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Stripe Atlas for LLCs

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Re: Stripe Atlas for LLCs

#101

Post by theptip »

billconan wrote: post #93
nodesocket wrote: post #61

> Is organized in Delaware, the jurisdiction of choice for many new LLCs. Be aware that if you are "doing business" in California which means you live there you also have to file as a California foreign entity and pay the absurd anti-small business flat tax of $800 a year. This also does not include your state income tax liabilities in California. Just because the LLC is formed in Delaware does not mean you don't hav…

So if I live in CA, it might be better to directly register a CA company to save cost, rather than registering a Delaware company via Strip Atlas?

Yes, here's a recent HN thread with some more background on the CA LLC formation process:

https://news.ycombinator.com/item?id=16805322

Re: Stripe Atlas for LLCs

#103

Post by jkaplowitz »

leesalminen wrote: post #95
tptacek wrote: post #34

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.

Also, it’s important to keep in mind that a vesting schedule is just a piece of paper at the end of the day. Even if you have one signed and notarized, it’s just a contract. In America, contracts boil down to who has more money to dispute one in court. If you’re a scrappy startup, and one of your founders is wealthy- be careful. They can destroy your business fighting a multi year civil court case.

Depends. If there's an arbitration provision, their options to do that are limited (not zero).

Re: Stripe Atlas for LLCs

#104

Post by wpennington »

allannienhuis wrote: post #63
hamandcheese wrote: post #38

Earlier quoted context omitted.

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. :)

Without a written vesting schedule for ownership of shares of a company, a founder could leave (or die or become disabled/incompetent due to sickness/accident) and keep their (or their estate's) share of the company. Those events can completely destroy the value of a company. For example in a 50/50 partnership, the remaining partner would be responsible for 100% of the work, but only receive 50% of the dividends or l…

It's also important to note that much of the value of any company created in the future as it grows, matures, etc. It sometimes happens that people default to ascribing value based on history or past contributions -- which certainly does matter with respect to the idea, tech, product, early customers, etc -- but is an incomplete ascription of anyone's particular value with respect to the life of a company. Depending on what stage the company is in -- but because we are talking about formation we can assume it is early -- much of the work is likely yet to come. If the past is too heavily weighted, it can cripple the company in the future. Among other things, vesting can help protect founders against over-indexing on the past while ensuring the team is aligned on the future of the company and that are all in it "for the long-haul". Plenty of other reasons to do so as noted in the other comments throughout the thread.

Here is a useful link from Cooley (a large, well-respected law firm) that goes into some of the nuance of these things: https://www.cooleygo.com/founder-basics-founders-stock/

Re: Stripe Atlas for LLCs

#105

Post by [deleted] »

jkaplowitz wrote: post #103
leesalminen wrote: post #95

Earlier quoted context omitted.

Also, it’s important to keep in mind that a vesting schedule is just a piece of paper at the end of the day. Even if you have one signed and notarized, it’s just a contract. In America, contracts boil down to who has more money to dispute one in court. If you’re a scrappy startup, and one of your founders is wealthy- be careful. They can destroy your business fighting a multi year civil court case.

Depends. If there's an arbitration provision, their options to do that are limited (not zero).

[deleted]

Re: Stripe Atlas for LLCs

#106

Post by opmac »

sachitgupta wrote: post #97

@Patio11 - I recently moved from California to Florida and I'm about to open an LLC here. What are the advantages / disadvantages of having an LLC based in Delaware vs creating one in Florida? I'd love to use Stripe Atlas - but not sure if I'm making things more complicated than they need to be by opening in Delaware vs Florida.

You should probably talk to an attorney, but as I understand, Florida isn't a bad state to consider either. It really comes down to cost savings and specific laws, and where you're primarily doing business.

Re: Stripe Atlas for LLCs

#107

Post by gamblor956 »

dragonwriter wrote: post #50
patio11 wrote: post #49

Earlier quoted context omitted.

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…

> Because an LLC is a partnership 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.

LLCs are partnerships for tax purposes in the US (unless they have only a single owner, in which case they are disregarded), hybrid entities for legal purposes in the US however many owners they have, and are either corporations or partnerships outside the US depending on the country. Most countries treat LLCs as corporate-type entities regardless of the number of owners, and only a handful will treat an LLC as a disregarded entity if it has a single owner.

[1] Edited to be more comprehensive.

Re: Stripe Atlas for LLCs

#108

Post by mechwarrior »

patio11 wrote: post #82
mikeleeorg wrote: post #80

Earlier quoted context omitted.

This is very important info. I've seen some founders get tripped up over this. Hopefully Stripe Atlas LLC provides support for foreign entity registration and taxes too (I would assume they do).

We don't yet foreign entity registration in the product, but you could imagine us automating this, in addition to the Delaware franchise tax filing and registered agent services which we already handle.

If foreign entity registration was automated for NY I would use this product immediately.

Re: Stripe Atlas for LLCs

#109

Post by heavenlyhash »

matthewmcg wrote: post #53
dragonwriter wrote: post #50

Earlier quoted context omitted.

> Because an LLC is a partnership 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.

He's referring to the fact that, by default, the United States taxes LLCs having more than one member as a partnership. An interest in a partnership is taxed differently than an interest in a corporation (stock).

citation, since I have it open: https://www.irs.gov/businesses/small-businesses-self-employe...

> Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless [...etc...]

(To grandparent comment: for what it's worth, I too find it highly confusing that "partnership" and "LLP" (vs LLC) are both terms and not as closely related as one might first suspect...)

Re: Stripe Atlas for LLCs

#110

Post by gamblor956 »

sachitgupta wrote: post #97

@Patio11 - I recently moved from California to Florida and I'm about to open an LLC here. What are the advantages / disadvantages of having an LLC based in Delaware vs creating one in Florida? I'd love to use Stripe Atlas - but not sure if I'm making things more complicated than they need to be by opening in Delaware vs Florida.

If you don't plan on trying to raise VC money, then a local LLC is preferable to a Delaware LLC in 99.999999% of business cases.

Or another way to put it: if don't plan to do business outside of Florida, why would you subject yourself to the laws and jurisdiction of another state just to save a few bucks?

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