I set up an LLC via Atlas. The process was simple, but there's a lot of legwork at the state/city level that they don't do and you'll need to be prepared to do yourself.
Atlas does not remove the need for an accountant, or a lawyer, so either budget that in if you're thinking of forming an LLC.
(Edwin from Stripe here.) Yes, Atlas right now is designed to start a company—but it's a not a complete replacement for lawyers or bookkeeping! When a business is started with Atlas, we provide legal guides and templates for the typical next steps after incorporation, and a free consult with a startup attorney. We have a growing network of lawyers and accountants who work with Atlas businesses (and provide their services at a reduced rate for them). That said, we've some things in the works on both of these fronts to further reduce legwork.
I'm not sure why you're being downvoted. I went through the same process to create an LLC, and while the process was simple enough, once I had my attorney look over it, I realized that I needed to make changes that Atlas would not accommodate on their boilerplate. So instead I used a different, more established company to form the LLC.
If I ran Stripe I’d acquire CorpNet (and Gusto and TaxAct while we’re at it) to make a complete C Corp package.
Ironically if you go to a typical small town venture lawyer you get copy and pasted docs anyway.
I don’t know if it reassures you but for 99% of people the docs never become an issue. They could be literal chicken scratch and for the most part things will be okay. This is really why the Atlas product works.
When you're first starting out, you can cut it with chea boilerplate insurance (and legal docs), but at some point you graduate to specialized commercial insurance.
The difference is that you never do this with your legal docs for whatever reason.
There’s a lot of extra legwork with Atlas even outside the extra state level work. We essentially had to hire a lawyer to redo or to create a lot of the documents we got from Atlas (IP agreements, employment agreements, etc were all not adequate). I mean it doesn’t even handle beneficiary signatures for stock agreements correctly. Just overall seems like a half baked product - either that or our business just wasn’t a fit (typical VC backed startup).
Sounds kind of like my experience using Gusto to comply with state and local laws when hiring employees and contractors in various places. Not groundbreaking, much legwork remains, but still helpful.
1. They automate the process of establishing an LLC within the US
2. They provide a lot of boilerplate legal documents (formation documents, tax registration, etc).
3. They partner with banks and legal services to get Atlas customers a discount on auxiliary services (layers, accountants, business bank accounts).
There may be more to it than that, but that's all I've seen of the service thus far. My incorporation needs were pretty simple and I'm already a Stripe customer, which was the main driver for me to try out Atlas.
As a UK person it seems insane this is even a thing. It takes £12.50 and about 5 minutes to set up a limited company here via a pretty slick govt process. The govt provides boilerplate legal documents and automatically sets up the tax registration.
When it comes to filing yearly accounts the govt site for companies turning over less than around $1m automatically files the accounts for you and works out your tax liability.
It’s funny, the US is an incredibly burdensome place to set up and run a business. That being said, it’s easier to do small amounts of self employment work without needing any real paperwork, as you don’t need to set yourself up as a sole trader the way you do in the UK.
Additional stuff I needed to do after forming an LLC. Note that I incorporated in Delaware and operate in California, which added some additional requirements I would not have had if I incorporated in the same state I operated in:
1. Acquire a certificate of good standing for my LLC from the Delaware Secretary of State.
2. Register with the California Secretary of State as a foreign LLC (out of state LLC), which required the aforementioned letter of good standing.
3. Acquire a business license from the city my LLC operates in.
4. Pay a franchise fee to the California Franchise Tax board.
5. Figure out what other fees I'm on the hook for. I wasn't able to figure this out on my own and am currently working with an accountant and lawyer I found after incorporated to help me do this correctly.
There's probably going to be a few other odds and ends. I operate out of my home and only employ myself, which saves on a lot of other paperwork and logistics I'd need to sort out otherwise.
I had the Delaware registration / California operating setup. The wind down is just as many steps. Cancelling sales / use tax registrations, the SoS registration, making your FTB tax is all paid and then cancelled in both states. Making sure both state and federal returns are marked final and don't close your bank account until you've paid them all.
wow you all should read the laws, specifically the consequences
not registering your out of state entity basically has no consequences, its a lower consequence than failing to return a book to the library and has the same level of resources set aside to enforce it
reach the same conclusion yourself as this is obviously not condoning anything, but anyone can run circles around you with the same runway and resource prioritization by ignoring these states
you might end up paying the same registration fees eventually just later, and depending on the state you get retroactive limited liability in the courts.
Remember tell things:
1) municipalities are in competition with each other to attract business
2) asking them if a certain level of compliance is necessary is like asking a barber if you need a haircut. It’s like asking the oil changer if they noticed anything else. Learn the consequences yourself and you’ll be able to make objective decisions.
i wish there was a service that would just tell me what fees i needed to pay. this was a big pain in the butt and most of the value i paid for for professional help.
I.....must be missing something. All I keep reading are "Atlas got me close but I still had to do X or Y".
I formed an LLC in Missouri and it was like one or two forms. It was criminally easy. I paid taxes and ran the company for about five years, and last year it was acquired.
So, I say all that to show it ran the full gamut of being a business. What is everyone else doing that's so hard and takes more steps? It due to employees and the like (my LLC only ever had me, to be fair).
Are you sure you were fully compliant with Missouri and your localities laws?
I did everything myself for the first 2 years with a similar experience, and then discovered after hiring an accountant that there were entire other taxes and fees and things I was supposed to have been filing and paying (even if they were $0 due kind of things).
Its criminally complicated to actually be compliant with everything, EVEN WITH paid professional support.
I'm not sure about Missouri's business requirements, but others (e.g., California and New York) require Foreign Qualification, which Stripe doesn't help with, and can be quite expensive, and difficult.
Having now joined this list of 20,000 startups to create a Delware C-corp, I can say with certainty, there is a lot of room to improve the process of tracking a company after creation. The path presented by Stripe is almost deceptively easy at first which leads to a stunning amount of work shortly thereafter. This is, per normal with Stripe, a beautiful integration of the real world and technology, but I'm hopeful there's more of a full-lifecycle version of this system, even something that would help me drop my C-corporation in the future. If there was ever an opportunity to compete with Stripe, the startup that gets Atlas done across a full-lifecycle (even just a happy-path full lifecycle) would add tremendous value to startup ecosystem.
We really _wanted_ to use Stripe Atlas for our startup but ended up using Clerky for various reasons. Neither will get you all the way to the goal line, but both give you a damn good start. You’ll end up finalizing some things with your accountant / legal counsel.
That being said, Atlas is getting closer and closer to closing all the gaps. Excited to see what they’re able to accomplish in the next 1 - 2 years. The onerous process (easier in the US than others, but still not easy) inhibits innovation and the easier things become the more folks can focus purely on creating value in the economy.
A really big win in the space recently was the temporary approval for electronic submission of 83(b) paperwork. The more things like that occur (and become permanent) the better off we’ll all be.
Sorry for the stupid question, but how exactly do I find a lawyer to help me with this stuff? I tried to Google some lawyers in my area, but I don't even understand what type of law to focus on, or if there's some online service? I've never sought a lawyer service before ..
For example, I want help with a privacy policy and T&C. I made a draft of both after looking at like a dozen similar apps and looking at what they cover, but now I want to find a lawyer to take my rough draft and make it legitimate so I can use it on my website and apps.
FWIW I have no entrepreneurship background in my family so I have to ask around like this even for my dumb questions (thanks).
It's not a stupid question. The simplest is to look for a "business lawyer" and then ask them about their experiences with businesses like yours
But also, don't overestimate what a lawyer is going to do. They're not going to make your docs legitimate, but they will spend as much time as you want to pay for working on them and telling you the risks.
They _will_ frequently be able to get you started with docs like that, though. If they've done the work before they'll have a ready to go draft for you.
I know this sounds snarky but it is true -- when i've spoken to three separate small business lawyers on what is required i received three different answers, with about 70% overlap across the three. I actually wonder if there is any right answer for a small business on a budget.
Some law is 100% cut and dry and lawyers agree. A lot of law is interpreted, and as you see below some lawyers will have different opinions based on their experiences.
As an "outsider to law" I... didn't expect that. I thought it would feel "firmer". Just a head's up as you might find yourself getting different advice that you'll have to parse.
Our Startup was created through Atlas, having created an LLC previously in the US, going through Atlas was a much simpler and more streamlined process, however there is an alarming pitfall you need to watch out for:
Atlas companies are optimized to "receive investments" where it's setup with a high share count which attracts obscenely large Delaware franchise tax bills. If you're not seeking investment you'll want to immediately reduce the count to below 10000 to pay minimal franchise tax. You'll also need to adjust your annual franchise tax as the amount of franchise tax owing that they predict for can be a ludicrous circa ~90k, instead of the ~$500 minimum small companies should expect to pay.
You have to be proactive about adjusting for this on your own, there were no warnings or options provided by Atlas which was surprising from Stripe where the default company structure attracts enormous franchise tax bills.
Their choice for using SVB as your companies preferred no-frills bank for accepting Stripe payments is also puzzling, it's slow, has a horrible UX, never improves, constant planned maintenance downtimes, etc. Basically the opposite you'd expect from a Stripe UX or Service. SVB's phone support was good and its primary banking feature of sending wire transfers does work, but their mobile and Web App looks like is being maintained by a single developer. I'm assuming SVB will remain the default until Stripe becomes their own bank and switches to using that instead.
There’s an alternate way to calculate DE franchise tax which disarms that alarming share-number-based tax scenario, btw. It’s based on gross assets, it comes to the minimum tax if your gross assets are <$1MM, according to https://corp.delaware.gov/frtaxcalc/
But yeah, I remember the pit in my stomach the first time I did franchise taxes and the first method came out to some obscenely high number.
I disagree about the framing of both of these points.
As another has pointed out, Delaware has an alternate way of calculating this tax which requires no adjustment of your share count. And no business entity is tied to any bank.
Yes, you should be aware of it. Yes, it would be nice if Atlas made you aware of it. I'm just not sure what the expectation is.
To me, forming business entities is easier than using the internet, and all the lawyers involved are for people that would also have trouble using the internet. This is a reductive analogy as I don't mean "the internet" as helping you find the answers, only in the sense that technophobes would also need hand holding in other areas like business formation.
I don't find it to be Atlas' role in helping this here, it can, it's just puzzling to me that there is an audience for that. But again, they could patch this.
* “Document Vault”. As a small business, it’s difficult to keep up with various vendor contracts I’ve signed or other important legal documents. Would be great if there was a corporate document vault service (for the lack of a better term) where I can store/label/file away important legal documents. Could be as simple as me emailing doc-vault@stripe.com and anything in the email I put becomes metadata. And a search web interface.
* Merchant of Record like service. As mentioned in another comment of mine. Would be great if Stripe Tax was connect to the tax agencies to make my payments on my behalf (including corporate taxes).
* Payroll services. Huge topic but would be great if I could pay my employees, vendors, etc from Stripe
* Expense Reporting. Think Expensify. And if this could be also tied into actually paying off my credit card once an expense is approved - even better.
Used Atlas to incorporate and they helped correct mistakes that were made on both ends, was really nice having an actual person to talk to. Also had a deal for reduced fees which made it even sweeter. There were a few UX things that I wish were more clear initially, but they went above and beyond to fix them. Previously used LegalZoom for a 501c4 which was an experience I don't really recommend. It'd be nice to see some more options for different kinds of businesses. Kinda crazy to see how many companies they've incorporated yet still were able to offer really good support.
> "Since then, over 20,000 businesses have started with Atlas and have generated over $3 billion in revenue"
This is an interesting stat. I realize the math isn't this simple ... but that implies the average revenue one of these businesses generated over the course of the last 5 years is $150,000.
It's fascinating trying to get a good grip on how to capture the health of a portfolio in summary statistics. (I coded the dashboard to do this back in the day.)
Average probably is not it, because of the distribution of startups along the power law and the mix in the Atlas userbase between companies which are aiming for that trajectory and those that are aiming for profits/predictable revenue growth.
Also, FWIW, since half of Atlas companies are post-covid the naive calculation of revenue run rate is a bit understated.
For folks who geek out on this sort of thing, we're hiring and my dashboard could very much use an update, plus there is much more important work to be done as we ship an ambitious roadmap for this coming year and beyond. jweinstein@stripe.com if you'd like to discuss; Jeff runs the group Atlas is in.
We don't have great visibility into businesses becoming non-operational (they can become dormant or close up shop without notifying us). But in our analysis of the revenue from their Stripe accounts ($3B!) and public funding data (both data points, to be honest, are conservative, since we can't totally 1:1 match with duplicate accounts, different names, etc.), we can estimate that the number of Atlas businesses shutting down is small—and even smaller when compared to the overall startup scene.
Atlas looks fantastic for starting a US company, and it makes sense that Stripe would start with US companies.
Are there other types of company in other countries that may be better fits for certain reasons? Are there countries/types that would work better for say, non profits, charities, or financial institutions? I wonder if Stripe is building or considering a more diverse range of options for Atlas.
This is probably a somewhat cynical take, but Stripe Atlas' US only offering is a big contributor to international startup brain drain which is costing local economies significantly. When countries (such as within the EU, India or South America) invest so much in the education and development of young entrepreneurs, only for them to leave to the US for the allure of quick investment, all of their potential future value leaves with them. I understand there is a lot for these countries to do to improve investment conditions for high risk startups, but how can poorer South American countries (like those in the Stripe promo video linked) compete with the US in terms of the availability of capital? This is not solely Stripes fault, though in my opinion by promoting Delaware parent companies for international founders they contribute to the hindrance of the local tech economies of these countries.
I'd like to reiterate that this is a relatively uncharitable take, and would welcome alternate perspectives on this issue.
While some Atlas users are internationally mobile, the dominant use case for Delaware entities is to give you a convenient box the system knows how to interface with while you live and operate your business wherever you live and operate your business. This is true for foreign and U.S.-based owners of Delaware entities.
One of my favorite Atlas users, Meitre in South America, has this tagline on their site: "Proudly born in Uruguay. Made with love in California" Much of their business is in South America; they went on (after incorporation) to through YC, raised from A16Z, etc. I think their experience is a userful counter to the standard narrative about brain drains, because that business is very thoroughly South American and also a first-class participant in the SV ecosystem.
Anecdotally speaking, a lot of the Atlas companies I'm aware of which raised money raised it either primarily locally, a mix of local and Silicon Valley, or "extremely widely distributed."
Thanks for the response, it seems my initial take was indeed unbalanced and hadn't factored in the potential of geographically distributed raises which benefit the founders local territories whilst bringing the benefits of significant US capital.
While availability of capital is (in my experience) critical in the decision for South American startups to create a Delaware C Corp, another overlooked piece is the amount of bureaucratic hoops you’re forced to jump through elsewhere. Founders (again, my anecdotal experience) want to focus on building their business. The US system is far from perfect but it’s the most streamlined & has a clear path laid out for scaling. The US system is onerous at best but it’s one of the best relative to others.
Ultimately, if you make things harder for entrepreneurs, they will find an alternative. Atlas makes things easy & actively looks for more way to remove obstacles. It’s a no-brainer for people wanting to focus on building and not tax entity structure.
(I work at Stripe and have worked on Stripe Atlas.)
We're always on the lookout for more ways to support the growth of the Internet economy, and have been looking in detail at which entity types and "hubs" would unlock the most opportunity for our users and for people who we talk to. As always, we'll announce our work here when/if it is ready to be used.
My # one needs isn't related to Atlas per se (but I can see how all Atlas users need this), I love you're acquisition of TaxJar and release of Stripe Tax. But it only solves 1/2 the problem. I need an easy way to make tax payments to the appropriate regulator (e.g. Merchant of Record service). Hope that is in the works.
We hear you, and are hard at work on making taxes easier. Moving money around is very core to what we do, and money movements between companies and tax agencies are one of the largest funds flows for companies subject to that sort of regime, so you can make some very plausible assumptions about our level of interest in this area.
Eu countries, especially the low tax ones each have benefits for different types of companies wrt to intellectual property law or finance. Ireland Malta cyprus estonia bulgaria Luxembourg have hundreds of companies that offer off the shelf company formation
Would be great to see in Russia.
Technically it's open for Russians, but it's a common knowledge that 99% of requests get denied.
I wonder if it's the same for some of other countries where Atlas is "open"...
the problem is how to be complaint with local law if you are a EU citizen and open a US company. You need to be careful to avoid be incriminated for tax evation
I don't think that's the problem here, Russia is not part of the EU. It might have to do with additional risk of fraud and criminality as well as risk to stripe if they deal with a sanctioned entity.
I was thinking the same, because last year when I was forming the LLC, I remember eliminating Atlas for this reason, also Stripe is not operating in Turkey and not accepting applications.
So I formed through another company, which was cheaper with more features. 500$ for Atlas, and you still have to do a lot of stuff and pay more to move forward.
Even they are not providing services in Turkey, and no intention to fight for this equality, they like to use Turkish founders in marketing materials, videos as you can see in this Atlas campaign. Not feel right.
Anyone* can own a US company, you don't need to be a US citizen. However this usually creates some legal headache since most countries have strict controlled foreign corporation (CFC) rules. So if you are living in France and use a service like Strip Atlas, french tax authorities will probably make the case that the company is being managed from France and is therefore liable for french taxes on a corporate level.
Atlas does not remove the need for an accountant, or a lawyer, so either budget that in if you're thinking of forming an LLC.