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Is Delaware the cheapest place to incorporate?

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Re: Is Delaware the cheapest place to incorporate?

#61

Post by brudgers »

ghaff wrote: post #26
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.

I looked into this a while back and came to the conclusion I maybe/probably didn't need to do it upfront but it was cheap enough that it was probably worth going ahead and doing. As it turns out, my timeframes for doing anything with the business slid out but a don't really regret having put the LLC un place.

YAGNI…without customers and forming an LLC can happen as contracts are being written…but if you think your first potential customer is likely to sue before there’s a contract, walk away and find a different first customer.

It seems like what Paul Graham called “playing house.” Forming an LLC feels like progress but it’s not.

http://www.paulgraham.com/before.html

What I mean is as I have been thinking about my opinion today I think my opinion comes from a deeper intuition developed over the years.

The standard arguments for forming an LLC are not based on better meeting the needs of actual or potential customers.

Even worse I think is that the standard argument is based on assumptions that the relationship is adversarial, arms length, and short term.

Good customer relations are way more valuable than limited liability because problems tend to be worked out before lawyers get involved.

Re: Is Delaware the cheapest place to incorporate?

#62

Post by adastra22 »

jawns wrote: post #60
blovescoffee wrote: post #39

Earlier quoted context omitted.

Why is the correct answer a DE C Corp if you're looking to raise?

I'm a longtime Delawarean and in my past life as a journalist I wrote about why the state is such a corporate haven. The short answer is that companies incorporate in Delaware to mitigate risk. The slightly longer answer is that the Delaware courts that deal with corporate legal matters are much more predictable than comparable states. There is voluminous settled case law, and so when you incorporate in Delaware, it…

I mean it is because everyone else is doing it. Because everyone else incorporated in Delaware, that's where the case law is well established, all existing contracts are written in terms of DE corporate case law, etc. etc.

We all could have picked Road Island or New York instead. But for historical reasons it was Delaware.

Re: Is Delaware the cheapest place to incorporate?

#63

Post by fragmede »

KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

How difficult is it to change, in practice? If I've got an LLC or a corp in a different state, can I form a DE C corp and arrange to have that buy my whatever?

Re: Is Delaware the cheapest place to incorporate?

#64

Post by Spooky23 »

glimshe wrote: post #52
KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Would Nevada/Wyoming be a good deal if they lived in the US? Let's say, living in Texas.

If it’s a small company, you may notice the cost of registering the foreign corporation in your actual location.

Some people and tax authorities may draw an inference from states like Nevada with a reputation for shady companies in some industries.

Re: Is Delaware the cheapest place to incorporate?

#65

Post by jawns »

adastra22 wrote: post #62
jawns wrote: post #60

Earlier quoted context omitted.

I'm a longtime Delawarean and in my past life as a journalist I wrote about why the state is such a corporate haven. The short answer is that companies incorporate in Delaware to mitigate risk. The slightly longer answer is that the Delaware courts that deal with corporate legal matters are much more predictable than comparable states. There is voluminous settled case law, and so when you incorporate in Delaware, it…

I mean it is because everyone else is doing it. Because everyone else incorporated in Delaware, that's where the case law is well established, all existing contracts are written in terms of DE corporate case law, etc. etc. We all could have picked Road Island or New York instead. But for historical reasons it was Delaware.

Yes, that's correct. Companies originally flocked to Delaware because it was relatively easy to incorporate there, and then the volume of registrations begat the volume of case law, which begat more registrations because of the favorable legal environment.

My point was that it's not just because it's trendy or a matter of conformity. It is a risk-management strategy.

Re: Is Delaware the cheapest place to incorporate?

#66

Post by iambateman »

If you choose Delaware, make sure to look at the costs in year 2 and beyond.

I did a Delaware C Corp as a bootstrapper. The first year cost $1,000 in total incorporating cost and the second year was going to be several hundred just to stay in good standing.

This is compared to an LLC costing $100 one time in South Carolina.

If you’re bootstrapping, it’s worth thinking about the costs.

Re: Is Delaware the cheapest place to incorporate?

#67

Post by [deleted] »

KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

[deleted]

Re: Is Delaware the cheapest place to incorporate?

#69

Post by ValentineC »

KieranMac wrote: post #38

I'm an attorney. Delaware is definitely not the cheapest or even in contention for the cheapest. Still, if you want to raise capital, the correct answer is DE C Corp. If you're not looking for external funding, any state will do. If you care about anonymity, do Nevada or Wyoming. If you don't care about anonymity, Colorado is actually a very good choice. Very simple, intuitive online filing system that accepts filing…

Piggybacking on this.

If I'm a non-resident alien looking to incorporate the cheapest US-based company so that I can open a business bank account for credit card churning, would a Colorado LLC still be the the best choice for me?

Re: Is Delaware the cheapest place to incorporate?

#70

Post by jake_morrison »

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 need a company in Taiwan, it's generally best to have your main company outside and have a branch in Taiwan. It has significant tax benefits, particularly for foreigners.

A branch can repatriate profits to the parent company, after paying Taiwan tax. If you have a standalone Taiwan company, then you have to pay dividends, then pay personal tax on it. If you are not resident in Taiwan, then you would pay 20% tax on those dividends. There is also a 5% tax on retained earnings.

Another benefit is that if your company pays someone overseas for services, then Taiwan considers that "Taiwan source income", and they owe 20% tax on it. Other countries like Hong Kong would not tax that money.

As foreigner, if you leave, then you would find it difficult to run your company remotely. So you might as well set up somewhere else.

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