
Ask HN: Best place to incorporate a startup? - illuminated
There&#x27;s a currently trending article of why one shouldn&#x27;t incorporate in US.<p>I&#x27;m willing to find out other entrepreneurs&#x27; experience in online incorporation: where is the easiest&#x2F;fastest to end the process with such a bank account that can be used for online payments (you can associate a sort of a merchant account with it) and can withdraw the money fairly easily (card, wire, etc.)?<p>I&#x27;m not interested in options allowing pharmacy, gambling or adult businesses, but a rather &quot;normal&quot; one.
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ankitoberoi
Wow - was just about to ask the same.

I'm based out of India and hate the Taxation system here (it's worse than what
you read for the US) - software attracts Service Tax and VAT (Sales Tax) both
- you pay reverse service tax for services you take from abroad and you even
pay TDS (Withholding Tax) from your pocket for entities not incorporated in
India. I could just go on and go on here.... it's just stupid.

I'm planning to incorporate my startup soon and want to do it in a country
where I can: 1) Use a PG like Stripe. 2) No Service/Sales Tax just flat out
corporate tax on profits. 3) Easy, Simple and Affordable Registration and
maintenance process.

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RealGeek
> _You pay reverse service tax for services you take from abroad and you even
> pay TDS (Withholding Tax) from your pocket for entities not incorporated in
> India_

This is the most bizzare tax compliance issue I faced in India.

If you incorporate in US, you still have to pay taxes in India. This can make
things easier in India, but it can create additional compliance and tax burden
in US.

If you are looking forward to raise Venture Capital, then Delaware C-Corp is
the preferred route. If you want to remain a self-funded company, then LLC can
be a better option.

If you want to carry forward your revenue in India, then you can contract your
Indian entity and transfer funds for services. Any funds you transfer to
Indian company will be subject to Services tax or VAT and Income tax.

You can use services like LegalZoom to incorporate in US online.

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redtexture
Delaware corporations are not required for venture financing, as more than a
few major venture people have said publically and on their blogs.

Just use your own state's corporation laws (if you're in the U.S.), until
you're a many-multi-million dollar size entity, and avoid the headaches of
being a foreign corporation within your own state (meaning out-of-state, but
within the U.S.). You've got bigger fish to fry, if you're starting out.

~~~
RealGeek
ankitoberoi is from India. Since he is not a US resident, he may not have a
state preference.

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richsin
Fastest: Incorporate in Delaware, cost $157+$20 overnight Fedex for a C-Corp,
24 hour turnaround, registered agent Incorp which is free for the first year
and $99 after, done by fax. 10M shares at .00001 par value. $350~ a year
franchise tax. Some banks may require a Certified Copy but my bank did not,
which is an additional $50. Merchant accounts are pretty easy, just need to
apply for one either at the bank or use a service like Stripe mentioned in
other posts. All merchant rates are negotiable on the most part. I can start a
new business within 72 Hours with merchant account and bank account,
incorporated, full startup documents.

Foreign Corporations depend on if you have employees physically located in
that state, certain states may differ. Most startups don't follow this rule,
it's the wild west in the beginning.

Just make sure you keep good records and you get a decent accountant to make
sure you don't get surprised come tax season. If your looking at the lowest
tax rates on corporations, I believe Singapore and Hong Kong are great STABLE
options, however they come with their own issues when it comes to accepting
payments and also are much more costly to set up.

Get your corporation in order, get a merchant account and start making money.
These questions are best left for accountants and even at that, not everyone
will give you the same advice. Once you have revenue and you have an idea of
what your working with, you can see if it's worth incorporating in another
state/country.

PS: If your a startup with founders, check out Clerky.com. Very nice guys and
will get your corporation done properly. Worry-free. I didn't use them because
I was looking at maximum cost savings by doing it myself, but will invest in
them later if we need to redo the paperwork or just flat out start a new
company.

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illuminated
Exactly the reply I was looking for. Thanks a lot!

Can you share which bank would be best to use in case of a Delaware C-Corp?

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brudgers
The best place to incorporate is wherever creates the least impedance with
potential investors. If the pool of potential investors has not been
identified, then incorporation as a C-corporation may create an unproductive
tax burden.

If the purpose is solely to limit liability, then other limited liability
forms of organization might make more financial sense and organizing locally
might make sense.

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illuminated
I don't think that should be the incorporation motive, unless you already have
a prospect of having investors. When you're starting a business/service, all
you want is to be able to have income and to have such a legal protection that
incorporation offers. Once you get to the point that you're profitable and
that investors might come, I don't think it's a problem to re-incorporate...

I'm all for local incorporation, but only when it's possible/feasable. In my
own case, local incorporation would render me unable to process online
payments unless I have a yearly profit of at least 50K EUR, which I cannot
have at all unless I'm able to process online payments :)

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brudgers
Smoothing out transactions sounds like a good reason to look at incorporating
elsewhere particularly if the overhead of international payment processing can
be kept to a manageable level.

In the US, there are multiple forms of limited liability businesses some of
which are not corporations and several forms of incorporation. That was the
context of my response not the suggestion that limiting liability should be
avoided.

Good luck.

