This is my first post on Hacker News. Glad to join you guys and see that you're talking about finances. I'm an accountant who is also a tax and business lawyer, specializing in micro businesses and creative projects. Hopefully I can contribute to the discussion.
This community is full of people who know how to hack code. I'd like to introduce the idea that it's possible to be equally creative with business entity design. Business laws and tax codes are just other types of codes, waiting to be hacked.
Corporations are one way to organize and that structure is well-suited to mature businesses. But it's far from the best format for beginning creative enterprises. It seems to be widely accepted that start-ups need to be corporations to make the transitions smoother as more investors are added down the line. It's time to reconsider that.
Start-ups have completely different needs than mature businesses and should not be strangled by all the baggage that comes with a corporation, in the name of 'making a smoother transition.'
It is fairly simple to start with an organization that is NOT a corporation and, thereby, avoid payroll taxes. Possibly ALL taxes, depending on the structure and the source of cash. This is particularly true if you are going to give equity anyway.
Do some research on entity choice. Examples might be a Limited Liability Company, Limited Liability Partnership (in some jurisdictions), Limited Partnership, Limited Liability Limited Partnership (also only in some jurisdictions), even go naked as as simple Partnership or Joint Venture.
By the time you're big enough to go public, you'll be able to afford the lawyers you need to reorganize. And that will be the least of your concerns. In the meantime, pick a business structure that is well-suited to your current needs, and can even help with some of your current headaches, like salaries, taxes, and cash flow.
So, yes, a good accountant will pay for themselves many times over. So will a good lawyer. Finding a good one is the real challenge.
This community is full of people who know how to hack code. I'd like to introduce the idea that it's possible to be equally creative with business entity design. Business laws and tax codes are just other types of codes, waiting to be hacked.
Corporations are one way to organize and that structure is well-suited to mature businesses. But it's far from the best format for beginning creative enterprises. It seems to be widely accepted that start-ups need to be corporations to make the transitions smoother as more investors are added down the line. It's time to reconsider that.
Start-ups have completely different needs than mature businesses and should not be strangled by all the baggage that comes with a corporation, in the name of 'making a smoother transition.'
It is fairly simple to start with an organization that is NOT a corporation and, thereby, avoid payroll taxes. Possibly ALL taxes, depending on the structure and the source of cash. This is particularly true if you are going to give equity anyway.
Do some research on entity choice. Examples might be a Limited Liability Company, Limited Liability Partnership (in some jurisdictions), Limited Partnership, Limited Liability Limited Partnership (also only in some jurisdictions), even go naked as as simple Partnership or Joint Venture.
By the time you're big enough to go public, you'll be able to afford the lawyers you need to reorganize. And that will be the least of your concerns. In the meantime, pick a business structure that is well-suited to your current needs, and can even help with some of your current headaches, like salaries, taxes, and cash flow.
So, yes, a good accountant will pay for themselves many times over. So will a good lawyer. Finding a good one is the real challenge.