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Hiya folks! I worked with the team on this; happy to answer any questions you have.
Will there be a way for a C-Corp to change into an LLC?
(not a tax advisor / CPA, talk to one for actual specifics)
Earlier quoted context omitted.
Would it be possible to use Stripe Atlas to create the LLC, bank account etc and use Stripe normally for handling the payments side for the subscriptions. However, if a marketplace came with the application. To use a 3rd party for all that comes with it. IOW, not wanting to use Stripe Connect for various reasons that make sense to the business.
You're welcome to have your company do business with anyone you wish it to do business with. We do not obligate you to use any Stripe product; we feel like we should always have to earn your business. (We in fact go further than that; Atlas actively goes out of our way to help our companies take payments outside of Stripe, for example getting paperwork together to e.g. publish apps on the App Store.)
What would be the combined fed+state corporate income tax rate for a Delaware LLC? Quick google says this is 21% (federal) + 8.7% (Delaware). Is my understanding of this correct, that a Delaware LLC pays 29.7% taxes on its profits?
Hiya folks! I worked with the team on this; happy to answer any questions you have.
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
Can you elaborate on what this means? What is formal vesting (and as opposed to what... informal vesting?) and how does not doing it make a company explode? I’m sure I’m not the only one here who has never started a company and has no idea what this means. :)
Earlier quoted context omitted.
> I'd say it's worth it because to be honest I have no idea what my company's responsibilities for taxes are and yeah that makes me a little uneasy. Yikes. You should get an accountant. Ask for referrals from other businesses in your area that are similar to yours. Ask your local co-working spaces or incubators. Google...
Yup, I'm working with an accountant to better understand what's going on. Last year I was in a grace period but this year I'm going to have to file. Luckily it's just me, no employees and no cofounder to worry about. But man tax law is complicated and I don't like not knowing every part of what I'm doing.
(Drop us a line if you need a referral to an accountant; we can introduce you to an accountancy that works with a lot of Internet businesses. We also have some guides about it at https://stripe.com/atlas/guides to demystify it a bit.)
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
Can you elaborate on what this means? What is formal vesting (and as opposed to what... informal vesting?) and how does not doing it make a company explode? I’m sure I’m not the only one here who has never started a company and has no idea what this means. :)
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
Atlas C corporations with multiple founders have a vesting schedule built-in (4 year vesting; 1 year cliff), the market standard in Silicon Valley.
Vesting in an LLC is complicated:
Because an LLC is a partnership, there can be complicated consequences of someone stepping back from an operational role (like e.g. being a founder) but remaining an owner of the business. We didn't think it was appropriate to have a one-size-fits-all answer for this: some companies might choose to buy out the departing founder, some might choose to pay them dividends on an ongoing fashion, and some might not have financial bandwidth to pay dividends but might want them to participate in upside in the event of a future acquisition.
Conversely, adopting vesting establishes some fairly substantial tax consequences (83(b) elections, etc).
This is heavily dependent on facts-and-circumstances.
Vesting is more of an established concept, with off-the-shelf support throughout the ecosystem, for C corporations. For those who want it in an LLC, please speak to an attourney. You can still adopt it for your Stripe Atlas LLC, it just isn't built in to the default experience.
This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
Context for folks who haven't encountered vesting before: vesting is an arrangement where, instead of getting all of your ownership up front, you earn it over time. For example, you might have a fairly common arrangement in Silicon Valley where you get 1/4 of your equity after working for a year and the remaining 3/4 over the next 3 years. This pre-commits to what happens regarding ownership if someone leaves 18 mont…
An LLC is not a partnership. (A limited liability partnership is an LLP.) An LLC is a distinct business structure with some similarities to a corporation, some to a partnership, and some unique features.