5 ms·

> 80% of entrepreneurs are sole proprietors or partnerships This seems interesting but makes complete sense. Most ideas likely won't pan out and incroporating

by soared 10y ago

> 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. https://stripe.com/atlas/guide#incorporation https://stripe.com/atlas/guide#incorporation

ggregoire 10y ago
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/vosdroits/F23264 https://www.service-public.fr/professionnels-entreprises/vos...
- ensignavenger 10y ago
  According to this website: http://www.companyformationfrance.com/types-of-french-companies 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 https://fr.wikipedia.org/wiki/Entreprise_individuelle might be your answer.
  - ggregoire 10y ago
    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.
    - ensignavenger 10y ago
      I see- the first link equates entreprise individuelle with a sole-propritership. Is the paperwork just registering for tax purposes or something?
      - ggregoire 10y ago
        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 https://en.wikipedia.org/wiki/SIRET_code [2] https://en.wikipedia.org/wiki/Institut_national_de_la_statistique_et_des_%C3%A9tudes_%C3%A9conomiques https://en.wikipedia.org/wiki/Institut_national_de_la_statis... [3] https://www.service-public.fr/particuliers/vosdroits/F11677 https://www.service-public.fr/particuliers/vosdroits/F11677 [4] https://www.service-public.fr/particuliers/vosdroits/F15252 https://www.service-public.fr/particuliers/vosdroits/F15252
        ensignavenger 10y ago
        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-employed/apply-for-an-employer-identification-number-ein-online 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!
- funkydata 10y ago
  How about EURL or SASU?
Swizec 10y ago
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
- SanFranManDan 10y ago
  A sole proprietorship doesn't give you the same protections as a corporation. You have unlimited personal liability for your business actions.
  - Swizec 10y ago
    Exactly. 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.
    - ajeet_dhaliwal 10y ago
      The UK is the same as the US in this respect. Something I'd taken for granted until now.
  - cookiecaper 10y ago
    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). IANAL
DINKDINK 10y ago
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 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
- soared 10y ago
  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.
- morgante 10y ago
  This is part of why people incorporate in DE. The courts there make piercing the veil quite challenging.
morgante 10y ago
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).

by soared 10y ago

ggregoire 10y ago

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/vosdroits/F23264 https://www.service-public.fr/professionnels-entreprises/vos...

ensignavenger 10y ago
According to this website: http://www.companyformationfrance.com/types-of-french-companies 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 https://fr.wikipedia.org/wiki/Entreprise_individuelle might be your answer.
- ggregoire 10y ago
  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.
  - ensignavenger 10y ago
    I see- the first link equates entreprise individuelle with a sole-propritership. Is the paperwork just registering for tax purposes or something?
    - ggregoire 10y ago
      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 https://en.wikipedia.org/wiki/SIRET_code [2] https://en.wikipedia.org/wiki/Institut_national_de_la_statistique_et_des_%C3%A9tudes_%C3%A9conomiques https://en.wikipedia.org/wiki/Institut_national_de_la_statis... [3] https://www.service-public.fr/particuliers/vosdroits/F11677 https://www.service-public.fr/particuliers/vosdroits/F11677 [4] https://www.service-public.fr/particuliers/vosdroits/F15252 https://www.service-public.fr/particuliers/vosdroits/F15252
      - ensignavenger 10y ago
        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-employed/apply-for-an-employer-identification-number-ein-online 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!
funkydata 10y ago
How about EURL or SASU?

Swizec 10y ago

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

SanFranManDan 10y ago
A sole proprietorship doesn't give you the same protections as a corporation. You have unlimited personal liability for your business actions.
- Swizec 10y ago
  Exactly. 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.
  - ajeet_dhaliwal 10y ago
    The UK is the same as the US in this respect. Something I'd taken for granted until now.
- cookiecaper 10y ago
  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). IANAL

DINKDINK 10y ago

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 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

soared 10y ago
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.
morgante 10y ago
This is part of why people incorporate in DE. The courts there make piercing the veil quite challenging.

morgante 10y ago

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).