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Starting a real business (stripe.com)
458 points by hepha1979 on Dec 14, 2016 | hide | past | web | favorite | 128 comments

I wrote this (and the linked guide). Feel free to ask me if you have any questions or comments, in particular about things you'd like to see us cover in the future. If you'd rather do it over email, my address is my HN username @stripe.com

> Feel free to ask me if you have any questions or comments, in particular about things you'd like to see us cover in the future.

There is still no writeup why Stockfighter was wound down, though this was promised by Thomas H. Ptacek/tqbf on https://twitter.com/tqbf/status/771533037666390017

Concerning the blog post here: As you surely know in Germany credit cards are still not common (by SEPA direct debit mandate and there exists an IMHO far better option; this option exists in the whole EU, though it is particularly popular in German). This is IMHO an important limitation of Stripe (and Stripe Atlas) for German customers (I would even call it a road block for this market) not to offer SEPA direct debit. Are there any plans to add this option in near future?

Hi @wolfgke! I work at Stripe. You're right about the importance to cover other relevant payment methods locally. Happy to chat more about our SEPA debits plans, feel free to get in touch: I'm just gabriel at stripe dot com.

Why not answer the question? I would guess there are no actual plans to implement it.

Something else came up. I'll get to it eventually.

This is an excellent guide and one I wish I had when I first started my business.

One particularly tricky topic that I'd love to see covered is paying foreign employees. Paying members of a distributed team is straightforward when they perform as contractors. As we've grown and they've continued working with us, the relationship has become one of employer-employee in the eyes of U.S. law. This puts them in a nebulous situation where they are de facto employed by a U.S. company, but are non-U.S. persons deriving their income from a non-U.S. source.

It's likely other Atlas users could find themselves in a similar situation.

Acknowledged on the topic; this is something that I hope we can cover in more detail in the future, but not something that I can opine about semi-officially without it getting vetted by lawyers first.

I second this request for discussion. Over the past 7 years we've accumulated contractors working regularly from 10+ countries. The complexities of sending/receiving payment with contractor status (and other employment ambiguities) are significant.

@tzickles: do you mind me asking how you're handling it now? Is it all do-it-yourself?

This guide looks amazing so far, thanks for putting it together.

@patio11 or anyone: since Stripe Atlas is still in the early stages and not accepting everyone, what's the quickest/cheapest/easiest way to move a company from a Sole Prop to an LLC/S-Corp?

My CPA recommended a tax attorney but that seems old school and expensive. At the same time, companies like LegalZoom or MyCorporation charge $$ for BS things like "obtaining an EIN" which takes a few minutes, so I don't trust those services either.

Unfortunately the devil will be in the details. If the sole prop has nothing and no obligations, you might be able to just incorporate. But if you have any contracts in place, or customers, or contractors etc, that requires some work - not difficult, but doing the right thing (eg. contract reassignment) is situation specific.

Personally I'd look for a solo small-business attorney, they should be able to do this for cheap. Definitely not a brand name startup law firm :)

Well done. I appreciate you took the time to mention LLC, since the "fund raising startup" is always advised to go DE C-corp and that (I believe) is what Stripe Atlas is currently doing. One note on the LLC, it says they are cheaper to "incorporate", that depends on the State.

Disclosure: I'm was a corporate transactions attorney and I applied to Stripe Atlas, it was actually pretty cool, they asked what products/service I would create for Stripe Atlas and I built it here: www.generalcounselcloud.com

The primary purpose is Registered Agent, which is always over looked and I don't think a startup has tackled. For example, I didn't see anything in the initial write up on Registered Agent (what it is, who they are, the price) but every business organization must have one. My startup also does annual reports, your write up mentions they are easy (which they are) and most business owners do it themselves or pay a CPA ~$100, personally I find a lot of business owners willing to pay for the convenience and peace of mind. If appropriate I'd ask your thoughts since these are services are complementary not competitive with Stripe Atlas.

Paying for a registered agent is the biggest scam going. You're literally paying $100/year to use someone else's contact information instead of your own. It's essentially like paying $100/year for WhoIs privacy.

>You're literally paying $100/year to use someone else's contact information instead of your own.

Yes people may be their own registered agent FREE. However, almost no one can act as their own DE registered agent because the Registered Agent must have a DE physical address, and very few DE companies are physically present in DE.

Additionally, for the non-DE businesses, whether you are big or small business you likely don't want process servers coming to your place of business (or your home) and serving lawsuits in front of your employees/family.

Edit: Still your point remains that not many people see the benefit of paying for an Registered Agent (even when they can't be their own) which is why I have bundled 3 additional services (annual report/franchise tax notification; annual report preparation/filing; unlimited legal advice). Annual Reports are easy and can be done by business owners too, but based on the number of people who file late and pay late fees greater than the filing fee, its still a service businesses need.

If you act as your own registered agent, you must have someone present at all times during ordinary business hours to accept legal service.

You're not just renting someone else's address. You're also renting an employee that will take papers from a sheriff's deputy on behalf of your business.

But a registered agent business is not the only type of business that can provide such services. Attorney's offices can do it. A self-storage business can do it. A private mailbox business can do it. A crazy cat-person that never leaves the house can do it.

Those options may be cheaper than the specialist business, but most RA businesses will provide additional services that make the higher fees worthwhile. For instance, they will not only inform you in a timely fashion when your business has been sued, but may also e-mail you a scanned copy of the complaint and summons within minutes of receiving it.

Also, registered agent businesses are likely to have offices in place in multiple states, so they can better compete on price if your business operates in more than just one state.

That said, don't buy RA services from Corporation Service Company, because they buy up tech businesses and then indiscriminately fire all the software pros.

Your "Learn More" link does nothing, just FYI.

Updated, thanks!

Still making my way through it, but this caught my eye:

> What “material size” means to you is a great question to run by your accountant, but as a guideline, in the United States, many businesses with revenue above $100,000 choose to incorporate.

Does this mean I made a very sub-optimal play by choosing to incorporate before revenue? We have revenue now, but not very much, and the Stripe fee, lawyer fee, and soon-to-be-accountant fees definitely put us in the red.

This is an excellent guide, thank you for writing it! Could you talk about where DBA and DUNS numbers fit into the business/incorporated spectrum? If you distribute apps through Apple as a business you have to have a DUNS number.

What's the average processing time for Atlas these days? I applied in August, but haven't heard anything till now.

If you haven't received an invitation yet, send me an email, I will fix that. (Offer available to HNers generally -- you can never waste my time emailing me.)

If one had hypothetically used the invitation to apply for Atlas, you get a Stripe account instantaneously, should know whether we can support you within 2 business days, and should have a bank account opened in about a week.

We are, naturally, working on making things faster. More news on that front when it is ready.

Is there any material benefit applying through Atlas' Network of partners [1] over applying directly?

[1] https://stripe.com/atlas/faq#who-is-in-the-stripe-atlas-netw...

Nice work Patrick. In regards a request please cover how non-US based people can open a real US business bank account.

I think Atlas' answer is "Use Atlas." One reason the product exists is to solve this problem in a fairly predictable fashion.

We hope to write more about banking specifically at some point, including (if I have my druthers) about KYC, which you've previously mentioned has been a pain point for you in attempting to get an account opened from overseas. KYC is not an absolute blocker; particular strategies for accomplishing it are something I'll have to write about another day.

Do you need a real bank account or just a routing number?

If you are a freelancer/contractor and just want to receive payments, a routing number may be enough. I have a Payoneer pre-paid card, it gives me an account number US customers can use in order to send me wire transfers.

My affiliate link is bellow - you get $25 more first time you receive 100 bucks using it (I get another 25).


Payoneer is not really a solution for a serious international business selling into the USA.

1. They use First Century Bank for the routing which does not have the greatest reputation.

2. You can only get paid out in your local currency (at least for Australia where my business is based) and the exchange rate is terrible. This is a really killer.

3. The fees are very high.

4. They seem rather prone to cutting people off and having very poor customer service in regards resolving issues. They don’t appear to be worse than paypay in this regards, but I would not be keen to have hundred of thousands of dollars in transit with either company.

Stripe + patio11 = good^2

Thanks for writing this!

If you're just starting out, the worst decision you can make is to incorporate as a C-corp. An LLC makes vastly more sense, even for the tiny proportion of companies that want VC funding (and specifically institutional funding - funding from other sources would not matter as much - I'll explain why below). Stripe Atlas really ought to make the default an LLC.

The two major reasons why:

1. When you're a C-corp, you pay taxes twice. Once at the corporate level, and once at the individual level. This matters both for ongoing income but also for any liquidation event - as most liquidation events are asset, not stock, sales, you're getting taxed twice here too.

2. You can go from LLC -> C-corp easily but not the reverse. Why would you make the decision before you have to? Start as an LLC. In the very unlikely event you are taking institutional funding you can convert; in most cases, you'll happily stay as an LLC and keep the extra tax dollars you'd be giving the government.

Finally - all this business that VCs prefer to invest in Delaware C corps because of the legal knowledge there is - sorry - bullshit. They do it because they have to invest in taxed entities, because they themselves are partnerships so their interest in any flow-through entity will flow up to their investors, some of which are non-profits. Non-profits, like pensions, risk losing their non-profit status if they have unrelated business taxable income. There is a solution here, which is to have a special purpose blocker corp that sits in between the VC partnership and the LLC. This is done all the time in private equity but not in VC and there is no principled reason why not.

So there you have it. Don't do Stripe Atlas because you're forcing yourself to make a decision you don't need to make right now, that's irreversible, and that may end up costing you a lot of money.

IANAL, but I am a Wharton MBA

I started my company as an LLC. Since it began in Pennsylvania, I registered as a PA LLC. Welp, I applied to Y Combinator and they accepted me, but it turns out they won't invest in LLC companies. I figure, no biggie, I'll just convert to a DE C Corp as I'd been planning to do eventually anyway. It turns out this isn't so simple for dissolving a PA LLC, and it is a several month process. I almost wasn't accepted into Y Combinator as a result because they aren't going to wait several months before making their investment, and was only able to attend because a very experienced lawyer found a loophole to convert my company into a PA C Corp.

I am still suffering headaches from this, even after my company shut down, because of all sorts of bizarre issues of being a PA C Corp. And since nobody knows anything about PA C Corporations, I can't use standard documents and legal advice is particularly expensive (and usually not the best).

Corporate law isn't always so cut and dry.

>a very experienced lawyer found a loophole to convert my company into a PA C Corp.

This is a pretty standard business transaction called a conversion. As you found with dissolution of your PA LLC taking unexpectedly long, these transactions/processing times vary by not just transaction type but of course State too.

After conversion from PA LLC to PA C-Corp, did you end up Domesticating it to DE, because from the sound of it they wouldn't want to invest in any thing but? Some States are so backwards about processing times you might have been able to dissolve the PA C-Corp much faster than the LLC, but that is a little rarer.

Glad it worked out for you and to see a positive HN post about lawyers vs DIY.

This was a while ago so I don't remember the specifics, but the reason the conversion was special is the lawyer was able to do it in a few days instead of several months. These issues are specific to Pennsylvania, which has really awful corporate law. Supposedly all of these things are trivial for other states, but I'm just speaking from personal experience (and of course I mostly listened to what the lawyers told me, but I have every reason to believe they were extremely good at what they do).

Very interesting that no one suggested to form a new C-Corp that acquires assets of your PA LLC. Like any other profession, lawyers come in different colors. A lawyer experienced in issues of closely held businesses would have made it easier.

Why couldn't you start a new DE C corp instead of converting?

They insisted the previous corporation had to first be dissolved. I am not a lawyer, but I believe this is just standard practice. I suppose it's because there can be objections from investors in the original LLC if you take money in a new entity, and in very bad situations (which are probably very unlikely) that could lead to lawsuits. I think lawyers are just trying to do things properly to avoid these sorts of things.

in very bad situations (which are probably very unlikely) that could lead to lawsuits

The thing is, the more successful your company turns out to be, the more likely it is there'll be lawsuits.

Recent prominent case in point: Cruise Automation [1]

[1] http://www.strictlyvc.com/2016/04/17/a-strange-new-battle-be...

Can you start a DE LLC, if you are in another state?

Yes, you can register an LLC or C Corp in any state, but the reason people do things a certain way is usually because of taxes. You don't want to get double taxed (the specifics are nuanced and vary from state to state).

If I were to do it all over again, I would just start out as a DE C Corp.

Yes, and that's probably what you should do, because the other states tend to have weird rules about LLCs.

(I'm in Illinois, have/had NYC parters, operated out of NYC, Chicago, and California, and ultimately sold the company and got to watch a couple hundred thousand dollars in legal and accounting get spent --- like with any serious acquisition --- and neither "DE" nor "LLC" appeared to cause any hiccups for us.)

How long has it been since you shut down? Any idea on what needs to be done in particular for the headaches to stop and this to be resolved?

Would they invest in a DE S Corp?

This advice is wrong.

A C-corp deducts officer salaries. Officer salaries are not taxed twice in the manner the OP states. Assuming there are any profits that remain after officer salaries, and assuming those profits are not kept in the business as retained earnings, and assuming the company decides to pay those profits as dividends, then they are taxed twice.

A C-corp can provide a clear separation between business and business owner(s); and among various owners.

Ask an attorney what to set-up and be clear with them where you think/hope your company is headed.

UPDATE: Its not that other structures don't provide this, its that OPs characterization of C-Corp structure isn't right.

For small startups nothing has led me to believe that the actual taxation for a C-Corp is a major problem. But everything I've learned has suggested that being a C-Corp will definitely add significant tax expense to your life, because C-Corp taxes are complicated and LLC taxes are not.

So then the question is: of what possible benefit is a C-Corp to a small business that hasn't taken funding from an investor that requires share classes?

I'm not aware of any protection or separation that a C Corp provides that an LLC doesn't. So far as I know, the sole practical reason to incorporate a C Corp is to get share classes, which startups need pretty much solely to satisfy venture capital investors.

One thing I didn't realize until recently is that when applying for a home loan, they perform an audit of your business in addition to your personal assets if you have an LLC. The reason is because the company's profits pass through to the owners so it is considered personal income from the perspective of the lender. However with a C Corp everything is separate which saved me from a business audit.

I'm not sure what that means, but I had no trouble buying a house in 2005 right after we started Matasano. What's an "audit of your business"?

Started with tax returns. Given how the rest of the personal audit went, I am sure they would have asked for more. BTW no one had trouble buying a house in 2005 which helped 2008....

LLC members agreements, like any contract, are expensive to litigate and onerous to read, comprehend and retain. A twelve year old understands share ownership, a concept enshrined in law and precedent after centuries of use. I'm wiling to bet that on balance lawyers make more money off LLC disputes and creation than C-Corp's.

I doubt the lawyers made much money off the creation of Matasano, since we 1-clicked it off an order form for Delaware LLCs offline.

I own a C-corp and an LLC and although I can't quote the tax prep fees off the top of my head, I don't recall them being significantly different.

I believe the maximum number of people where the pass-thru taxation can apply is different. At least that used to be the case my state.

owners generally do not pay themselves large officer salaries, because of the w-2 tax rates which can be extremely high in a state like california. this also muddies up the discretionary compensation numbers when a potential buyer comes along and assesses the P&L on the company. this w-2 income is also taxed twice -- the state takes its cut with payroll taxes and unemployment/disability insurance. if you add sales tax into the mix, an owner is paying upwards of 50% taxes on this money if he decides to buy something nice -- not smart.

to get non-payroll money out of a c-corp and into the owners' pockets, it will be taxed twice, first as corporate income and then as dividend income on the individual owners' tax return. if you have a way around this that doesn't involve laundering money offshore or to shell companies, i'm all ears.

for a smaller, closely held private company with no institutional investors, an LLC taxed as a partnership or something similar (not an s-corp) will yield a lower effective tax rate for the owners of the company and more closely represent what actually is going on.

investors want to invest in a delaware c-corp usually because all of the laws and case precedence are favorable to them.

Why would you not recommend S-corp taxation (LLC taxes as S-corp) for this purpose? Doesn't that give you the best of both worlds (easy management with pass-through taxation)? There are obviously headaches over an LLC (have to keep books, corporate meetings, etc...), but I feel those are outweighed otherwise by the savings by taking at least part of your income as S-corp distribution vs wages.

You clearly feel differently, I'm just curious why.

the managerial overhead is not worth the difference (remember the professional fees required to run all this stuff). if my company made more revenue, i'd probably feel differently.

at the end of the day it comes down to how much revenue vs. overhead vs. capital structure you feel comfortable with.

I've found in my case, I pay about $2k/yr to have an accountant manage this for me, but save about 4-5k in taxes, so it's worth it financially.

We converted from filing as LLC to LLC filing as S a few years into the company, and it didn't really change much for us. Either way, when you get significant revenue, you need an accountant to do your taxes. I don't remember our costs going up significantly after we switched.

> We converted from filing as LLC to LLC filing as S a few years into the company, and it didn't really change much for us.

yeah, so why switch if you don't have to

You don't have to, but we did to get W2 payroll for principals.

Note that although this is generally true, it is only useful advice if corporate income greatly excceds the sum of employee and officer salaries. The IRS frowns on officer salaries that are below market so you can not simply pay yourself a pittance in W-2 wages and give yourself a huge dividend. That's tax avoidance.

Both of the points you brought up are not specific to c corps. Any company will list salaries as an expense on the P&L, and an LLC also provides a layer of protection between "business and business owner(s)". The first two Ls stand for Limited Liability...

Huh? If a C-corp makes $200k and pays out $100k as salary to the sole owner/shareholder and keeps $100k in the business, the shareholder will pay payroll taxes and personal income tax on that $100k salary, and the corporation will pay corporate income tax on the remaining $100k.

OPs characterization seems correct to me. (That you pay taxes once at the corporate level, and once at the personal level.)

You pay once at the corporate level and once at the personal level, but apparently not twice on the same dollar (which was how I understood tvladeck's comment).

Double taxation means twice on the same dollar. The $100k in the business gets taxed at the business rate once. Its never taxed again unless distributed as dividends, unless you count payroll taxes if paid out as salaries.

The C corp's money is not owned by the shareholders until it is distributed as a dividend. That is where the double tax comes into play since that money was already taxed at the corporate level and then it will be taxed again at the personal level.

I currently have a California LLC (single founder) not looking to raise VC. While the LLC has been nice because it greatly simplifies taxes, do be aware there is a mandatory $800 tax every year (no matter how much revenue you make). The $800 tax sucks, because when you're just starting out, $800 a year can be painful if your startup is making less than $1,000 a month.

I find that tax to be obnoxious. I wouldn't mind paying it AFTER the business has had a chance to breath, but that's a hefty chunk of change to present up front, without ever having done business. I'm sure my frustration stems from not understanding WHY they charge it, when they do... If anyone could enlighten me, I would appreciate!

You're not the only one who thinks this tax is absurd and unfair. It hampers innovation and entrepreneurs looking to start a business.

Why should an LLC that makes $5,000 a year pay the same flat tax of $800 as a business that makes $5,000,000 a year? There should be tiers instead.

I think a structure like the following makes way more sense, but then again this is the government we are talking about.

  Revenue < $50,000 = $250 tax
  Revenue $50,000 - $100,000 = $500 tax
  Revenue $100,000 - $500,0000 = $1,000 tax 
  Revenue > $500,000 = $2,000 tax

It makes plenty of sense, the people who donate to the lawmakers campaigns own companies towards the end of your table.

Not buying the conspiracy theory. A California LLC company making more than $500,000 a year, $800 tax or $2,000 tax doesn't matter. I just think lawmakers are out of touch to the consequences of these sort of taxes, and don't think about stimulating small business and entrepreneurs.

Incumbent firms will always seek to prevent competition. This tax does exactly that. No matter how you slice it this just another in a long list of "happy accidents" that benefit the donor class.

Your so right

If you're interested in reducing taxes, you shouldn't have incorporated in California. Quite a few other states have no such minimum taxes.

CA knows that. Which is why if you register in another state, they will just charge you an $800 foreign corporation fee instead.

CA is pretty good at making sure they get their money from you.

Yes. California has carte blanche because so many people want to be there (it is by far the most populous state with 40 million residents). They're not worried about keeping people or businesses in-state and it shows.

California has labor laws preferential to employees (e.g. not enforcing non-competes, the "your side projects belong to you if you aren't using your employer's resources"), but the minute you want to take one of those side projects into the business realm, California murders it on the spot. Pretty ridiculous.

If you live in California you have no choice. Even if you incorporate in a foreign state, you'll also need to register your foreign corporation in California.

Ah, yes. The small business assassination program.

For the benefit of Australians reading this post a corporation (pty ltd) is a very good idea. The lower taxation (28.5%) and franking credits on any tax paided make it the way to go.

Is it just my ignorance - or is this all much simpler in the UK?

I think we just have Sole Trade -> Private Limited -> Public Limited and not much other variation.

Generally anyone starting up will have the choice between Sole Trade (you are personally liable for the companies debts) and Private Limited (you are not personally liable, but have more regulations to abide by such as you have to submit accounts to Companies House.)

There is Partnership too, but yes, getting setup as anything other than a public company is very simple.

> When you're a C-corp, you pay taxes twice.

You can be a C-corp and elect for S-corp taxation (which will allow for flow-through taxation).

The advantage of this is that S-Corp status can be revoked easily.

LLC's can have more fees, such as in New York. A company rarely needs to worry early on about earning more revenue than it can pay out in salaries, so I'm not sure how often a C-Corp will become a problem.

After a ton of research I went Delaware S corp. I figured if I was ever going to get investors (ha, probably won't), I'd need a C corp. It seemed like S corp had the same tax benefits as the LLC but could be converted very easily to a C corp.

Note that you only "pay tax twice" on income left in the corp to be subject to tax, then later paid to yourself as salary. You can elect not to do that (e.g. pay any residual profit each year to yourself as a bonus) so it is absolutely not generally true that income is double taxed.

Source: owned several companies over the past 15 years, at least one of each type of USA legal entity: LLC, S-corp, C-corp.

The reasons to select one entity type over another are many and subtle. Consult your lawyer and accountant for advice (and only act on it if they both agree).

Not sure who told you that but it's completely wrong.

Corporate income is taxed twice in the following sense: once when earned by the corporation, and again to the owner when received as a dividend out of the corporation's profits.

Salary paid to officers/employees is only taxed once, because it is treated as an expense to the corporation and thus only taxable to the recipient. Most small businesses avoid this as much as possible because individual tax rates are usually higher and salary payments incur SSI/payroll taxes.

Awesome and informative. Never understood the whole VCs investing in Delaware C Corps deal but your explanation makes sense to me.

My further understanding is that most people's C-corps have to altered at institutional funding rounds at expense comparable to converting an LLC.

> 80% of entrepreneurs are sole proprietors or partnerships

This seems interesting but makes complete sense. Most ideas likely won't pan out and incroporating usually isn't worth the time. I'm in Colorado and making a c-corp took all of 15 minutes, but I've been told in other states its a huge proccess. If it wasn't so simple and I didn't have free legal support, I definitley would not have done it.


Are you the only proprietor of your C-Corp?

"Corporations. Corporations (both C corporations and S corporations) have the strictest internal requirements, including holding initial and annual director and shareholder meetings, adopting and maintaining updated bylaws, issuing stock to shareholders, and recording all stock transfers. ... Facing the consequences

If a corporation or LLC is sued and unable to show it met all corporate or LLC formalities and state requirements, a judge can rule that the company has been acting more like a sole proprietorship or general partnership. This can result in “piercing the corporate veil” meaning that limited liability protection disappears and leaves individual owner(s) assets vulnerable if a lawsuit judgment is made against the company."

Source: http://www.bizfilings.com/learn/business-compliance.aspx

I've found that bizfilings has a wealth of high-quality information on incorporation and other requirements for starting a business

Yeah I am the only owner. Luckily I had a startup lawyer helping me for free, and the general message was to just act like a business and you'll be treated like a business. Keep records of things, don't mix personal and business money, etc.

This is part of why people incorporate in DE. The courts there make piercing the veil quite challenging.

My favorite part of moving to the US was when I found out starting a sole proprietorship takes literally nothing. You just start and in your tax return you say "self employed" or "partially self employed" and say how much of your income was from that. Then you get to deduct business expenses too.

In Slovenia starting a sole proprietorship was a weird process of starting a corporation that doesn't bring any benefits of a corporation[1] and a bunch of complications with taxes and social transfers and such.

[1] it's tied to you personally, uses your personal tax ID number, and gives zero liability protection

A sole proprietorship doesn't give you the same protections as a corporation. You have unlimited personal liability for your business actions.


And in Slovenia (potentially elsewhere in Europe) I have to do a bunch of bureaucracy to get a sole proprietorship. In the US, I don't.

Hence why it's one of my fav things about moving to the US.

The UK is the same as the US in this respect. Something I'd taken for granted until now.

While this is true and it is valuable to at least register an LLC, it's a common myth that an LLC will shield its owners from all civil liability. LLCs don't provide protection from tort claims and the owners/directors (people who can't invoke respondeat superior) can be individually pursued for tort liability without having to pierce the corporate veil (which itself is more common/possible than many people believe).

I understand you may already know this, but I think it's an important caveat that is frequently overlooked in such discussions, causing many small businesspeople surprise when they learn that they may be personally liable in the event of a lawsuit (which will probably name the publicly-listed owners as defendants by default).


If I understand well, in the US, everybody is sole proprietor by default and you don't need any agreement from the government to start your personal business?

In France, if I plan to earn any money from a website I built, I need to create at least a "micro-entreprise" [1] to declare my income (up to 32,900€/y for a SaaS).

[1] https://www.service-public.fr/professionnels-entreprises/vos...

According to this website: http://www.companyformationfrance.com/types-of-french-compan... there is, but I couldn't vouch for the accuracy of it.

Edit: If you know French- https://fr.wikipedia.org/wiki/Entreprise_individuelle might be your answer.

Actually, "entreprise individuelle" and "micro-entreprise" are almost the same status (the diff is the limited income for the latter).

The big diff apparently is that everyone in the US is sole proprietor by default, while in France you need to ask an agreement from the government.

I see- the first link equates entreprise individuelle with a sole-propritership. Is the paperwork just registering for tax purposes or something?

Several purposes:

- get a SIRET code [1] (id of your business, needed to make invoices)

- declare your income to pay your income tax and your social taxes

- be eligible to the national health insurance

- increment your rights for the social pension

- update the national statistics [2]

- be eligible to the ACCRE [3] (tax reduction during 1 year)

- be eligible to the ARCE [4] (a capital equals to 45% of your unemployment indemnities, from the social taxes you paid from your previous jobs)

And probably other things.

[1] https://en.wikipedia.org/wiki/SIRET_code

[2] https://en.wikipedia.org/wiki/Institut_national_de_la_statis...

[3] https://www.service-public.fr/particuliers/vosdroits/F11677

[4] https://www.service-public.fr/particuliers/vosdroits/F15252

Very interesting. In the US, you may need to register for a EIN (Employer Identification Number) for most of our equivalent (in cases where there is an equivalent) to those things. You can do so online quick and easy, and as a sole proprietor. https://www.irs.gov/businesses/small-businesses-self-employe...

Depending on what you are doing, you may also need a similiar tax id from your state (and possibly any other states you are doing business in, if you have a physical presence there). Most states have on online process similar to what the federal government has.

Then, you may need to register with your city and get a city business license- some cities don't require this for all types of businesses, but this can be one of the most expensive and difficult parts of the process, as you usually have to go to city hall and pay money for it.

But all of the above can be done as a sole proprietor. It is also fairly easy in many states to get an LLC setup online for not too much money if you want to go that route... though this depends wildly by state, I have heard California is a (comparative) nightmare to do this in!

How about EURL or SASU?

It's mostly because people don't realize how easy incorporation actually is.

Also, lots of businesses are very low-margin (to the point where even the few hundred dollars for incorporation is a large expense).

Absolutely amazing world for entrepreneurs around the world. It used to be that incorporating in Delaware for foreign companies was almost a secret knowledge that cost quite a lot in legal fees and travel. Right now it is almost click through. I hope this will lead to VC money being more accessible as anyone can create Delaware if there is someone willing to write you cheque.

Same with credit card payments, it used to be super expensive and painful to integrate, right now its a simple API.

Thanks Stripe.

Lengthy and comprehensive guide[1] but no support for LLCs (yet) which cost less to incorporate

[1] https://stripe.com/atlas/guide#incorporation

"We’re all making it up as we go along."

This is rubbish. Most regular people are not :). Entrepreneurs - maybe.

Just because you're 'faking it until you make it' does not necessarily mean that it's 'ok'.

Most businesses are well established, and there are long running norms and practices.

Working for a bank, usually you need a very specific education, then several years of learning the ropes, and there's no way around it, unless you want an embarrassing hole in your knowledge.

So yes, it's good advice for some, but there's a reason you might feel like an 'impostor' and it could be because you are. There is a reason that most CEO's are 40-50 something and not 23. Heyzeus.

I feel like the "we" in that article is obviously the group of entrepreneurs and not everyone... especially as the subject of the leading sentence is first-time entrepreneurs.

Fair enough, but when he says 'we're all' ... well ...

I was so exited about Stripe atlas.

But for me it came around 2 months late.

I already used a online website to register a C-Corp and they have no process to "import" your c-corp you either start all over again or dont use it.

I also have no idea what would I have to do to "close" the existing c-corp and start anew using atlas.

I've never had this "imposter syndrome".

The main feeling I've struggled with in the past was that the market I was in had been monopolized by well-funded, well-advertised imposters.

I mean that strictly in the sense that a lot of startups these days are selling their product before it's even finished - I feel that by me actually taking the time to complete the product (instead of going around raising capital), that I'm at a disadvantage.

It's dangerous to legitimize this concept of 'imposter syndrome' - Some actual crooks might use it as an excuse and start to think that what they're doing is normal.

I think you may be misunderstanding "imposter syndrome".

From Wikipedia:

"Impostor syndrome (also known as impostor phenomenon or fraud syndrome) is a concept describing high-achieving individuals who are marked by an inability to internalize their accomplishments and a persistent fear of being exposed as a "fraud"."

Seems like Stripe is trying to jack Clerky's business.

Anyone here can share their thoughts on benefits of Delaware C-Corp vs incorporating in Singapore?

It is two different countries. It always depends, where your main/your first business will be. I, for example, could easily set up a company in Dubai with ZERO taxes. But as my main customers live in Germany, it will be difficult for me to tell them why they are invoiced by a company in the UAE

In case anyone else is going to Ctrl+F 'Europe':

> We’re writing primarily from the perspective of U.S. companies—it’s most relevant to Atlas customers (all of whom have U.S. companies)

I take this to mean this won't work for those on the other side of the pond?

While I definitely appreciate what Stripe is trying to do here, they've left out one of the most important, but perhaps less tangible aspects to starting a business:

Getting off the ground!

Say you have an idea, maybe even a prototype... MAYBE even a functional software business that's drawing some small income! How do you go about GROWING that idea, or tiny business? Do you HAVE to seek external capitol? Do most successful startups utilize angel / VC funds to "make it"?

If so, where do you go, and how much do you ask for? What happens if your business fails?! Do you owe all that money back? Are people going to be pissed at you? Are you blacklisted from the industry? Etc. Etc.

The point I'm getting at is... It seems to me like they've left out the part about resources. Funds. The stuff that really gives your idea, a strong kick in the pants.

You do not have to seek external capital. If your business fails you are not blacklisted from industry.

The link below has some basic information about fundraising for startups


Stripe Atlas would be a lot better if it would have more of the kind of payments that CoinPayments allows: ETH, DASH, Monero, Litecoin, ...

I believe that Stripe Atlas has only Bitcoin as a cryptocurrency, correct?

I imagine that including those payment types would have a marginal, at best, effect on Atlas as a product. In total they probably account for < 0.1%(likely even less) of all online transactions and are not a real blocker for anyone starting a business unless the business is dealing in those currencies.

Yeah. I suspect that those currencies are so minuscule in volume compared to USD (and other currencies) that Stripe wouldn't even pay back the engineering cost of implementing those new currencies (at least, not in the next year or two)

I don't see what this has to do with the linked article, which is about the basics of incorporating a company and managing money and risk.

hey.. patrick mckenzie aka patio11!

If you want to know if you are running a real business, answer this simple question.

Are you making money?

If you are, you run a business, if not, you run a liability.

Making money by what measure? Cash on cash return? Current cash flow? GAAP profits? Making investments with a positive expected value?

If I buy a government bond I won't "make money" until the principal is repaid. But that doesn't mean I acquired a liability - it means I invested money in something.

Likewise for buying real estate or any business that monetizes a capital asset. Are those not real businesses?

Investing today for uncertain earnings in the future is perfectly legitimate, in tech, in brick & mortar businesses, really in anything. It doesn't mean you can be unrealistic, but it does mean that you shouldn't be short-sighted.

That is too complicated. Given infinite time, if you don't make money you're out of business.

Given infinite time we're all dead.

My point is that "are you making money" (implicit: right now) is in fact not an appropriate criteria as you suggest.

Then we disagree

Clearly. :) Per your definition, Uber is not running a real business. I have serious doubts about their long run viability, but to claim it's not a business is... strange?

Absolutely love this! There's no one better than Patrick to talk about starting a "real" business and being a solo entrepreneur. Really looking forward to learning as much as I can from his guides.

On a personal note, Patrick is an awesome guy. I'm still super thankful he took time out of his busy schedule to do our little podcast: http://startupcto.io/podcast/0-23-cross-training-with-sales-...

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