Bizee vs. Doola for a Custom Software Shop: Entity Setup That Fits

Work made for hire applies automatically to employees, but an independent contractor's code belongs to the contractor by default unless your agreement explicitly assigns the IP to your company. This trips up shops that hire freelance developers off a marketplace with a generic contract, then discover during a client audit or an acquisition offer that the assignment language was missing or too narrow. Neither Bizee nor Doola drafts contractor agreements, so build or buy a proper IP assignment template before you onboard your first subcontractor, regardless of which one forms your LLC.

Before you onboard a subcontractor, confirm the following:

• The contract explicitly assigns copyright in the code to your company, since an independent contractor owns their work by default without that language.
• The assignment covers source code, libraries and any reusable components the contractor builds along the way, not just the final deliverable.
• A signed agreement is in place before work starts, because a generic marketplace contract may leave the assignment language missing or too narrow.
• An attorney has reviewed the assignment language at least once before you reuse the template across engagements.
• A contractor who refuses to sign contributes no code to any client deliverable or your own product until they do.

If your team is US-based and you're comfortable handling your own annual report and franchise tax filings after year one, Bizee's entry package, which lists $0 plus state fees and a free first year of registered agent service on its current pricing page, is likely to have the lowest upfront cost, though you should compare current pricing and included services before you buy. It's a formation and compliance-reminder service, not a bookkeeping platform, so you'll still need a separate accounting setup for client invoicing and contractor payments.

Distributed engineering teams often have a cofounder, lead developer, or first hire outside the US. Doola's EIN process as a third-party designee doesn't require a Social Security number, and its bookkeeping subscription is useful if nobody on the founding team wants to own US tax compliance directly. It costs more than Bizee's bare formation fee, but it's buying you time you'd otherwise spend learning US payroll and tax rules from scratch.

An LLC taxed as a default disregarded entity or partnership pays self-employment tax on all its profit. Once your shop's profits regularly clear what a reasonable salary for your role would look like, electing S-corp tax treatment lets you split income between salary and distributions, and only the salary portion carries self-employment tax. It's a conversation to have with a CPA once you're consistently profitable, not something to set up on day one before you know your numbers.

Plenty of dev shops build an internal tool for client work that eventually becomes its own subscription product. The moment you take outside money for that product, burn multiple becomes the number investors watch: at $0 to $10M ARR, a multiple under 1.6 is considered acceptable and under 1.1 good¹, a tighter bar than most services-minded founders expect walking in.

Say a client signs a fixed-bid contract for a custom internal tool and only reads one clause closely: who owns the code once the final invoice is paid. A vague contract that says the client owns the deliverable is not the same as one that assigns copyright in the underlying source, libraries, and any reusable components your shop built along the way. Write the assignment clause to name exactly what transfers, what stays yours as pre-existing IP you reuse across clients, and when ownership transfers, at signing, at delivery, or at final payment. Getting this backwards either scares off a client's legal team during contract review or leaves you unable to reuse your own internal tooling on the next project, both of which cost more than any entity filing.

State filing fees average $132 nationally², so the entity itself isn't the expensive part. The real cost of getting it wrong shows up later: a client who won't sign without an indemnification clause your LLC structure can actually back, or a contractor dispute over who owns the code. Start with Bizee if your team and clients are domestic and straightforward. Start with Doola if you need EIN and banking help for a non-US team member from day one. About 10.2% of new business applications turn into an actual employer business within a year³, a reminder that most shops stay small on purpose, and an LLC's lighter compliance burden fits that reality better than a corporation's board-meeting requirements do.