21–30 of 41 posts
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?
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…
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.
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?
Of course, international-based companies don't usually incorporate in Delaware because that would subject them to US federal income (and other) taxes, in addition to the taxes of their home country, on their full income, rather than just the income derived from their US operations. This is why multi-national corporations have separate subsidiaries in each country.
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…
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.
Setting up an LLC in California will cost you $800/year..so this out of state C-Corp seems like a cheaper option
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…
It feels like he's got the minimum number of steps required to invoice a Fortune 500 company, to get a 7-figure insurance policy, and to deliver buggy code to that company without worrying about losing his house in a subsequent lawsuit. Is there any advantage to waiting to get to that step until after speaking to an attorney, or should people just go ahead and at least get minimally covered? Might it depend on whethe…
Here is the basic trade-off:
On the one hand, it is a drain to have to pay lawyers or to have to comply with pure legal formalities when you need to focus your energies and resources on building a business.
On the other, if you skate along, and then something goes wrong which you have not covered legally, you get into a potentially tricky situation that can easily become more expensive to deal with than would otherwise have been the case had you invested some money and effort into covering the formalities in the first place.
My rules of thumb for founders on this are:
1. If you are a sole founder, you normally can take the "minimum steps" to get a bare-bones entity in place and defer more complex items until later. In that situation, you don't need to worry about what I have called "strings on stock" (i.e., restricted stock) or about IP formalities because these areas tend only to lead to problems when you have multiple founders and the risk exists that one or more of them may act opportunistically in the absence of clearly defined legal rights.
2. If you are a team, and you have a high level of trust among each other, you can also sometimes go with a bare-bones setup while you remain in, say, an early development phase (or otherwise are not actually transacting real business) and nothing of too high value is yet involved in your venture. In such cases, as you build varying degrees of value into the business, you do take some legal risk that someone will act opportunistically but this is normally an acceptable level of risk, both because it is remote and because the fallout from a worst case is not likely to be major. Hence, you can often wait before taking the more formal steps. Of course, all of this changes once you have built something that already has high value or excellent prospects of acquiring value. At that point, in my view, it is imprudent to rely on too informal of a setup.
While you can wait in such cases, it still helps, in my view, to speak to an attorney preliminarily up front just to get a strategic perspective on your options. Having done that, founders can usually make good judgments about whether or not to take other immediate legal steps or to defer them. The point is that they can then do so in an informed way (assuming the attorney is knowledgeable, which is not always the case unfortunately).
Concerning legal formalities associated with equity distribution, I have had lots of founders over the years come in having done a half-baked job on this when set something up themselves (a "quickie LLC" or some such thing) and it normally is no significant problem either completing or correcting this sort of thing as long as the founders remain in harmony. So, founders can take their own cut at this sort of thing and often come out OK but this often is as much dumb luck as anything else. Again, if any sort of value is involved, I think that founders should try to do things right at the stage when they do their key stock grants (or start doing real business).
The OP didn't mention anything about having the papers notarized. This is typically required, but perhaps not in Delaware? Also, as others noted, you'll often have to file for "foreign corporation" status in your home state.
Once you have filed "foreign corporation" status in your home state, you will probably need to check whether your product or service is subject to sales tax. Then you will need to get a sales tax account. Depending on your jurisdiction, this may include both state and city or county sales tax accounts. You should also call up the IRS or file online to get a Tax ID number (TIN/EIN).
Does anyone have experience doing this from out of state? For example, setting this up while residing in California? Setting up an LLC in California will cost you $800/year..so this out of state C-Corp seems like a cheaper option
http://www.sos.ca.gov/business/be/name-availability.htm#chec...
Does anyone have experience doing this from out of state? For example, setting this up while residing in California? Setting up an LLC in California will cost you $800/year..so this out of state C-Corp seems like a cheaper option
Does anyone have experience doing this from out of state? For example, setting this up while residing in California? Setting up an LLC in California will cost you $800/year..so this out of state C-Corp seems like a cheaper option
I don't know much about the rest of the process, but it looks like the name checking part is slightly less convenient in CA: "A free preliminary check of the availability of a name can be requested by mailing a completed Name Availability Inquiry Letter (pdf~62KB) to the California Secretary of State's office in Sacramento. Email or online inquiries cannot be accepted at this time." http://www.sos.ca.gov/business/be/…
I remember taking the DMV test there, and it was all pencil and paper stuff, and then it took something like a month to get the license.
In Oregon, it was all computer-screen driven, and licenses were issued in very short order.
The business name search is all on-line in Oregon, as is all filing, at least for LLC's. http://egov.sos.state.or.us/br/pkg_web_name_srch_inq.login