Any additional requirements if one of two partners live outside US?
Startup incorporation checklist
51–60 of 115 posts
Re: Startup incorporation checklist
#52It's worth mentioning that incorporation by itself doesn't get you very far in terms of protecting against personal liability. It's really just the first step in company formation. You'll want to appoint directors and officers as well. And to protect against departures, IP issues, etc., you'll also want to issue stock with vesting to founders, and have everyone enter into IP agreements. We've automated all of this at…
What's the advantage of using Clerky versus one of the suggested free tools on this repository? For example, here's one of the suggestions:
http://www.foundersworkbench.com/document-driver/
Based on a cursory review of this service, which claims to be free, it looks like vesting, the appointment of directors/officers, an IP assignment agreement and even the 83(b) election letter is provided.
Does Clerky provide something other than the usual template documents startups should sign?
Re: Startup incorporation checklist
#53Nice thanks, I'd like to see such lists or guides for other countries such as Canada or European ones, if it makes sense. Of course it doesn't replace a good lawyer but at least to get an idea on how hard it is for founders.
Re: Startup incorporation checklist
#54If my company won't be making money or revenue for quite some time, what does that mean for me in terms of the IRS? Will we get penalized for NOT having revenue?
If a C or S corp, you still need to file a Form 1120 [1] U.S. Corporation Income Tax Return:
"Who Must File Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Domestic corporations must file Form 1120, unless they are required, or elect to file a special return. See Special Returns for Certain Organizations, below"
LLCs have a similar requirement.
[1] https://www.irs.gov/businesses/small-businesses-self-employe...
Re: Startup incorporation checklist
#55Earlier quoted context omitted.
Why should making it "a real company" be necessary before meeting any number of times per week? You're probably better off having those meetings first, and waiting to incorporate until you're sure you have a business.
Yes, agreed. No need to incorporate just to get together and hack on a project. That said, I would certainly consider (at the very least) signing an agreement with your hacking buddy before launching anything that might generate revenue. I've seen and heard multiple co-founder friendships fall apart once things started to get "real". Good luck!
Yes, please take this advice. It's worth noting that California imposes a MINIMUM tax of $800/yr on LLCs (even if you have zero revenue), which, if you're on a true shoestring budget or are only half-serious about the business, is significant.
This effectively encourages you to not form a company in CA if it's only expected to produce a tiny amount of income.
Re: Startup incorporation checklist
#56Nice thanks, I'd like to see such lists or guides for other countries such as Canada or European ones, if it makes sense. Of course it doesn't replace a good lawyer but at least to get an idea on how hard it is for founders.
I'd love to see other guides pop up as well. Still shocked at the number of agencies, documents, forms, and faxes that are required just to set up a simple company.
Re: Startup incorporation checklist
#57How we can open checking account in SVB? They rejected to open account for us saying that we are not tech vc-backed startup, but we are! Or any other possibilities?
FWIW, you can easily open a business checking account at any bank and they usually have better online services than SVB. Often you can ask your personal bank to waive the fees on a business account if you've been with them for a while.
Re: Startup incorporation checklist
#58It's worth mentioning that incorporation by itself doesn't get you very far in terms of protecting against personal liability. It's really just the first step in company formation. You'll want to appoint directors and officers as well. And to protect against departures, IP issues, etc., you'll also want to issue stock with vesting to founders, and have everyone enter into IP agreements. We've automated all of this at…
What's the advantage of using Clerky versus one of the suggested free tools on this repository? For example, here's one of the suggestions: http://www.foundersworkbench.com/document-driver/ Based on a cursory review of this service, which claims to be free, it looks like vesting, the appointment of directors/officers, an IP assignment agreement and even the 83(b) election letter is provided. Does Clerky provide somet…
If you use any of the free document generators out there, you are left to your own to figure out what to do with the generated documents. It's not rocket science - you can definitely figure it out, with enough research. But it will take you a long time and it's cumbersome - consequently, you are highly likely to mess it up in some way or another.
We started Clerky exactly to solve this problem - as startup lawyers, every time we saw someone try to save money by doing paperwork on their own, there was some sort of issue with it. Yet we could definitely see why they wanted to do it on their own. So we built software to make it impossible to mess things up (as long as the information entered is correct).
It's hard to say why people reliably mess things up. I think part of it is that it requires of a level of attention to mundane details that is not natural to most of humanity. Another part of it is that it really helps to know some of the reasons behind why those mundane details are important - which requires some knowledge of how corporations work, contract law, etc. And it's one of those things where you don't know what you don't know.
Re: Startup incorporation checklist
#59If my company won't be making money or revenue for quite some time, what does that mean for me in terms of the IRS? Will we get penalized for NOT having revenue?
It's worth pointing out that California imposes a MINIMUM tax of $800/yr on LLCs (even if you have zero revenue). This disincentives you from going and forming an LLC "just because".