

Ask HN: is it really hard to start a US business from Europe? - Avalaxy

Hi guys,<p>I've been working on a startup for the previous months. The original plan was to launch it worldwide, but unfortunately (or maybe it's a good thing to start small) this wasn't possible due to legal implications. I've decided that I will launch my product in the US only for the time being (until I figure out a way to bypass the European laws that prohibit what I'm doing). The reason that my product is allowed in the US is because the US has the First sale doctrine.<p>My question is: is it better for me to start a company in my own country (The Netherlands) or should I start a company in the US (LLC, Delaware) and still work from The Netherlands? I keep hearing that it is very difficult for non-US companies to get a foothold in the US because Americans would rather do business with American companies, but I don't know if this is true or just prejudice.<p>Thanks.
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markdown
I don't think the average consumer (not B2B) checks where a company is based
before deciding to transact with the company (unless you're selling a tangible
good and shipping is a consideration).

I neither know or care where browserstack.com (the last service I paid for) is
based.

As for the legal and financial aspect of setting up in the US, I recommend
looking through early posts on the freshdesk.com blog... there is great info
there on setting up a US business (from India in their case).

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Avalaxy
Thanks for your post! Some more information: it's a C2C / B2C online platform,
there is no physical product.

About the legal aspects: I'm actively going to block users from other
countries than the US, so I think the only laws that apply to my business are
the US laws, but I will consult a lawyer about that.

Reading through the freshdesk blog now, nice site :)

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salahxanadu
Will you only target english?

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Avalaxy
Yes, for the time being.

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gamechangr
Not true at all.

I am American (lived in three countries) and can assure you that is not
accurate. America has more foreign owned businesses than any nation on earth.
When you think about it, America is almost entirely made up of immigrants. I
have done quite a bit of business in Europe and would say that it would
compare with London or Zurich.

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pepyn
From my experience selling digital products to the U.S./international market,
a very small percentage of visitors actually check the contact page (where
they would find the business name/location). Unfortunately I did not A/B test
displaying it more prominently so I don't know whether that would have
improved conversions or not.

When choosing a payment processor, making sure that it handles the whole
process should save you the hassle of setting up a merchant account (an
account that allows you to accept credit card payments) with a US bank.

I am Dutch too and I know a B.V. (Dutch limited stock company) is allowed to
be a "holding" company that owns all the shares in a foreign company - but I
went to business school and not law school, so there might be some fine print
you'd want to consult a lawyer about.

It'll be an expensive hassle though, so if you're not dealing with B2B I'd
recommend getting the "trust indicators" consumers are looking for by getting
a U.S. street address with Earth Class Mail and possibly a U.S. phone number
(through Skype) that forwards to a Skype account in your company. You can
always go the U.S. incorporation route when you have the revenue to
finance/justify it.

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Avalaxy
Thanks for your post. What would you advice for my C2C startup, a Dutch BV or
an American LLC?

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pepyn
I would definitely start out with a B.V. since it would be much easier and
cheaper to set up, and less hassle/paperwork when tax time comes.

Then, when revenues justify the investment, I'd set it all up properly in the
US with the help of a good attorney and/or accountant.

An important point here is that as a B.V. you would be governed under Dutch
law if someone sued you. This should be disclosed in your terms and conditions
as it will be considered unfair trade practice otherwise. If you feel you
don't want to hire an expensive lawyer, I think the KvK has an export desk
where they can help with these kinds of questions.

But it all depends on what kind of startup you have - if you have already
validated the idea and have some investor/savings money I would hop on a plane
and get it sorted there straight away :)

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Avalaxy
Thanks for your advice! Can I stay in touch with you in case I have some more
(short) questions?

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pepyn
For sure! I just sent you an email (to the address in your profile).

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mjn
I don't think Americans actively object to doing business with foreign
companies, but many aren't really used to it, so may balk if anything seems
unexpectedly foreign. For example, if the checkout process is in Euros or
includes a bunch of instructions about VAT, conversion will probably drop. But
if the overall experience seems "normal", few people care where the business
is incorporated.

That said, there may be other issues I'm not qualified to comment on. For
example, if your business complies with U.S. law but not Dutch law, then I
have no idea whether incorporating & operating it from the Netherlands will
cause you trouble. Not being based in the U.S. may also make it more difficult
to use U.S.-based payment processors.

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Avalaxy
Thanks for your post. I figured out that Stripe and Braintree pretty much
require you to have a US company, but I was thinking about using Skrill which
doesn't have this restriction as far as I know.

The online platform will be fully localized for the US market. Unless you
actively look for it, you won't notice that it's not a US company.

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eduardordm
You cannot get a merchant account unless you have have a SSN.

Obviously, opening a company will not grant you a SSN. It will be hell to
simply open a bank account.

It is easy to open a company, close to impossible to actually have a business.

I own an useless LLC in Delaware, btw.

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Avalaxy
Merchant account? What kind of merchant account?

And why is your LLC useless?

