Ask HN: Software Company Ltd vs. Product Ltd

Depends on the actual specific scenario.

Is product A or B an actual liability? Like, is Product A a nuclear energy generation plant built next to a fault line, and Product B is a toothpicks made of dynamite, then perhaps two different companies is good.

but if Product A is a fluffy pillow and Product B is a fluffy cloth toy, then I think one company is the way to go.

Or if you have a lot of expensive shit to produce things, then you don't divide up by products but by category. So, for example, if you own a construction company with a lot of expensive stuff, then you start up Company A for all equipment (trucks, backhoes, etc), Company B for the building that you purchase to work out of, Company C is for all the expensive tools, Company D is for the actual construction company. Company D does NOT own any of what is in A,B, and C, but leases from them. Therefore if the construction company gets sued for construction stuff that goes wrong, Company D is really only has the personnel and that is all. Because the construction is the risky part of it. All the rest of the money from Company D gets funneled into renting stuff from the other companies, so you take money out of the high-risk Company D and put money in the low risk companies, so if the construction company gets sued, there's no money or assets in Company D - or very few of them. Of course, extremely important to do it "for real" otherwise the state can pierce the corporate veil, and it is all an exercise in futility. And that is the very first thing that any lawyer will try to do when suing you, the very first thing, is to try to pierce that veil so that they can get at the money, honey. So very important to keep corporate minutes, have annual meetings, lease agreements, separate bank accouts, etc, for each company and not to slack on that. Otherwise, what's the point?

I sublease my office from a company and they have hundreds of locations around the world - executive suites like WeWork (but not them). Every single location is a separate corporation, I know that. In case something happens at one, it is a completely separate corporation.

I think the real important thing above and beyond all, is to get ONE corporation going, because a corporation separates YOUR assets from the business, and that is most important. Because if you have a sole proprietorship, your home, car, bank accounts, etc are fair game.

Don't know the answers, but another angle to investigate: in B, does it make sense to have a holding company that just owns the two actual companies? Seen that a few times, but I think mostly to make shared ownership easier. Might also help if you ever want to have employees that work on both sides?

Keep it as simple as possible, you can always complicate things later.