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Stripe Atlas for LLCs

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Re: Stripe Atlas for LLCs

#111

Post by heavenlyhash »

gamblor956 wrote: post #107
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.

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 dis…

Nope, still more complicated than that. Single member LLCs are not partnerships by default. Multimember LLCs are partnerships by default. Either group can choose to be a yet a different category. See citation and quote in https://news.ycombinator.com/item?id=16961968 .

Re: Stripe Atlas for LLCs

#112

Post by gamblor956 »

jahewson wrote: post #59
Saaster wrote: post #43

Earlier quoted context omitted.

Unless you have presence in Delaware (offices or employees), you don't pay corporate income taxes there just because you formed as Delware LLC or C Corp. You pay a nominal franchise tax, and you're taxed in the other state(s) you operate in.

Yep. An LLC* is not taxed as a corporation unless it chooses to be, by default it is taxed as a sole proprietorship (and so the owner would pay income tax). This is known as a disregarded entity” at the federal level. Also watch out for franchise taxes - if you live in California it’s $800/yr minimum. * Edit: a single-member LLC

The California franchise tax applies to California LLCs and to non-California LLCs that do business in California, so you don't avoid it by registering in Delaware.

Re: Stripe Atlas for LLCs

#113

Post by gamblor956 »

woolvalley wrote: post #37
foobaw wrote: post #12

Earlier quoted context omitted.

This! Delaware is simply the choice for most because of conventions, marketing, and (legal) history. The ideal choice should be Wyoming in my humble opinion.

Why wyoming vs nevada

Unless you live in Wyoming or Nevada, you plan on raising VC money[1], or you know that you will be having substantial business operations in multiple states, you should generally incorporate an LLC in the state in which your primary business operations will take place.

[1] Most VCs require C-Corps. A few enlightened VCs will invest in LLCs, recognizing the tremendous tax benefits of the LLC form. In either case, they will require the entity be formed in Delaware due to its business law history.

Re: Stripe Atlas for LLCs

#114

Post by gamblor956 »

heavenlyhash wrote: post #111
gamblor956 wrote: post #107

Earlier quoted context omitted.

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 dis…

Nope, still more complicated than that. Single member LLCs are not partnerships by default. Multi member LLCs are partnerships by default. Either group can choose to be a yet a different category. See citation and quote in https://news.ycombinator.com/item?id=16961968 .

You're right, I left out that single member LLCs are disregarded entities because I wasn't trying to be comprehensive. I've updated the comment with more detail.

Re: Stripe Atlas for LLCs

#115

Post by mechwarrior »

I am particularly interested in the liability protection provided by an LLC (selling physical products).

How much legally grounded advice is provided as a part of the service about how to avoid activities that could make the corporate veil easier to pierce in the event of a lawsuit?

I've heard anecdotally about doing a good job of keeping business and personal accounts completely separate, for example. This is the type of advice that I would typically lean on a lawyer for, but it seems could be easily provided as a part of this service.

Re: Stripe Atlas for LLCs

#117

Post by vioyul »

Thanks Patrick. I've heard of Atlas recently and am seriously considering it. I was simply wondering if you provide any tax advice for people living in different countries but who own a Delaware LLC (or C-Corp) through Atlas?

Re: Stripe Atlas for LLCs

#118

Post by leesalminen »

freehunter wrote: post #100
patio11 wrote: post #36

Earlier quoted context omitted.

https://www.azlo.com/

This is in no way a criticism of anything and isn't directed at Stripe or any employee, just an honest question to the general HN community: How does Azlo make money? If I'm going to trust my accounts anywhere, I like to know at least something about their business operations. Azlo is completely fee-free according to their FAQ. They also say they require zero minimum balance and have no ATM fees at 55,000 partner ATM…

I’d always thought that a bank’s primary revenue source was from loans. Banks are able to actually write more loans (and charge interest) than cash in the bank [0]. Profit ensues.

[0] https://en.m.wikipedia.org/wiki/Fractional-reserve_banking

Re: Stripe Atlas for LLCs

#119

Post by gamblor956 »

heavenlyhash wrote: post #109
matthewmcg wrote: post #53

Earlier quoted context omitted.

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 LL C ) are both terms and not as closely related as one might first suspect…

Owners of LLCs and LLPs generally have "limited liability" with respect to their equity investment, meaning that they are only liable for the entity's debts to the extent of their investment.

The primary difference between an LLC and an LLP: an LLC must have at least one "general partner" who is fully liable for all of the LLP's debts in the event the LLP defaults.

Another major difference: until recently, law firms and accounting firms could be LLPs but not LLCs, due to malpractice liability concerns. Now that most bar associations and/or states require these firms to maintain malpractice insurance, many states allow law firms and accounting firms to be LLCs.

Re: Stripe Atlas for LLCs

#120

Post by tptacek »

patio11 wrote: post #49
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.

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…

We paid a lawyer to put together an OE for us at Latacora (we have 10-year vesting). I assumed it would be complicated, but, nope, it works pretty much the way it would in any company: you vest equity over time, and if you leave halfway through your vesting term, you keep half your equity.

The only LLC-specific wrinkle I think we ran into is that we had to spell out that vested equity wasn't equivalent to a pro-rata claim on profits or distributions. But that's like a a sentence or two.

Non-vesting Atlas LLCs are probably super useful for a bunch of different kinds of companies.

But I'll argue that a non-vesting structure is never appropriate for a multi-member startup.

I'm not picking on Atlas; lots of people DIY or even pay lawyers to put this stuff together and get it wrong. We got it wrong at Matasano. It was painful.

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