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Anyone have experience with Stripe Atlas after starting a foreign entity? I have a Canadian Corporation which I'd like to make a wholly-owned subsidiary of that

Anyone have experience with Stripe Atlas after starting a foreign entity? I have a Canadian Corporation which I'd like to make a wholly-owned subsidiary of that Delaware C corp (or perhaps the other way around).

3pt14159 9y ago
I have some experience as a C-level of a funded Canadian Corp with a American related company that went on to raise from Andreesen, but this experience a bit dated (2012) and I'm not a lawyer / accountant so DYODD, this is all from faulty memory. But I still think its helpful. Basically don't make a subsidiary, make two corps and sell the IP from the Canadian corp to the American one then license it back with a contract between the two corps. Then you set the same shareholders for both corps. As long as you are paying licensing costs for the IP to the American corp from the operating company within reasonable rates everyone is happy. Management fees / fees associated with the IP corp (costs related to the board, raising capital, non-managerial CEO work) get paid from the IP corp, and the rest gets paid from the operating company in Canada. But note that as soon as you create an American corp all of your tax planning and accounting fees will essentially 10x and if you don't do things carefully you'll miss out on your one time capital gains exemption or other CCPC goodies, like bulk asset sale dividend tax reductions. Get a tax attorney and game it out ahead of time.
- motohagiography 9y ago
  This provides the information I need to ask quality questions to lawyers and accountants, thank you. Regarding why to do it, is there a reason you can't just stand up the DE C and that IP agreement as part of the funding round instead of having it in place before?
  - 3pt14159 9y ago
    How fast do you want a term sheet signed? You can of course say "we're not interested in becoming a DE C" and you'll lose 50% of your candidates and you can of course say "we've already set up the DE C" and you'll lose none of them. But if you say "we'll set up a DE C when we need to" you signal that you aren't confident that you'll get the round signed or that DE C is something you'll do begrudgingly, thus advantaging firms that can invest in Canada, so it leaves everyone scratching their heads. Personally, my current company is staying 100% Canadian. The headaches dealing with the American tax system aren't worth it. If the revenue is there the capital isn't far behind, and I rather spend time optimizing the revenue of the company than getting slowed down with lawyers and tax attorneys plus I trust Canada's judicial system more than I do America's. Not by a lot, but still. All this doesn't really matter if you're pre-product market fit or pre-monetization though. In that case it's almost always better to just set up the DE C because you have less leverage / allure.

3pt14159 9y ago

I have some experience as a C-level of a funded Canadian Corp with a American related company that went on to raise from Andreesen, but this experience a bit dated (2012) and I'm not a lawyer / accountant so DYODD, this is all from faulty memory. But I still think its helpful. Basically don't make a subsidiary, make two corps and sell the IP from the Canadian corp to the American one then license it back with a contract between the two corps. Then you set the same shareholders for both corps. As long as you are paying licensing costs for the IP to the American corp from the operating company within reasonable rates everyone is happy. Management fees / fees associated with the IP corp (costs related to the board, raising capital, non-managerial CEO work) get paid from the IP corp, and the rest gets paid from the operating company in Canada. But note that as soon as you create an American corp all of your tax planning and accounting fees will essentially 10x and if you don't do things carefully you'll miss out on your one time capital gains exemption or other CCPC goodies, like bulk asset sale dividend tax reductions. Get a tax attorney and game it out ahead of time.

motohagiography 9y ago
This provides the information I need to ask quality questions to lawyers and accountants, thank you. Regarding why to do it, is there a reason you can't just stand up the DE C and that IP agreement as part of the funding round instead of having it in place before?
- 3pt14159 9y ago
  How fast do you want a term sheet signed? You can of course say "we're not interested in becoming a DE C" and you'll lose 50% of your candidates and you can of course say "we've already set up the DE C" and you'll lose none of them. But if you say "we'll set up a DE C when we need to" you signal that you aren't confident that you'll get the round signed or that DE C is something you'll do begrudgingly, thus advantaging firms that can invest in Canada, so it leaves everyone scratching their heads. Personally, my current company is staying 100% Canadian. The headaches dealing with the American tax system aren't worth it. If the revenue is there the capital isn't far behind, and I rather spend time optimizing the revenue of the company than getting slowed down with lawyers and tax attorneys plus I trust Canada's judicial system more than I do America's. Not by a lot, but still. All this doesn't really matter if you're pre-product market fit or pre-monetization though. In that case it's almost always better to just set up the DE C because you have less leverage / allure.