

5 Reasons You Shouldn’t Incorporate Your Business - alain94040
http://blog.fairsoftware.net/2009/01/29/5-reasons-you-shouldnt-incorporate-your-business/

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tptacek
I'm confused.

If you don't incorporate "correctly", the author says, then you run the risk
of being "very sorry" down the road when one of your founders wants to leave
with all her stock in hand.

On the other hand, if you don't incorporate at all, then you can't work with
other companies in terms of PO's and invoices, you can't get professional
liability insurance for your group, you can't get group health insurance, you
can't offer equity to employees, and you can lose your house to a frivolous
lawsuit.

What part of the risk of writing that $75 check to Agents & Corporations in
Delaware am I missing?

On an unrelated note: you guys got _rolled_ by your attorney.

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ricardog
Never understood the obsession with Delaware Corps. You have to register where
you live anyway (presumably that's where you make $$$). So what's the big deal
with Delaware?

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tptacek
I'm not sure what you mean by, "have to register where you live". Apart from
all the standard BS about corporate-friendly laws, the reason to do Delaware
is simple:

Delaware makes it really easy to incorporate. You pay a small (periodic) fee,
and that's pretty much it. You don't have to run an ad in the paper (like you
do in NYC!). You don't have to wave a rubber chicken around. You can do it
from a web app with a PayPal account, and then a week later have an EIN/tax
id.

~~~
ricardog
If you want to do business in California (for example because that's were I
live) and your business is incorporated in Delaware, you have to "register"
the business in California and designate a "registered agent". Plus you have
to file & pay taxes in California and then file taxes in Delaware. Any
business incorporated outside California is called a Foreign Entity (not
kidding).

Here's a link for you

<http://www.sos.ca.gov/business/corp/corp_faq.htm#question8>

I agree the whole "corporation friendly" stuff is BS.

Don't know abut NYC, but you can form a business in CA just as easily. Go to a
web page, press the buttons and a week later you get the legal looking
documents. I did this to form an LLC.

A final comment. After I had setup my LLC (to do consulting) and I proudly
showed up at my accountant's office at year's end, he basically told me I was
wasting my time and money. Until you get to $1M is revenue per year lawyers
won't go after you (there's no money in it for them). His words, not mine.

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tptacek
$1MM/yr is 4 consultants at heavy utilization, or a very good second year of
shipping a product, so that number isn't at all scary, but more to the point,
my tolerance for risks to my family and personal assets is pretty low.

I guess if you live in California, form a California corp. There are other
reasons to avoid Illinois and New York corporations, hence Delaware.

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ryanwaggoner
Here's the most useful and relevant nugget from this article:

 _I am not a lawyer so I can’t pretend to be giving any legal advice._

Edit: I had missed the last paragraph until now...apparently this guy is
pushing an alternative to incorporation and is advising against incorporation,
but has no legal expertise to be doing so. He's going to wish he had
incorporated when someone sues his ass :)

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quellhorst
1 great reason you should incorporate: So a business dispute doesn't end up
destroying your credit for 7 years.

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amobilebiz
Funny, the company making this software is incorporated. So much for eating
your own dogfood.

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alain94040
I'll add that I went to Guy Kawasaki's presentation yesterday at Plug&Play
(introduced by Ron Conway). As usual, great quotes from Guy, plus a free
tutorial on twitter. If only this was taped for eternity to pass to fellow
entrepreneurs everywhere...

~~~
teej
I feel like "great quotes" are the only good thing that comes out of Guy
Kawasaki.

