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Is Delaware the cheapest place to incorporate?

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Re: Is Delaware the cheapest place to incorporate?

#121

Post by throwawayapples »

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.

Texas has a larger up-front cost (about $300 one-time), but no annual fees at all, no income tax for corporations or individuals.

Unlike Wyoming and Nevada, Texas does have franchise tax, but that is 0 until you exceed $1.23M in revenue, and it maxes out at .331% or .75% after that (https://comptroller.texas.gov/taxes/franchise/).

Delaware has all of these (personal, which wouldn't apply if you live elsewhere, corporate income tax, corporate franchise tax, minimum $400 annually). Wyoming costs only $50 to incorporate but has a $50 annual filing fee.

Also, you'll probably need to file foreign corporate status if you have employees in Texas but are incorporated elsewhere, which is about $700 (one-time).

Re: Is Delaware the cheapest place to incorporate?

#122

Post by satya71 »

ddxv wrote: post #15
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.

There's some great advice in other threads. LLC in a friendly no-reporting, no-franchise-tax state is probably the best bet.

Re: Is Delaware the cheapest place to incorporate?

#123

Post by gt2 »

yieldcrv wrote: post #21

almost nobody needs Delaware the reality is that there are 49 other states, half a dozen territories, and hundreds of semi-autonomous reservations a handful of which are also known to have their incorporation statutes they haven't all stayed still over the past 30 years while Delaware’s marketing engine keeps going, they compete directly anybody with reading comprehension can find one more favorable and cheaper than…

There are so many registered agents to choose from. Are there any commonly recommended registered agents?

Relatedly, can anyone say if it's better to file with clerky instead of a registered agent?

Re: Is Delaware the cheapest place to incorporate?

#124

Post by gt2 »

pclmulqdq wrote: post #27

I would suggest that a Wyoming or Nevada LLC is probably your best bet in terms of low fees, low taxes, and relatively decent laws. Delaware is great if you want someone to eventually either invest in or buy your company, but the fees associated with Delaware corporations and LLCs are very high.

If choosing Wyoming or Nevada, what would be the next step?

Something like Clerky or find a registered agent, or use an attorney for everything?

Re: Is Delaware the cheapest place to incorporate?

#125

Post by Digory »

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.

It protects you from the mistakes of others. The problem for the single owner is that they do a lot themselves, and for that, you need insurance.

But when it works, it works. Imagine you dropship a faulty part to someone, so that there's no negligence by the sole owner. You'd much rather have the lawsuit go:

Plaintiff vs. Your LLC & Vendor Co.

than

Plaintiff vs. You & Vendor Co.

Re: Is Delaware the cheapest place to incorporate?

#126

Post by Digory »

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.

Sounds reasonable.

People hold IP in LLCs all the time. Obviously, though, the outcome depends on TW law and its loopholes as much as the IRS and state law. And the cheapest US LLC services just won't have any clue about any of that.

Re: Is Delaware the cheapest place to incorporate?

#127

Post by swampthing »

gt2 wrote: post #123
yieldcrv wrote: post #21

almost nobody needs Delaware the reality is that there are 49 other states, half a dozen territories, and hundreds of semi-autonomous reservations a handful of which are also known to have their incorporation statutes they haven't all stayed still over the past 30 years while Delaware’s marketing engine keeps going, they compete directly anybody with reading comprehension can find one more favorable and cheaper than…

There are so many registered agents to choose from. Are there any commonly recommended registered agents? Relatedly, can anyone say if it's better to file with clerky instead of a registered agent?

I'm a co-founder of Clerky — I think it really depends on your needs. If you're starting a true startup (as in you are going to optimize for growth, might raise money, etc.), then you'll be better off either using Clerky or working with a good startup attorney, or both. The reason for this is because there is a lot more you'll need to do beyond just incorporation, and we have products for that. Incorporation just causes the corporation to exist, nothing more. No one even owns any shares right after incorporation. The odds of someone getting all the paperwork right on their own if they're not a startup attorney are basically 0%.

Even for incorporation itself, if you do it on your own or work with a registered agent, it's likely that you'll end up needing to at least amend your certificate of incorporation later. Most of the self-help / registered agent resources out there are for regular small businesses, not startups, so the guidance is not really what startups need. Some people like referring to every new business as a startup, I think because it sounds sexier to be working on a startup than a regular small business.

However, if you're starting a regular small business — i.e. not a startup — then I would say using Clerky is not a good idea. We're really purpose-built for startups and don't attempt or purport to serve regular small businesses. Whether you should use a registered agent alone is another question. At a minimum, if you have business partners you're starting the business with, I would say you probably should talk to a business attorney rather than trying to go on your own. On the other hand, if you just need an entity just for the sake of having an entity, and don't really care about whether the paperwork is done correctly or not, then just working with a registered agent directly could suffice.

Re: Is Delaware the cheapest place to incorporate?

#128

Post by swampthing »

gt2 wrote: post #124
pclmulqdq wrote: post #27

I would suggest that a Wyoming or Nevada LLC is probably your best bet in terms of low fees, low taxes, and relatively decent laws. Delaware is great if you want someone to eventually either invest in or buy your company, but the fees associated with Delaware corporations and LLCs are very high.

If choosing Wyoming or Nevada, what would be the next step? Something like Clerky or find a registered agent, or use an attorney for everything?

We (Clerky) only support Delaware because that's where practically all startups (as opposed to regular small businesses) form. In case it's helpful, we've put together a pretty extensive explanation of why Delaware has come to be the standard for startups: https://handbooks.clerky.com/startup-incorporation/where

If you're not forming a startup and are considering Wyoming or Nevada, then I think whether you use an online service (like a registered agent) or an attorney could depend on whether you're just looking to have an entity for the sake of having one or if it's possible the paperwork will be important (e.g. if you have business partners). Unfortunately, there are no major online services similar to Clerky (in terms of legal quality) for Wyoming or Nevada, that I'm aware of, so if you fell in the latter category, I would recommend talking to an attorney. But if not, an online service could be fine.

Re: Is Delaware the cheapest place to incorporate?

#129

Post by sertbdfgbnfgsd »

yieldcrv wrote: post #51
sertbdfgbnfgsd wrote: post #30

Earlier quoted context omitted.

> I personally find Wyoming to be better faster and cheaper than (...) I hear that some states (or all?) require you to have someone physically in the state (and naturally some companies offer this as a service, and charge). Is that right? or are there some states without this requirement?

this concept is called a registered agent, they service all states. the largest registered agents in the US service every single state in the union. it is not complicated or presumptive of anything like the another reply suggested. every state has many service providers that compete with the national ones.

So are you saying that all states require a physical address? Yes, I understand that some companies offer this as a service, but that in itself doesn't mean there's no state where this isn't required.

Re: Is Delaware the cheapest place to incorporate?

#130

Post by etothepii »

csomar wrote: post #86
etothepii wrote: post #79

Earlier quoted context omitted.

The real reason to incorporate surely is the limit on liability and the ability to treat assets and actions of the project as distinct from your own. Accidentally infringe a copyright it is probably 1000x harder to cause the owner of a company grief tan it would be to devistate the life of a sole-trader.

I don’t think a C-Corp will be much help here. Otherwise, you could start a streaming corp and accidentally publish Netflix shows. You’ll need an expensive lawyer to determine the limits of protection here.

Sounds like a job for BVI corp. no one can even find out who owns it.
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