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Stripe Atlas for LLCs

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Re: Stripe Atlas for LLCs

#141

Post by Meekro »

ryanSrich wrote: post #127
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…

CA in general makes absolutely no sense to start a business in. There are zero arguments for starting a business in CA. Oregon, Washington, Texas, Colorado, etc. are all objectively better choices. Even if you're interested in raising money from SV investors you're far better off locating in Seattle, Denver, Portland, Austin, etc.

I definitely agree with you that there are better states than California, but I recently moved my online company from California to Texas and discovered a really nasty surprise: Texas considers web hosting, server rental, SaaS, etc. to be services subject to sales tax [1]. Washington actually does as well, since you mentioned it.

This will complicate your life in two ways: First, your internet company now has to enumerate subscribers in the same state as you and charge them sales tax. Your competitors, located in friendlier territories, can undercut you by not having to do this.

Second, any payments you make to a SaaS/hosting vendor are now subject to use tax. Do you pay AWS for hosting every month? Get ready to cough up ~6% of that for Texas' treasury. If you're running the kind of business where your hosting bill will grow proportionally to your revenue, this amounts to a tax on revenue. In my case, it wildly exceeds anything California ever charged me in income tax.

[1] https://blog.taxjar.com/saas-sales-tax/

Re: Stripe Atlas for LLCs

#143

Post by patmorgan23 »

koops wrote: post #134
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…

Is "doing business" in California really defined as living in California? What's your source for that?

If you have a physical presence in a state you are considered doing business in that state.

Re: Stripe Atlas for LLCs

#144

Post by mikeyouse »

koops wrote: post #134
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…

Is "doing business" in California really defined as living in California? What's your source for that?

It's not exclusively defined as living in California, but if you live in California and have an LLC, it almost certainly requires registration in the state:

https://www.ftb.ca.gov/businesses/Doing-Business-in-Californ...

For taxable years beginning on or after 1/1/2011, a taxpayer is doing business in California if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California or if any of the following conditions are satisfied:

> The taxpayer is organized or commercially domiciled in California.

> Sales, as defined in subdivision (e) or (f) of R&TC 25120, of the taxpayer in California, including sales by the taxpayer’s agents and independent contractors, exceed the lesser of $500,000 [1] or 25 percent of the taxpayer's total sales.

> Real and tangible personal property of the taxpayer in California exceed the lesser of $50,000[1] or 25 percent of the taxpayer's total real and tangible personal property.

> The amount paid in California by the taxpayer for compensation, as defined in subdivision (c) of R&TC 25120, exceeds the lesser of $50,000[1] or 25 percent of the total compensation paid by the taxpayer.

> For the conditions above, the sales, property, and payroll of the taxpayer include the taxpayer's pro rata or distributive share of pass-through entities. "Pass-through entities" means partnerships, LLCs treated as partnerships, or S corporations.

So if your 'HQ' is in California, if 25% of your sales are in California, if more than 25% of your property is in California, or if more than 25% of the total compensation you pay is in California, you need a California LLC.

Re: Stripe Atlas for LLCs

#145

Post by sachitgupta »

gamblor956 wrote: post #110
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?

> 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.

Well, I do have clients and customers outside FL - lots of them. Does that make a difference?

Re: Stripe Atlas for LLCs

#146

Post by lenjaffe »

Meekro wrote: post #141
ryanSrich wrote: post #127

Earlier quoted context omitted.

CA in general makes absolutely no sense to start a business in. There are zero arguments for starting a business in CA. Oregon, Washington, Texas, Colorado, etc. are all objectively better choices. Even if you're interested in raising money from SV investors you're far better off locating in Seattle, Denver, Portland, Austin, etc.

I definitely agree with you that there are better states than California, but I recently moved my online company from California to Texas and discovered a really nasty surprise: Texas considers web hosting, server rental, SaaS, etc. to be services subject to sales tax [1]. Washington actually does as well, since you mentioned it. This will complicate your life in two ways: First, your internet company now has to enum…

> this amounts to a tax on revenue.

Corporations wanted to be people. People pay income taxes on their revenue, not their profits.

Re: Stripe Atlas for LLCs

#148

Post by zawerf »

Is the LLC anonymous by default? For privacy reasons, not legal. I know I can still get subpoenaed. I just don't want my name/address associated with the company on anything public.

It seems to do this I will need a lawyer to be my registered agent for mail forwarding (a regular mail forwarding service such as https://www.virtualpostmail.com/services/registered-agent/ was apparently not enough since it doesn't have attorney-client protection). That was as far as I got when I last tried to start a LLC for my side project.

Re: Stripe Atlas for LLCs

#150

Post by EGreg »

jlongster wrote: post #149

Does this support converting an existing LLC into one that Atlas would set up?

No. I asked them. They said

We're still in the growing phases and constantly looking for ways to expand and improve, but I'm afraid, the Atlas program is only accessible as a package deal.

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