Ask HN: At what point did you incorporate for your startup or side project? • Hacker News Board

Re: Ask HN: At what point did you incorporate for your startup or side project?

#21

Post by wdrw » Mon, Jan 08, 2018, 3:52 AM UTC

blparker wrote: post #15

wdrw wrote: post #4

I have one corporate entity that I use for both my "side projects" and for consulting work. Mostly did it to ensure limited liability. Also, if one of the projects goes big, it will make things easier later on. Also, if we're talking about iPhone apps and such, a corporate name looks more professional in the app store.

I realize it’s state specific, but what were your approximate total charges for incorporating?

In my jurisdiction the actual incorporation is actually quite cheap (don't remember exact numbers unfortunately, but cost wasn't an issue at all). What's expensive is the services of a lawyer, but you really don't need it for a basic incorporation, the process is pretty self-explanatory. (Of course, if it's a startup with multiple co-founders, outside investment, etc, then a lawyer is definitely a must-have). The major cost, for me, is all of the ongoing tax accounting - you either need to pay for expensive bookkeping+accounting, or spend a lot of your time learning to do it yourself.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#22

Post by toomuchtodo » Mon, Jan 08, 2018, 4:17 AM UTC

jcadam wrote: post #17

Formed a Florida S-Corp for my side project about 5 months ago (Single member LLCs in Florida don't provide as much liability protection as they do in the rest of the country). Started accepting sign-ups about 5 days ago. Have had 2 trial sign-ups, $0 revenue so far Maybe I should advertise? :D

Rough cost to S Corp incorporate in FL?

Re: Ask HN: At what point did you incorporate for your startup or side project?

#23

Post by ProAm » Mon, Jan 08, 2018, 4:21 AM UTC

_RPM wrote: post #20

skraelingjar wrote: post #14

I incorporated at the very beginning, after a few beers at 2am. Ignorant of the law, I thought it was necessary to form right away. If I was doing it again, I would still at least have an LLC or equivalent entity for liability protection and to "look official". It has also come in handy for consulting work.

How did you incorporate at 2am?

You go to your state website and fill out the forms. Takes 30 minutes and a filing fee.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#24

Post by thisisit » Mon, Jan 08, 2018, 4:26 AM UTC

I guess it depends on type of business. If you end up running like healthcare etc which is heavily regulated, it is better to incorporate as soon as possible. Otherwise delaying it a bit is fine too.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#25

Post by jcadam » Mon, Jan 08, 2018, 4:31 AM UTC

toomuchtodo wrote: post #22

jcadam wrote: post #17

Formed a Florida S-Corp for my side project about 5 months ago (Single member LLCs in Florida don't provide as much liability protection as they do in the rest of the country). Started accepting sign-ups about 5 days ago. Have had 2 trial sign-ups, $0 revenue so far Maybe I should advertise? :D

Rough cost to S Corp incorporate in FL?

The initial filing fee isn't bad: ~$80 or so. Annual reports come with a fee of $150 though.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#26

Post by ajdlinux » Mon, Jan 08, 2018, 4:39 AM UTC

A few years ago, some friends and I entered a local government innovation competition, made a "bid", gave a presentation and were selected to deliver a proof of concept.

We incorporated pretty much immediately upon being advised of our selection for the PoC. This involved ~AU$600 for government fees and incorporation services.

We then retained a lawyer to provide us with a shareholders' agreement (~$1500) and obtained our legally required workers' compensation insurance (~$500).

We didn't sign the contract for the PoC until that point.

Conveniently, the rules of the competition allowed us to expense all that to the customer...

As for why we chose to incorporate - the majority of my team are somewhat risk-averse and legally-minded, and even though we were and remain close friends, we wanted to formalise our business structure to help manage any potential for disagreement later down the track.

As it turned out, our government customer was very happy with the PoC and was interested in engaging us further, but their timelines didn't match up with ours and we ultimately decided to take the $12,500 prize money, open source our PoC code and move on to regular megacorp/government careers.

Had we chosen to continue on, however, having a corporate structure would have been an absolute, non-negotiable necessity for taking on a proper government contract.

During the period our company was active, we never got an accountant - I learned more than I ever wanted to know about how to fill out an Australian corporate income tax return, with pen and paper...

Re: Ask HN: At what point did you incorporate for your startup or side project?

#27

Post by crisopolis » Mon, Jan 08, 2018, 4:43 AM UTC

jcadam wrote: post #17

Formed a Florida S-Corp for my side project about 5 months ago (Single member LLCs in Florida don't provide as much liability protection as they do in the rest of the country). Started accepting sign-ups about 5 days ago. Have had 2 trial sign-ups, $0 revenue so far Maybe I should advertise? :D

Yeah, Florida SMLLC's aren't like other SMLLC's. Creditors don't have to give charging orders and single member's assets are up for grabs.

I'll probably also end up becoming a Florida S-Corp.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#28

Post by maringerov » Mon, Jan 08, 2018, 4:46 AM UTC

About 4 months after starting - basically before we had to start paying our vendors. In retrospect, I think we could have done it even later, just before opening the online store.

I guess it matters where you are and what your business is. In our case, we are based in Europe and run an ecommerce company, so we had to be incorporated quite early on.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#29

Post by iameli » Mon, Jan 08, 2018, 4:46 AM UTC

Was doing long-term contract work for two companies. Incorporated (Washington S-Corp), moved contracts over there for liability, tax, structural reasons. Huge pain in the ass. Basically took a year of my co-founder's time to set everything up properly and learn everything necessary to drive the thing financially.

On the other hand. Now we have revenue, payroll (Gusto), health insurance (Premera), an attorney, proper corporate paperwork, and products that we wanna make. Pretty happy to have done that all before looking for investment. Seems like we're likely to retain more of our independence than other potential paths.

Re: Ask HN: At what point did you incorporate for your startup or side project?

#30

Post by macp » Mon, Jan 08, 2018, 4:50 AM UTC

blparker wrote: post #15

wdrw wrote: post #4

I have one corporate entity that I use for both my "side projects" and for consulting work. Mostly did it to ensure limited liability. Also, if one of the projects goes big, it will make things easier later on. Also, if we're talking about iPhone apps and such, a corporate name looks more professional in the app store.

I realize it’s state specific, but what were your approximate total charges for incorporating?

For the State of Hawaii, incorporation fee is $50 for for-profits, with a $15 annual business report fee thereafter. The annual report is a 1-page form stating total shares issues, officers, type of business, and addresses.