Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Is Delaware the cheapest place to incorporate?

news.ycombinator.com

Post reply on HN
Print view View original

11–20 of 130 posts

Re: Is Delaware the cheapest place to incorporate?

#11

Post by brudgers »

giantg2 wrote: post #8
brudgers wrote: post #7

Earlier quoted context omitted.

Before you start a Deleware C corp, discuss the idea with your lawyer. If you don't have a lawyer now, you will almost certainly wind up with one if you start a Delaware C corp because Delaware C corps have sophisticated filing requirements and non-trivial fines if you don't meet those requirements. And honestly, a Delaware C corp would be "playing house." The hard work is finding customers/users not filling out form…

Probably better to go with an LLC. In many states they are low cost and have few requirements, but still provide limits on liability and provide a professional image. If the startup becomes successful enough to need a corporate structure, then you can hire the lawyer and go the more expensive route.

Finding customers is the best thing.

The only good reason for a Delaware C Corp is because an investor requires it…in other words, the only good reason is because someone else is willing to pay for it.

But yes, an LLC can be a reasonable option, but a sole proprietorship is the simplest thing that might work. And it requires no work beyond business records and tax reporting…and then only if you are making revenue.

Until then, it is a multiplication problem with one or more factors being zero.

Re: Is Delaware the cheapest place to incorporate?

#13

Post by Digory »

You may want to start a Delaware C-Corp if others are investing money. That is the standard. But it is far from the cheapest way to "start a company" in the United States.

Usually, it is easiest to start a "limited liability company." Smaller states compete for the lowest LLC cost. For example, Arizona, Mississippi and Missouri all charge $50 for an LLC, with no recurring fees. Kentucky charges $40, but requires a $15/yr report. But you may need a registered agent or other ongoing costs in those states.

By comparison, Clerky (a popular C-Corp startup service) charges $99 + $328 in state fees. If you get people interested, you can easily convert from an LLC to a Delaware C-Corp.

But if you are in Taiwan, why do you want a US company?

Re: Is Delaware the cheapest place to incorporate?

#14

Post by ddxv »

Digory wrote: post #13

You may want to start a Delaware C-Corp if others are investing money. That is the standard. But it is far from the cheapest way to "start a company" in the United States. Usually, it is easiest to start a "limited liability company." Smaller states compete for the lowest LLC cost. For example, Arizona, Mississippi and Missouri all charge $50 for an LLC, with no recurring fees. Kentucky charges $40, but requires a $1…

Thanks for the advise.

As for your question, I'm an American citizen and generally get advise to not directly create a Taiwan company as the tax and banking system are incredibly bureaucratic. Having painfully started a subsidiary here in the past, though not an actual TW corp, makes me suspect the advise I hear is worth listening to.

Re: Is Delaware the cheapest place to incorporate?

#15

Post by ddxv »

satya71 wrote: post #9

You'll need a Delaware C-Corp to receive funding. If funding isn't on the cards, a simple and cheap LLC is the best. Delaware C-Corp has a bunch of reporting requirements and a scary default tax treatment. It's not for the uninitiated. As someone else noted, Taiwan-based company. If you must have a US entity, LLC is the best for a one-person company. If you do raise funding or become big, it's trivial to convert to a…

Thanks, realizing that I incorrectly used the term incorporate as I did mean just LLC.

Re: Is Delaware the cheapest place to incorporate?

#16

Post by giantg2 »

brudgers wrote: post #11
giantg2 wrote: post #8

Earlier quoted context omitted.

Probably better to go with an LLC. In many states they are low cost and have few requirements, but still provide limits on liability and provide a professional image. If the startup becomes successful enough to need a corporate structure, then you can hire the lawyer and go the more expensive route.

Finding customers is the best thing. The only good reason for a Delaware C Corp is because an investor requires it…in other words, the only good reason is because someone else is willing to pay for it. But yes, an LLC can be a reasonable option, but a sole proprietorship is the simplest thing that might work. And it requires no work beyond business records and tax reporting…and then only if you are making revenue. Un…

I wouldn't want to find a customer without a liability veil in place. At least in my state, an LLC is maybe $150 to set up and $70 every ten years. The paperwork is really 1 notarized form plus your bylaws (templates are available) and a report every 10 years. That's a small price for liability protection. If you make it generic enough, you can reuse it for future business ideas too.

Re: Is Delaware the cheapest place to incorporate?

#17

Post by jmstfv »

I wrote extensively about the running costs of a Delaware C Corp for foreigners: https://jmstfv.com/stripe-atlas-taxes

Basically, expect around $800 to $1,000 in maintenance costs per year. LLCs may be cheaper, but open you up to tricky tax setups (you could be personally liable for U.S taxes).

> What is the recommendation for a company to manage an open source project?

I don't think you need that.

There is a non-trivial legal and accounting overhead that you will have to deal with to keep the corp running.

Re: Is Delaware the cheapest place to incorporate?

#18

Post by civilitty »

Digory wrote: post #12
mnky9800n wrote: post #2

what is the point of having a company if it doesn't have any revenue?

Corporations (and LLCs) protect you legally from the mistakes caused by others.

Not if it’s a single owner LLC or corp. IANAL but you have to be anal about separating personal and business activities if there’s only one shareholder.

Re: Is Delaware the cheapest place to incorporate?

#19

Post by digianarchist »

ddxv wrote: post #14
Digory wrote: post #13

You may want to start a Delaware C-Corp if others are investing money. That is the standard. But it is far from the cheapest way to "start a company" in the United States. Usually, it is easiest to start a "limited liability company." Smaller states compete for the lowest LLC cost. For example, Arizona, Mississippi and Missouri all charge $50 for an LLC, with no recurring fees. Kentucky charges $40, but requires a $1…

Thanks for the advise. As for your question, I'm an American citizen and generally get advise to not directly create a Taiwan company as the tax and banking system are incredibly bureaucratic. Having painfully started a subsidiary here in the past, though not an actual TW corp, makes me suspect the advise I hear is worth listening to.

If you’re operating a foreign company from Taiwan then it’ll probably be deemed a Taiwanese company anyway for tax purposes. Check local laws.

Re: Is Delaware the cheapest place to incorporate?

#20

Post by mindslight »

civilitty wrote: post #18
Digory wrote: post #12

Earlier quoted context omitted.

Corporations (and LLCs) protect you legally from the mistakes caused by others.

Not if it’s a single owner LLC or corp. IANAL but you have to be anal about separating personal and business activities if there’s only one shareholder.

Single owner isn't really the problem per se. Rather it's the owner(s) being significantly involved in the operations of the company, such that they can still be held to be personally responsible for the actions in question or the LLC can be declared undercapitalized (since it's not just paying someone to do those jobs). So like much of the legal system such structures don't actually provide much protection for individuals, but rather well-moneyed conspiracies.
Post reply on HN