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Ask HN: $3000 to incorporate. Is it a good deal?

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Re: Ask HN: $3000 to incorporate. Is it a good deal?

#11

Post by the_economist »

I've started several small businesses, dating back to 2001, and have never done more than filling out my state corporate commission's articles of organization.

This is not the safest route, but definitely the easiest and cheapest way to get started. Doing this will let you open a business bank account, get merchant services setup, get an EIN (tax id) from the federal government, etc.

In Arizona it takes about 3 minutes and costs $50: http://www.azcc.gov/Divisions/Corporations/forms/starpas/for...

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#12

Post by lgsilver »

A lot of the value of incorporating is "getting to know" your legal team. Wilson Sonsini in SV and SF will often defer or waive fees for a very small chunk of equity on ideas that they like, and other legal teams are open to similar arrangements.

The benefit of extending your network is huge here. A good legal team can be a gateway to capital, while a missfiled c-corp can scare away investors.

Aside from the oft-repeated, "don't do it until you absolutely have to", I would suggest that you to do some research on law firms that are specifically working with startups in your industry and area.

You may be surprised that many will set up your c-corp for just the cost of fees if they believe that your idea and future with them is strong.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#13

Post by calbear98 »

Take a look at Clerky. https://www.clerky.com/

From their web site: Clerky helps startups get the legal stuff done fast.

Incorporation, convertible notes, employee documents, NDAs - everything the typical startup needs. Use Clerky to get your paperwork out of the way so you can get back to building your company.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#14

Post by Inebas »

Thanks for all the comments. So ya the attorney will incorporate in delaware as a c corp. i do sell apps on the app store right now as an individual.

I am outsourcing some of the development and so he mentions it is important to incorporate to protect the ip. It will include some form for freelancers to sign.

The third thing is that i plan to do this at night and weekends while i test out the market and i dont want it to potentially conflict with work ip. I plan to release and sell small pieces of software to test each step of the way. Or maybe just free software.

Thanks.

Ps: oh and he advice me to wait on patents since it is not critical and will cost 20,000. Just execute and that gets investor interested.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#15

Post by OafTobark »

dear wrote: post #10
OafTobark wrote: post #6

Earlier quoted context omitted.

This. If you have no cofounder, and have no immediate need for the company to be formed, put it off as long as possible until there are reasons i.e. cofounder(s), hiring, launch, etc..

That is a question I have. At what stage should a company (limited or unlimited) be formed for a startup? If there is no company I believe you would have to do business with your own name, which doesn't look professional. All incomes and expenses would be treated as personal income/exp.

This is the wrong way to look at it. Your expenses prior to launch (with exception to employees and all), would be minimal (unless you're just outsourcing a ton of work). Hosting and a domain name is like nothing.

That said, until you launch, hire employees, have a cofounder, raising money, etc... no one is going to know you really exist and the "looking" professional or whatever is non-existant, nor do most early adopters really care or think that way.

The reason most people advise (including really good attorneys) to put off incorporating until you actually need it is basically to save you money and avoid having to undo, amend, or fix anything.

Hope that help better answer the question.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#16

Post by eb007 »

trapexit wrote: post #7

Folks who have been there before will tell you not to waste a single cent on incorporating until you absolutely have to. Wait until at least one of the following is true: 1. You have investors who are ready to go. 2. You hire an employee. 3. You have actual customers and actual revenue. 4. You have any significant exposure to liability. Don't bother with any of the paperwork B.S. of setting up a business until you ac…

I absolutely agree with this comment as well. Regarding having a hard discussion with a co-founder and incorporation being a forcing function for this (from a comment below in this thread)... not the best reasoning. You can and should have this discussion regardless of whether you incorporate.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#17

Post by Inebas »

kitcar wrote: post #3

Need some more info - State/Province/Country of incorporation? Federal or State/Provincial incorporation(again, depends on country) Includes any shareholder agreements as well? Also, why not wait for the co-founder first, to save $$ on getting papers re-drawn / filing amendments?

I'm hiring outside contractors and planning to ask for cofounders soon.

Re: Ask HN: $3000 to incorporate. Is it a good deal?

#18

Post by dear »

OafTobark wrote: post #15
dear wrote: post #10

Earlier quoted context omitted.

That is a question I have. At what stage should a company (limited or unlimited) be formed for a startup? If there is no company I believe you would have to do business with your own name, which doesn't look professional. All incomes and expenses would be treated as personal income/exp.

This is the wrong way to look at it. Your expenses prior to launch (with exception to employees and all), would be minimal (unless you're just outsourcing a ton of work). Hosting and a domain name is like nothing. That said, until you launch, hire employees, have a cofounder, raising money, etc... no one is going to know you really exist and the "looking" professional or whatever is non-existant, nor do most early ad…

Does a launch itself warrant incorporating (or just registering a business name instead of using own's name)?
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