezes. You’re already operating in legal limbo.

The other factor is timing. Registration feels premature when you’re just testing an idea. Why set up a business entity before you know if anyone will pay?

The answer is that by the time you know people will pay, it’s too late to set up quickly. You need the structure in place before you activate payments, not after you’ve already launched.

But nobody tells you that the indie hacker playbooks focus on building and launching. They skip the legal foundation because it’s boring and complicated.

So you launch without structure. You get traction without preparation. Then you hit the wall.

The Pre-Launch Checklist Nobody Follows

If you want to monetize without hitting legal limbo, you need these documents ready before you activate payments:

1. Business entity registration certificate

• Official document proving your company exists
• Filed with government authority (state, national, or local)
• Shows business name, registration number, date of formation

2. Tax identification number

• EIN (US), UTR (UK), ABN (Australia), VAT number (EU), etc.
• Issued by tax authority
• Different from your personal tax ID
• Required for business banking and payment processing

3. Proof of business address

• Registered agent confirmation letter
• Utility bill in business name
• Lease agreement for business premises
• Not a P.O. box, not a temporary address, not a virtual mailbox without proper registration

4. Beneficial owner identification

• Government-issued ID for all owners
• Must match name on business documents exactly
• Current/valid (not expired within 6 months)
• Clear, complete image of all document corners

5. Business bank account (recommended)

• Separate from personal finances
• Cleaner accounting and tax reporting
• Required by some payment platforms
• Makes you look more legitimate to verification teams

Most founders have only #4. Some have none of the above.

Without these five pieces, you’re not ready to accept business payments at scale. You can activate Stripe. You can get some initial revenue. But the moment volume picks up, you’ll hit verification requirements you can’t satisfy.

We’re Fixing the Timing Problem

The registration process shouldn’t take longer than building your MVP. The waiting shouldn’t kill your launch momentum. Getting legitimate structure shouldn’t require weeks of research and uncertainty.

What if you could get complete business verification documents in 24 hours? Before your launch. Before the traction. Before the freeze.

No more operating in legal limbo. No more frozen funds. No more missed momentum while you figure out paperwork that should have been handled before you activated payments.

We’re building exactly that. A way to get proper business structure at the speed modern builders actually need.

Sign up here if you want to be the first to know when we go live

Join the waitlist. Next time you launch, you’ll be ready from day one.