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How I Incorporated My Startup

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Re: How I Incorporated My Startup

#31

Post by jackolas »

pzxc wrote: post #3

Good post, getting incorporated (or making an LLC) really IS that easy, and I've not seen anyone outline the process so succinctly before. One comment: You don't NEED to incorporate in delaware, unless you have specific liability reasons for doing so. Incorporating in your own state is usually cheaper and easier, so unless you have specific protection you want that only a delaware corporation corporation can provide…

Sadly here its more expensive to file the one LLC form then the equivalent corporate form. (Yes corporate entities need more forms but its bizarre.)

Re: How I Incorporated My Startup

#32

Post by tocomment »

cscotta wrote: post #5

This a great, succinct guide - glad to see it. One very important step five to add: check with your state's Secretary of State office to see if there are any additional steps that must be taken. Many states require foreign-registered LLCs and corporations to submit an "application for authority to transact" or otherwise register with them. Depending on where you're located, a local business registration fee or licens…

I made an LLC in Maryland and I didn't get an EIN. I used my SSN to open a business checking account.

Would it be worth going back and getting an EIN? Would I be able to change the bank account? What would the benefits of doing that be?

Re: How I Incorporated My Startup

#34

Post by techsupporter »

tocomment wrote: post #32
cscotta wrote: post #5

This a great, succinct guide - glad to see it. One very important step five to add: check with your state's Secretary of State office to see if there are any additional steps that must be taken. Many states require foreign-registered LLCs and corporations to submit an "application for authority to transact" or otherwise register with them. Depending on where you're located, a local business registration fee or licens…

I made an LLC in Maryland and I didn't get an EIN. I used my SSN to open a business checking account. Would it be worth going back and getting an EIN? Would I be able to change the bank account? What would the benefits of doing that be?

In general, the taxpayer ID used to open the account is the taxpayer that owns the account. I am the treasurer of a small non-profit, and the non-profit's EIN is listed on our checking account. Having my SSN on there--except as identification that I'm authorized to perform transactions on the account--would have made me an owner, which is not what we wanted. Check with your bank to be certain, but I would change the account's EIN to your LLC's.

Re: How I Incorporated My Startup

#35

Post by csmeder »

rprasad wrote: post #24
csmeder wrote: post #18

Earlier quoted context omitted.

However, if your startup depends on having a merchant account, you need to incorporate before you can get the merchant account correct? I would really like to put off incorporating but I need a merchant account so I can bill people based on their usage. Also even PayPal let me bill people based on usage, I hear horror stories about pay pal every day.

You don't need to incorporate, but you need to at least file a DBA (doing business as).

You need to become an LLC or sole proprietor to have a DBA right? And Isn't the common advice don't become an LLC or sole proprietor if you want VC money in the future?

Re: How I Incorporated My Startup

#36

Post by patio11 »

maxklein wrote: post #7

Is it possible (or legal) for a set of foreign people (outside the country, no citizens) to create a delaware company? Would that work at all, what with banking and all? Anyone know?

Possible, trivial with the right bank, tens of millions of foreign individuals and corporations hold US companies and bank accounts. I used to set them up routinely for incubated companies at my workplace. Only sticking point is passing Know Your Customer regulations at the bank, which is not difficult at banks which routinely transact internationally. Our Citibank would accept a faxed copy of their passport plus basically any confirmation of existence of their corporate structure. (Including "We exist, thanks." on letterhead.)

Re: How I Incorporated My Startup

#39

Post by _pius »

breckognize wrote: post #12

I'm going to take the opposite view and suggest that this is not a good idea. While I whole-heartedly endorse bootstrapping when you can, there is a huge risk to not having a professional look at your incorporating documents, especially when there are multiple co-founders involved. That's why this is the first thing incubators like YC and AlphaLab require. Many attorneys (if you ask) will do incorporation for a flat…

I was with you until this:

$2500 is not a lot of money. And if you can't bring yourself to pay that much for something as important as an attorney, are you really starting a business? Or is it just a side project that you hope will become a business? There is a serious difference.

That's a bit obnoxious ... $2500 is a fairly large chunk of money for a new business. Even on a reasonably high developer's salary, the average person would have to save aggressively for a couple months to pay that.

It's a bit heavy handed to imply that if you don't have $2500 to blow on attorneys upfront, you aren't actually starting a business. Especially when there are boilerplate documents that get you pretty damn close without you paying a dime:

http://www.goodwinfoundersworkbench.com/

Re: How I Incorporated My Startup

#40

Post by kljensen »

grellas wrote: post #17

This is a nice do-it-yourself guide to how to file a certificate of incorporation in Delaware. A few observations from the dark side (I am a business lawyer): 1. Filing the certificate is only the first of several steps you need to take to complete an incorporation (you also need to set up its management structure, capitalize it, enter into any shareholder agreements as are appropriate, adopt bylaws, and comply with…

George is spot on. Also, in my experience, it's surprisingly easy to get a law firm to do this gratis depending on your network and prospects. It's cookie cutter for them.

(I've done the diy and professional routes both without problems. The diy co raised vc no problem and survived minor disputes.)

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