How much does it cost (everything included) per year approximately to run a company with zero or very close to zero revenues in US ?.
I am talking about cost including Lawyer charges, Accountant charges, Tax, agent charges etc.
If you're operating at Zero Revenue in the US, you won't be needing an accountant nor a lawyer. However, you will need a registered agent for your company, which is very likely a Delaware Incorporated. The yearly fee for the agent is likely to start around $100 and up. I paid $349 /year for the Delaware Tax.
Approximately $1,000, with some variation due to individual choices and variation, on the US side of things. I can’t speculate as to what it costs on your side of things.
As a non-US citizen, opening a company in the US is not the hard part. The hard part is figuring out taxes and legal "configuration" in your own country, where you live. I'm not an expert, but I hear from accountants that you have to figure the thing out properly and you end up having an accountant for your company abroad and one for yourself. It might end up being too much expensive if it's for a bootstrapped startup with little revenue.
Happy to hear from people in EU that made this work and what are the total costs (especially tax-wise in your own country).
I agree with this 100%. As a SaaS business they are going to be spending a lot of time working out what state their buyers are in and what tax to add to the sale. For this reason we incorporated in the UK (We are London based) and charged no tax for our US customers. All we had to do was call the IRS and get an EIN to provide to our larger customers, which was a fairly painless and free process.
For company owners with remote teams unsure of where they will be all living in the future or who move around between countries, this stuff is the biggest irritation. The one time a world government might come in handy to have a global incorporation. Also some big companies do wacky things like Atlassian: incorporated in London, UK, listed on the NASDAQ in the USA, managed and run in Australia... only the accountants and lawyers can explain why.
> and you end up having an accountant for your company abroad and one for yourself.
That makes sense. After all you have assets abroad now, parts in a company. The company’s revenue will be taxed in the U.S., but if you pay yourself dividends these can also be taxed at home. Even if you don’t pay yourself anything, I imagine in most countries you have to disclose that you have assets abroad. That makes your individual tax returns more complicated—that being said, if you feel up to it you could still do them yourself of course.
Be aware that incorporating in another jurisdiction doesn't mean your operations aren't taxable according to the local laws of where you are.
For example, if a company is incorporated in the US, but all it's employees/owners are physically located in Germany, then under German law, the "place of ordinary business" is Germany, and the company gets taxed as though it's a German company.
I believe the same sort of principal applies in most jurisdictions.
You need a permanent office - that is, employees that generate revenue for the company in the US - for the Spanish government to consider whether you can pay taxes in the US or in Spain.
Note that this varies from country to country depending on the double taxation agreements between countries [1]
I've noticed a lot of people setting up UK limited companies for similar reasons - you can do it online for a few pounds and there seem to be very few checks done on your identity or business plan when you do so.
The only problem with a UK company for a non-UK person is it has been my experience that it’s really hard to open a proper UK bank account without UK residency. Perhaps others have had better luck, but for me, that was a significant pain point.
No business plan checks at all - I still don't have one. You have to pick a vague category that you do business in, but that was about it.
There's mention here about difficulties getting a UK bank account but I can't speak to that as I'm UK based. For me, as a UK-er, I got a business account (and a credit card at different bank) within a few days and I've never had to do anything in person. Total cost being the £14 for company reg (and later accountant fees because I'm bad at that). For what it's worth, my personal credit was below the toilet when I did all this as well, so no sweetheart Mr Moneybags dealing either.
Having just switched business banks in the UK, it appears that the rules have become a bit stricter in recent years. At minimum, you're now going to require the basic business details (registration number with Companies House, etc.) and the same standard of personal ID for all the people involved as for any of the other areas now covered by the anti-laundering rules (government-issued photo ID, recent proof of current address). We also got asked a variety of basic questions about the nature of the business and its finances, including things like where we did business and how we got paid. I don't know how many of those were strictly necessary and how many were this particular bank doing its due diligence, but other banks we've used have also asked broadly similar questions in the past.
In short, starting a limited company in the UK still seems to be fairly easy, but getting access to other facilities such as banking may be a different story if you're doing something unusual.
It's a strange business. AML is pretty tight on regular businesses, but the UK still has opaque structures like the Scottish Limited Partnership (may be fixed in a few years) and the various Crown dependency islands are extremely secretive.
Check out Tide[0], I use them for my business banking and have had nothing but great experience with them. Had my account setup in ~10 minutes after being made to jump through all sorts of hoops to get a high-street bank business account setup.
Thanks. We did take a look at them before, but unfortunately they appeared to have a few significant disadvantages for our situation (fees would have worked out very high, they seem to be very phone/app/online-centric in their access and security arrangements, missing some basic banking features).
I'm also not quite sure how they get around the anti-laundering rules that everyone else has to abide by. They mention checking various possible IDs, but what they say they need doesn't meet the standards that every other bank and financial service we've ever worked with would require, which makes me a bit suspicious about corner-cutting.
Fair enough, I'm essentially a contractor with a Ltd company so my use case is fairly simple and I'm the only one with access, I appreciate for larger organisations it may not be quite where it needs to be yet. Probably one to keep an eye on though.
Anyone have experience with Stripe Atlas after starting a foreign entity? I have a Canadian Corporation which I'd like to make a wholly-owned subsidiary of that Delaware C corp (or perhaps the other way around).
I have some experience as a C-level of a funded Canadian Corp with a American related company that went on to raise from Andreesen, but this experience a bit dated (2012) and I'm not a lawyer / accountant so DYODD, this is all from faulty memory. But I still think its helpful.
Basically don't make a subsidiary, make two corps and sell the IP from the Canadian corp to the American one then license it back with a contract between the two corps. Then you set the same shareholders for both corps. As long as you are paying licensing costs for the IP to the American corp from the operating company within reasonable rates everyone is happy. Management fees / fees associated with the IP corp (costs related to the board, raising capital, non-managerial CEO work) get paid from the IP corp, and the rest gets paid from the operating company in Canada.
But note that as soon as you create an American corp all of your tax planning and accounting fees will essentially 10x and if you don't do things carefully you'll miss out on your one time capital gains exemption or other CCPC goodies, like bulk asset sale dividend tax reductions. Get a tax attorney and game it out ahead of time.
This provides the information I need to ask quality questions to lawyers and accountants, thank you.
Regarding why to do it, is there a reason you can't just stand up the DE C and that IP agreement as part of the funding round instead of having it in place before?
How fast do you want a term sheet signed? You can of course say "we're not interested in becoming a DE C" and you'll lose 50% of your candidates and you can of course say "we've already set up the DE C" and you'll lose none of them. But if you say "we'll set up a DE C when we need to" you signal that you aren't confident that you'll get the round signed or that DE C is something you'll do begrudgingly, thus advantaging firms that can invest in Canada, so it leaves everyone scratching their heads.
Personally, my current company is staying 100% Canadian. The headaches dealing with the American tax system aren't worth it. If the revenue is there the capital isn't far behind, and I rather spend time optimizing the revenue of the company than getting slowed down with lawyers and tax attorneys plus I trust Canada's judicial system more than I do America's. Not by a lot, but still.
All this doesn't really matter if you're pre-product market fit or pre-monetization though. In that case it's almost always better to just set up the DE C because you have less leverage / allure.
My biggest hesitation with Atlas is the C corp part. I don't want funding, I want to start small and bootstrap. For this, LLCs seem best so you don't get taxed twice.
My most optimistic first year in revenue would be $30-60k, still well in side business territory. Am I missing something, or is Atlas not for me?
I am replying to this because it is a question I have as well. Stripe employees - I know the Atlas page discusses the reasoning behind a C corp a bit, but I think it would be beneficial to elaborate on why it is preferable over an LLC. It’s also worth noting that the Atlas website mentions support for LLCs and other business types later down the line. Any timeline on this?
As I imagine the OP of this comment is, I am a US citizen who was primarily interested in Atlas because it seems like the most painless solution.
I highly recommend a pass-through LLC. I went C-corp with my company and I just ended up getting double-taxed over its lifetime. If you need to convert, it's easy: 1) start a C-corp; 2) acquire LLC with C-corp; 3) there is no step 3. Moreoever, if you need to convert, it's probably because you have a good reason and it's essentially a fixed-price amount (should be < $10K, probably < $5K).
I work on Stripe Atlas. Prior to that, I ran a few software businesses, all as LLCs.
A rule I had in my business was “Don’t talk about timelines until you’re ready to ship, because they only slip, and then people are sad.” I broke the rule several times, and regretted it every time. Stripe has the same rule, but is disciplined about keeping it.
I have a lot of thoughts on the C corporation vs LLC tradeoffs and while I’d love to put them in an HN comment my top task this week is putting them in a more permanent location.
I was in a similar situation, decided atlas was not for me. You should note as well there's a $30 monthly charge on the bank account unless you keep some large ($25k? don't remember exactly) balance. This is pretty well hidden and was enough to make me keep my LLC and free business bank account (capital one).
One of our banking partners does charge a $25 maintenance fee, waived under a few conditions (including a balance in roughly the range that you quote). We try to be pretty up-front about this; CTRL-F "Ongoing Costs" on https://stripe.com/atlas
We try to work with banking partners to put together an offering which works for the broadest selection of users, across geographies, business models, and personal circumstances. This is a perpetual work-in-progress.
the way around double taxation in a corp is paying yourself properly as an employee/director (which is tax deductible) and generally reinvest profits (with the very occasional dividend or share issuance/buyback). founder's stock is massively tax advantaged if set up correctly.
but you're right, it's not well-suited for a small business owned by one person.
If you're a solo employee in a C-Corp, I'm pretty sure you can file as an S-Corp, which provides the same pass-through benefits of an LLC. When I was incorporating and found that out, it really confused me why everyone was so against C-Corp.
Also, if you are working in California, I believe you can waive the first year of foreign franchise tax.
Keep in mind, business entities and tax classifications are different things. You can be an LLC and then elect to be taxed as a C Corp. Usually this doesn't make sense unless you need to prevent income from passing through to the owners. Apart from that, everything you can do with a C Corp you can do with an LLC (issue options, split equity, take investments, etc.), just without that double tax and administrative overhead.
In this day and age, there are very few cases where forming a corporation, taxed as a C Corp is an ideal structure for most businesses starting out.
My particular pain point is how to have a Stripe account living in an unsupported country (Brazil).
Is Stripe Atlas the best solution?
I am starting two very modest side business intending to sell to international customers (mostly US+Canada initially). One SaaS and one content membership.
That seems to be the solution. But for the side-project of content membership, I am using this new startup https://www.substack.com/. I really like their platform and business model, it is a perfect match for my needs... except they only accept Stripe for monetization of my newsletter.
In the beginning I also considered Atlas, but that seemed way too much trouble and expenses for two businesses that may or may not be viable.
In the end, I decided to go with Paddle (https://paddle.com/). The integration was really easy, it is just a button that links to my subscription plans (with webhooks that alert my server when subscriptions are created and paid).
thanks for the recommendation -- i'm also a brazilian and i was wondering how much of a hassle would be to do all that for some business i have on the side.
I might be wrong. But I think the reason they created Atlas was to give Stripe access to non supported countries. They will do all the work with incorporation, opening bank account, etc. And you will operate your business from the US bank account. After your business has a credit history you can even have credit cards.
You will probably need an accountant in Brazil to see how you declare your business entity in the US and also an accountant in the US to declare you US taxes.
You made my time worth reading HN today guys. It's great to know that there are people facing the same issues who found how to deal with it and shared.
While we'd be happy to have you in Stripe Atlas, we'd also be happy to have you in the live preview for Stripe in Brazil. You can sign up here: https://stripe.com/global#br
Send me an email after doing so (my email address is my HN handle at stripe.com) and I'll talk to the team running it to make sure you get access expeditiously. (Offer open to anyone on HN.)
We're available throughout Africa through Atlas, and are happily serving customers in many African countries, including South Africa. (The community in Cape Town is huge!)
We want to be able to support entrepreneurs and businesses substantially everywhere. We don't talk about concrete timelines externally until we have something ready to show, because that is pure downside for our users if e.g. priorities change, a country launch gets delayed due to issues beyond our control, etc.
When we have plans for infrastructure that we can roll out in a fashion which is predictable enough to be viable to build a business on top of, you'll hear about it in all the usual places. Until then, https://stripe.com/global#za and Atlas are your best options.
"You also realize that you don’t really need public financial help if you don’t get robbed to begin with. To create a SPRL/BVBA in Belgium, the capital must be fully subscribed at the time the company is incorporated, to the amount of €18,550 (of which €6,200 must actually be paid up in the account of the SPRL/BVBA). Also, the articles of association must be written before a notary. You need to be physically present in the office of a random guy you never met and will never meet again to make sure that your company can be incorporated."
Indeed. This is one of those things that is a massive, nonobvious competitive advantage for Anglosphere countries - most have an incorporation system that works for really tiny businesses, and there are very few requirements for notaries or similar. There really isn't a good reason for company registration to have non trivial costs.
Companies House will do it for £12. There are third parties who will do the registration through their API for even less, somehow. And the UK is also quite good at legal recognition for unincorporated members' associations (useful if you want a local nonprofit org).
Eh, I mostly agree, but I think there is a limit. It used to be easier here in Ontario, but then people started lighting up multiple numbered companies to the point where the government couldn't easily understand what was going on so they tightened the rules a bit. The cost is still pretty low, but it isn't as easy as it used to be.
Actually, I would imagine the equivalent Belgian structure to a C-corp to be a SA/NV, which has a required starting capital of €61.500, which has to be paid up in full at incorporation.
The biggest complaint I would have is using Silicon Valley Bank. I was a customer for over two years and their web interface is complete garbage and they charged an account service fee each and every month.
I switched over to Capital One Spark Business Checking and highly recommend them instead.
I had pinged them about the SV Bank account especially with their high fees compared to my Credit Union and they mentioned that you can immediately close the SV Bank account as use your bank or credit union. [1]
What would be really cool is if Stripe Atlas allowed its customers to form an LLC first and then provided a seamless framework to get LLC converted to C-Corp. I’m looking to bootstrap a single founder business and I can’t find good reasons to go with a corporation. I could be wrong though.
Neither US citizenship nor residency are requirements for forming a Delaware LLC or Delaware corporation. You can start a business in Delaware from anywhere in the world. I think this is what Stripe Atlas does. The only requirement is registered agent has to be based in Delaware and licensed to do so.
Well, the technically-correct (and yet practically-tautological) answer is I want to save time and money doing so. I'll see if that can actually happen.
We do not support this at present, but are aware that many people want to do it. Would you mind telling me what you’re hoping to get out of doing that, so that I can take that to the team?
Like I replied to a sibling comment, I simply want to save time and money doing so (not having to pay a monthly fee for using a bank would go a long way towards the latter). It does seem like I would be able to save time using Atlas to handle ongoing obligations to run my company, which is why I am interested.
A short question for Atlas users: If I live abroad, and I want to contract someone abroad too, not USA Citizen, is his/her salary deductible from company income taxes (as if I contracted someone in USA)?
US companies can deduct expenses necessary and reasonable for the business from their income taxes and employee salaries are business expenses.
You will probably want advice from an accountant local to your foreign employee as to how to comply with local laws to employ them, including making the relevant tax payments.
Wondering if Atlas gets a lot of money launderers. Incorporating has always been super easy, but most agents wouldn't open a bank account for you. Especially at this price point.
One of the joys about dealing with partners is that occasionally offers change over time as partners’ strategies change, their interest in particular programs of theirs changes, etc. We can offer new Stripe Atlas customers (as of April 2018) up to $5k in AWS credits at present.
Anybody know of any other ways to get aws credits? I'm not willing to give up the benefits of an LLC, and I can deal with setting up my own bank account. But the aws credits and initial accounting help would be really nice.
If you’d like, you or anyone else on HN can send me an email and I’ll send you an invitation.
That form is the primary way most people get access; we invite almost everyone whose business we could accept within 48 hours of hitting submit on it. (We do a very coarse filter on “Is this business obviously unsupportable for legal or policy reasons? No? OK, invite them to send us a full application.”)
Setting up a business entity is actually not that difficult. You can do it yourself.
In California for instance, you can set up an LLC in about 5 minutes for $70. It requires filing out one form with the name of your business and the owners and mailing it in (takes a few weeks to process). In many other states you can do this online.
Once you have your Articles of Organization, you can take them to any bank and open a bank account with a credit card in about 30 minutes.
84 comments
[ 6.8 ms ] story [ 219 ms ] threadHappy to hear from people in EU that made this work and what are the total costs (especially tax-wise in your own country).
That makes sense. After all you have assets abroad now, parts in a company. The company’s revenue will be taxed in the U.S., but if you pay yourself dividends these can also be taxed at home. Even if you don’t pay yourself anything, I imagine in most countries you have to disclose that you have assets abroad. That makes your individual tax returns more complicated—that being said, if you feel up to it you could still do them yourself of course.
For example, if a company is incorporated in the US, but all it's employees/owners are physically located in Germany, then under German law, the "place of ordinary business" is Germany, and the company gets taxed as though it's a German company.
I believe the same sort of principal applies in most jurisdictions.
You need a permanent office - that is, employees that generate revenue for the company in the US - for the Spanish government to consider whether you can pay taxes in the US or in Spain.
Note that this varies from country to country depending on the double taxation agreements between countries [1]
[1] http://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/L...
There's mention here about difficulties getting a UK bank account but I can't speak to that as I'm UK based. For me, as a UK-er, I got a business account (and a credit card at different bank) within a few days and I've never had to do anything in person. Total cost being the £14 for company reg (and later accountant fees because I'm bad at that). For what it's worth, my personal credit was below the toilet when I did all this as well, so no sweetheart Mr Moneybags dealing either.
In short, starting a limited company in the UK still seems to be fairly easy, but getting access to other facilities such as banking may be a different story if you're doing something unusual.
[0] https://www.tide.co/
I'm also not quite sure how they get around the anti-laundering rules that everyone else has to abide by. They mention checking various possible IDs, but what they say they need doesn't meet the standards that every other bank and financial service we've ever worked with would require, which makes me a bit suspicious about corner-cutting.
Basically don't make a subsidiary, make two corps and sell the IP from the Canadian corp to the American one then license it back with a contract between the two corps. Then you set the same shareholders for both corps. As long as you are paying licensing costs for the IP to the American corp from the operating company within reasonable rates everyone is happy. Management fees / fees associated with the IP corp (costs related to the board, raising capital, non-managerial CEO work) get paid from the IP corp, and the rest gets paid from the operating company in Canada.
But note that as soon as you create an American corp all of your tax planning and accounting fees will essentially 10x and if you don't do things carefully you'll miss out on your one time capital gains exemption or other CCPC goodies, like bulk asset sale dividend tax reductions. Get a tax attorney and game it out ahead of time.
Regarding why to do it, is there a reason you can't just stand up the DE C and that IP agreement as part of the funding round instead of having it in place before?
Personally, my current company is staying 100% Canadian. The headaches dealing with the American tax system aren't worth it. If the revenue is there the capital isn't far behind, and I rather spend time optimizing the revenue of the company than getting slowed down with lawyers and tax attorneys plus I trust Canada's judicial system more than I do America's. Not by a lot, but still.
All this doesn't really matter if you're pre-product market fit or pre-monetization though. In that case it's almost always better to just set up the DE C because you have less leverage / allure.
My most optimistic first year in revenue would be $30-60k, still well in side business territory. Am I missing something, or is Atlas not for me?
As I imagine the OP of this comment is, I am a US citizen who was primarily interested in Atlas because it seems like the most painless solution.
A rule I had in my business was “Don’t talk about timelines until you’re ready to ship, because they only slip, and then people are sad.” I broke the rule several times, and regretted it every time. Stripe has the same rule, but is disciplined about keeping it.
I have a lot of thoughts on the C corporation vs LLC tradeoffs and while I’d love to put them in an HN comment my top task this week is putting them in a more permanent location.
We try to work with banking partners to put together an offering which works for the broadest selection of users, across geographies, business models, and personal circumstances. This is a perpetual work-in-progress.
but you're right, it's not well-suited for a small business owned by one person.
Also, if you are working in California, I believe you can waive the first year of foreign franchise tax.
In this day and age, there are very few cases where forming a corporation, taxed as a C Corp is an ideal structure for most businesses starting out.
Is Stripe Atlas the best solution?
I am starting two very modest side business intending to sell to international customers (mostly US+Canada initially). One SaaS and one content membership.
Any ideas?
1) https://www.deploir.com
2) https://www.whoworth.com
What a coincidence, huh?
In the beginning I also considered Atlas, but that seemed way too much trouble and expenses for two businesses that may or may not be viable.
In the end, I decided to go with Paddle (https://paddle.com/). The integration was really easy, it is just a button that links to my subscription plans (with webhooks that alert my server when subscriptions are created and paid).
As Brazilians say, we should "exchange stickers".
But sure, my email is in my profile!
Thanks for the Paddle recommendation.
You will probably need an accountant in Brazil to see how you declare your business entity in the US and also an accountant in the US to declare you US taxes.
Send me an email after doing so (my email address is my HN handle at stripe.com) and I'll talk to the team running it to make sure you get access expeditiously. (Offer open to anyone on HN.)
Would be great to have Stripe in at least one country on the continent!
We want to be able to support entrepreneurs and businesses substantially everywhere. We don't talk about concrete timelines externally until we have something ready to show, because that is pure downside for our users if e.g. priorities change, a country launch gets delayed due to issues beyond our control, etc.
When we have plans for infrastructure that we can roll out in a fashion which is predictable enough to be viable to build a business on top of, you'll hear about it in all the usual places. Until then, https://stripe.com/global#za and Atlas are your best options.
Indeed. This is one of those things that is a massive, nonobvious competitive advantage for Anglosphere countries - most have an incorporation system that works for really tiny businesses, and there are very few requirements for notaries or similar. There really isn't a good reason for company registration to have non trivial costs.
Companies House will do it for £12. There are third parties who will do the registration through their API for even less, somehow. And the UK is also quite good at legal recognition for unincorporated members' associations (useful if you want a local nonprofit org).
I switched over to Capital One Spark Business Checking and highly recommend them instead.
Does Stripe get huge kickbacks from SVB or something?
[1] https://twitter.com/atlas/status/901220134328643584
You will probably want advice from an accountant local to your foreign employee as to how to comply with local laws to employ them, including making the relevant tax payments.
Every time I follow links to Atlas, the experience always ends with the "Request to join" signup form.
That form is the primary way most people get access; we invite almost everyone whose business we could accept within 48 hours of hitting submit on it. (We do a very coarse filter on “Is this business obviously unsupportable for legal or policy reasons? No? OK, invite them to send us a full application.”)
In California for instance, you can set up an LLC in about 5 minutes for $70. It requires filing out one form with the name of your business and the owners and mailing it in (takes a few weeks to process). In many other states you can do this online.
Once you have your Articles of Organization, you can take them to any bank and open a bank account with a credit card in about 30 minutes.