16 ms·

Stripe Atlas for LLCs

• antaviana 8y ago
  If the US company is going to be a fully owned child company of another EU company, which is most suitable, a C Corporation or an LLC and why?
  • patio11 8y ago
    We do not support LLCs as subsidiary of other companies, for reasons. We do support that use case for C corporations. There are complicated tax issues involved here; an accountant can talk you through them.
    • antaviana 8y ago
      Isn’t Google LLC a subsidiary of Alphabet Inc?
      • patio11 8y ago
        Google has some issues that you and I probably do not, and has some lawyers and accountants that you and I probably do not. Thankfully, we don't have to build a product which seemlessly works for this Google; we just have to build one which seemlessly works for the next Google.
      • simcop2387 8y ago
        It is, I believe patio11 is saying that Stripe does not support setting that up due to the complex tax and other requirements.
• zrail 8y ago
  This is pretty exciting. $500 is a great deal for an LLC with a fully vetted operating agreement suited for an internet company as well as a bank account out of the box.
• gk1 8y ago
  Before doing this, be sure to read your home state's requirements for registering out-of-state LLCs. You might still be required to file annual paperwork and fees in your home state, thus possibly counteracting any convenience you thought you were getting by registering in Delaware. Or consult with an accountant, many of whom offer free first-time consultations.
  • zrail 8y ago
    I believe every state requires you to register your business in that state if you have a tax nexus there. California is particularly onerous about this, requiring LLCs to register and pay a minimum $800 franchise tax every year.
• billconan 8y ago
  Can I be taxed as a s corp with stripe atlas?
  • patio11 8y ago
    An LLC can elect to be taxed as an S Corp. We're happy to introduce all Atlas companies to accountants; this is something you can ask them to do for you.
    • sheeshkebab 8y ago
      I think parent meant a C Corp with automated IRS tax election for S Corp... not llc.
      • patio11 8y ago
        Same story for C Corps, FWIW.
      • gk1 8y ago
        Why do you think so? LLCs can elect to be taxed as S-Corps, and this thread is about LLCs...
• patio11 8y ago
  Hiya folks! I worked with the team on this; happy to answer any questions you have.
  • no1youknowz 8y ago
    Would it be possible to use Stripe Atlas to create the LLC, bank account etc and use Stripe normally for handling the payments side for the subscriptions. However, if a marketplace came with the application. To use a 3rd party for all that comes with it. IOW, not wanting to use Stripe Connect for various reasons that make sense to the business.
    • patio11 8y ago
      You're welcome to have your company do business with anyone you wish it to do business with. We do not obligate you to use any Stripe product; we feel like we should always have to earn your business. (We in fact go further than that; Atlas actively goes out of our way to help our companies take payments outside of Stripe, for example getting paperwork together to e.g. publish apps on the App Store.)
      • no1youknowz 8y ago
        That sounds great. I will definitely be following up very soon! Many thanks for taking the time to respond.
  • foobaw 8y ago
    Will there be a way for a C-Corp to change into an LLC?
    • patio11 8y ago
      There's a great and very common use case for LLC to C corp, so we prioritized building that. I'd love to hear what your use case is for the other way around; if it is something which creates a lot of value for a lot of founders, we'll certainly consider supporting it in the future. Speaking broadly: You can always work with lawyers/accountants to see about the feasibility of converting your C corp into an LLC. We just haven't worked to specifically enable it in the fashion that we attempted to smooth out LLC-to-C-corp.
• spamross 8y ago
  Why Delaware over Wyoming? Wyoming has no corporate income tax and lower fees.
  • taylorwc 8y ago
    Delaware has the most established precedent history for business case law. That's why so many corporations file there, despite the high fees.
  • foobaw 8y ago
    This! Delaware is simply the choice for most because of conventions, marketing, and (legal) history. The ideal choice should be Wyoming in my humble opinion.
    • woolvalley 8y ago
      Why wyoming vs nevada
      • prklmn 8y ago
        It’s cheaper
        • zrail 8y ago
          If the annual renewal cost of your business entity is a dominating factor of where you're going to site the entity, you should probably be thinking strongly about whether you should be forming an entity at all.
      • gamblor956 8y ago
        Unless you live in Wyoming or Nevada, you plan on raising VC money[1], or you know that you will be having substantial business operations in multiple states, you should generally incorporate an LLC in the state in which your primary business operations will take place. [1] Most VCs require C-Corps. A few enlightened VCs will invest in LLCs, recognizing the tremendous tax benefits of the LLC form. In either case, they will require the entity be formed in Delaware due to its business law history.
• cvaidya1986 8y ago
  If I want to release a bunch of different projects under the same company name which one is better LLC or C Corp?
  • patio11 8y ago
    Either supports that use case; the decision is typically driven by other considerations. I wrote a guide about them: https://stripe.com/atlas/guides/llc-vs-c-corp https://stripe.com/atlas/guides/llc-vs-c-corp
  • nodesocket 8y ago
    You can be an LLC that is taxed as an S-corp as well, but only make sense if you have significant profits which you wish to reduce your liability by paying dividends instead of payroll taxes. -- I am not an accountant or lawyer --
• sheeshkebab 8y ago
  It sounded right until $500 part... llc setup cost is $50, bank accounts, stripe accounts are all free, same goes for any “credits” from aws and elsewhere. I understand the desire to turn a profit on this, but that’s kind of overboard, IMO.
  • gk1 8y ago
    It's roughly in line (albeit on the high end) with what RocketLawyer and other do-it-yourself companies charge. Yes they are all more expensive than truly doing it yourself (as in, printing forms from the local gov site and mailing them), but you're paying for convenience and the increased likelihood of getting the paperwork done right.
  • redindian75 8y ago
    agreed... Was happy to see a standardized LLC product from Stripe till I saw it costs a whopping $500!
  • icelancer 8y ago
    >> bank accounts, stripe accounts are all free, same goes for any “credits” from aws and elsewhere Free only if you don't value your time, I suppose. And you left out the support part from Stripe Atlas and their community, which could easily be worth many multiples of $500.
  • SneakerXZ 8y ago
    It includes a bank account that is huge money and time saving for people outside of US. If you do it elsewhere you will have to fly to the US and open the account yourself.
  • classics2 8y ago
    It’s unlikely you work for free and neither do the employees and lawyers at Stripe.
  • zawerf 8y ago
    I don't know why you put "credits" in quotes so I went to look it up. They give you $5000! Unless there's some catch this actually makes atlas free and maybe even profitable to do since I am already paying AWS for running servers already. (Unless you're saying there are easier ways to get those free credits? Where else would you find them? Startup accelerators?)
• freehunter 8y ago
  Damn, I was hoping for this about 6 months ago, I ended up filing my own paperwork instead. It was actually easier and cheaper than I thought for my state (Michigan). $50 and like five lines on a form. I even got my own EID completely online in about 10 minutes, and a bank account at my local small business bank the same day. But just like with Stripe Atlas for C-Corps, what you're paying for isn't the paperwork and the filing fees, it's the access to lawyers and tax help and the network of other founders. It's Stripe's experience, and help for people who aren't in the US. I'd say it's worth it because to be honest I have no idea what my company's responsibilities for taxes are and yeah that makes me a little uneasy.
  • gk1 8y ago
    > I'd say it's worth it because to be honest I have no idea what my company's responsibilities for taxes are and yeah that makes me a little uneasy. Yikes. You should get an accountant. Ask for referrals from other businesses in your area that are similar to yours. Ask your local co-working spaces or incubators. Google...
    • freehunter 8y ago
      Yup, I'm working with an accountant to better understand what's going on. Last year I was in a grace period but this year I'm going to have to file. Luckily it's just me, no employees and no cofounder to worry about. But man tax law is complicated and I don't like not knowing every part of what I'm doing.
      • patio11 8y ago
        Part of the reason I started working at Stripe is that I remember going through exactly this and it freaking sucked. Building a product and finding customers for it is hard enough without also having to cross-class as an expert in international taxes of software sales. (Drop us a line if you need a referral to an accountant; we can introduce you to an accountancy that works with a lot of Internet businesses. We also have some guides about it at https://stripe.com/atlas/guides https://stripe.com/atlas/guides to demystify it a bit.)
• gk1 8y ago
  Before doing this, be sure to read your home state's requirements for registering out-of-state LLCs. You'll likely be required to file annual paperwork and fees in your home state, thus possibly counteracting any convenience you thought you were getting by registering in Delaware. Or consult with an accountant, many of whom offer free first-time consultations.
• mechwarrior 8y ago
  This looks like a great service! For my state (NY), I am required to register an out of state LLC (a "foreign" LLC [1]) before conducting business in NY. Is this registration or assistance with this registration included? [1] https://www.nolo.com/legal-encyclopedia/how-qualify-foreign-business-new-york.html https://www.nolo.com/legal-encyclopedia/how-qualify-foreign-...
  • icelancer 8y ago
    This is likewise required in WA.
• tptacek 8y ago
  This is all very cool. But: don't operate a multi-partner company in any form, LLC or C-Corp, without formal vesting. Companies without vesting are rigged to explode if any member leaves.
  • hamandcheese 8y ago
    Can you elaborate on what this means? What is formal vesting (and as opposed to what... informal vesting?) and how does not doing it make a company explode? I’m sure I’m not the only one here who has never started a company and has no idea what this means. :)
    • tptacek 8y ago
      Formal as in somehow written into the contracts that govern your company.
    • eli 8y ago
      if you get in a fight with your cofounder on day 2, you really don't want them to quit and still own half the company. "Formal" in the sense that it's written down in a binding legal document as opposed to a "handshake agreement."
    • allannienhuis 8y ago
      Without a written vesting schedule for ownership of shares of a company, a founder could leave (or die or become disabled/incompetent due to sickness/accident) and keep their (or their estate's) share of the company. Those events can completely destroy the value of a company. For example in a 50/50 partnership, the remaining partner would be responsible for 100% of the work, but only receive 50% of the dividends or liquidation value. Those type of events are hard enough to deal with anyway - not having a vesting schedule makes it almost impossible to recover from. For instance if there _was_ a vesting schedule for a partner that left after a very short period of time, the unvested equity could be used to attract another partner. The vesting schedule should reflect their contribution to the company over time, and can be whatever the founders negotiate as reasonable. If someone helps found a company and brings a ton of immediate value (ie IP or cash or contracts, etc) then their vesting schedule can reflect that. Issues such as assignment to estate or beneficiaries are important legal issues that need to be considered at startup time as 'insurance' against things no one wants to see happen, but might.
• danbtl 8y ago
  What would be the combined fed+state corporate income tax rate for a Delaware LLC? Quick google says this is 21% (federal) + 8.7% (Delaware). Is my understanding of this correct, that a Delaware LLC pays 29.7% taxes on its profits?
  • Saaster 8y ago
    Unless you have presence in Delaware (offices or employees), you don't pay corporate income taxes there just because you formed as Delware LLC or C Corp. You pay a nominal franchise tax, and you're taxed in the other state(s) you operate in.
    • jahewson 8y ago
      Yep. An LLC* is not taxed as a corporation unless it chooses to be, by default it is taxed as a sole proprietorship (and so the owner would pay income tax). This is known as a disregarded entity” at the federal level. Also watch out for franchise taxes - if you live in California it’s $800/yr minimum. * Edit: a single-member LLC
      • nodesocket 8y ago
        Pretty sure you can only be a "disregarded entity" (schedule-c) with a single member LLC. Beyond that is get's more complicated.
        • jahewson 8y ago
          Yes, that’s right. Good point!
          • jkaplowitz 8y ago
            You can choose to be taxed as a corporation even in that case, but it's usually not worth the tradeoffs.
      • charlesdm 8y ago
• prklmn 8y ago
  If you want to run a remotely lean organization, spending $500 to incorporate your LLC is not starting off on the right foot.
  • wpietri 8y ago
    Sorry, but lean and cheap aren't synonyms. As an example, a pal once worked for some medium-sized company where if you wanted a new pencil, you go down to the basement and through a long hallway to a window. At the window you had to confront the Dragon of the Office Supply Horde, and to prove your worthiness, you had to bring a sufficiently used existing pencil. That company was definitely cheap, but was very much not lean. Toyota, on the other hand, is the classic lean company. When they don't need to build cars, they don't lay people off or send them home, which would be the cheap thing to do. Instead, they have them clean, polish, train, and generally improve the plants and themselves. They spent extraordinary sums building the first Prius prototype, which could barely get around a track. But they kept on improving it, eventually making one of the world's best-selling cars and making them a leader in a new market. Spending $500 to incorporate a startup may not be cheap, but it certainly can be lean if you determine that the investment in learning how to correctly do the legal and financial dance will not have as much ROI as paying for it to happen and focusing instead on building the actual business.
• nodesocket 8y ago
  > Is organized in Delaware, the jurisdiction of choice for many new LLCs. Be aware that if you are "doing business" in California which means you live there you also have to file as a California foreign entity and pay the absurd anti-small business flat tax of $800 a year. This also does not include your state income tax liabilities in California. Just because the LLC is formed in Delaware does not mean you don't have to pay income taxes in the state you reside. Delaware is just the legal residence, has nothing to do with income taxes. I moved to Tennessee in January and switched my single-member disregarded entity LLC from California to Tennessee. The annual fee in Tennessee is $400 vs $800 and there is NO STATE INCOME tax in beautiful TN.
  • mikeleeorg 8y ago
    This is very important info. I've seen some founders get tripped up over this. Hopefully Stripe Atlas LLC provides support for foreign entity registration and taxes too (I would assume they do).
    • patio11 8y ago
      We don't yet foreign entity registration in the product, but you could imagine us automating this, in addition to the Delaware franchise tax filing and registered agent services which we already handle.
      • mechwarrior 8y ago
        If foreign entity registration was automated for NY I would use this product immediately.
      • xapata 8y ago
        > could imagine us [doing] Euphamism for "That's on the roadmap, but I'm not allowed to announce it yet." Probably.
  • billconan 8y ago
    So if I live in CA, it might be better to directly register a CA company to save cost, rather than registering a Delaware company via Strip Atlas?
• philip1209 8y ago
  > Is designed to make conversion to a C Corporation as simple as possible. (We can connect Stripe Atlas users to a lawyer to manage the conversion process with discounted, flat-rate packages). This is the most important part. LLCs tend to be cheaper and more flexible before you raise money, but a C-Corp is basically necessary to raise money. Converting an LLC to C-Corp conversion is often quoted at about $10K from a law firm. With Stripe Atlas, you are set up to make the conversion easily.
  • patio11 8y ago
    $10k isn't the high end, either.
    • throw9991999 8y ago
      Any ballpark figure on how much it costs with Atlas?
      • patio11 8y ago
        Starts at $500. We can't quote a firm price because you can do things in the company (it is your company, after all) which make it more complicated. There are an infinite number of contracts that a company could hypothetically sign, some of which have interesting implications for conversion. Those contracts have to be read and interpreted; that isn't going to be free for a lawyer.
• scollins 8y ago
  If I'm not a resident of US and didn't visit US in a tax year, would I have to pay US income tax for the LLC?
  • patio11 8y ago
    Owning a US LLC as a non-resident can be complicated; it depends on a variety of circumstances regarding what you do, how your business interacts with the US market, whether you are a US citizen, where you live, etc. You may wish to speak to an accountant.
    • evla 8y ago
      Would it be easier to own a C Corp as a non-resident? Does Atlas provide that as well?
      • patio11 8y ago
        We do provide C corporations. It was the first option we launched with, and a core goal of that was supporting non-US founders.
• tnorthcutt 8y ago
  I'll soon need to move an LLC from Texas to Colorado. Should I instead consider shutting down my Texas LLC and forming a new one with Stripe Atlas? Would there be any benefit to this?
• kureikain 8y ago
  Anyone know what is the total cost of Striple Atlas? What others cost beside the $500 one time fee? Will really appreciated some breakdown numbers
  • patio11 8y ago
    https://stripe.com/atlas https://stripe.com/atlas Ctrl-F for "ongoing costs" It's impossible to give you a fully inclusive quote without knowing more of your situation, and I'm not qualified to comment on e.g. tax consequences for you if you live outside the United States, but broadly speaking the total cost of ownership ranges from about $1k to about $2k depending on circumstances (C corp vs LLC, number of founders, whether founders are US-based or not, etc). This includes annual costs for Delaware taxes but doesn't include e.g. corporate or personal income taxes.
    • tnorthcutt 8y ago
      FYI, there seems to be some disparity on two different pages: On https://stripe.com/atlas https://stripe.com/atlas: Delaware tax filing: preparation is free, Delaware fee starts at $225 On https://stripe.com/docs/atlas/tax-obligations https://stripe.com/docs/atlas/tax-obligations: All LLCs formed or registered in Delaware must pay an annual LLC tax, currently at a flat rate of $300.00.
      • patio11 8y ago
        Thanks; will correct.
• ssijak 8y ago
  I am not a USA resident, I live in Europe (not EU zone). What would be my tax obligations to the USA if I had LLC formed through Atlas for a purpose of software SAS business (selling software subscriptions worldwide)? I know I would be obliged to pay income taxes in my country, but I don`t know if and what would I need to pay regarding taxes to the USA.
  • gamblor956 8y ago
    You generally need to talk to a tax lawyer about this, but in a nutshell: You could owe tax to the state in which you incorporate, if they tax LLC income earned out of state. (Most states don't, but you will have a "minimum franchise tax" that you must pay regardless of LLC income for the privilege of being registered in their state.) You generally would owe US federal income tax on the income you earn from your US customers. But, in many cases you could qualify for tax treaty benefits that reduce your US tax liability to zero. You would still need to file a US tax return, but you would not actually pay US taxes. (Your tax return would explain why you don't need to pay.) You would generally be taxed on the income in your home country. Despite common belief, almost all countries tax the worldwide income of citizens residing in their country. (Territorial taxation is generally reserved for corporations and expatriates.)
  • jwr 8y ago
    Consider the legal implications, too: if your form an Atlas LLC, you can easily be sued in the US.
• sachitgupta 8y ago
  @Patio11 - I recently moved from California to Florida and I'm about to open an LLC here. What are the advantages / disadvantages of having an LLC based in Delaware vs creating one in Florida? I'd love to use Stripe Atlas - but not sure if I'm making things more complicated than they need to be by opening in Delaware vs Florida.
  • opmac 8y ago
    You should probably talk to an attorney, but as I understand, Florida isn't a bad state to consider either. It really comes down to cost savings and specific laws, and where you're primarily doing business.
  • gamblor956 8y ago
    If you don't plan on trying to raise VC money, then a local LLC is preferable to a Delaware LLC in 99.999999% of business cases. Or another way to put it: if don't plan to do business outside of Florida, why would you subject yourself to the laws and jurisdiction of another state just to save a few bucks?
    • sachitgupta 8y ago
      > If you don't plan on trying to raise VC money, then a local LLC is preferable to a Delaware LLC in 99.999999% of business cases. Well, I do have clients and customers outside FL - lots of them. Does that make a difference?
      • gamblor956 8y ago
        It depends on where you plan on doing work for those clients.
        • sachitgupta 8y ago
          Mostly in FL but I also travel a bunch cause I'm remote.
  • 8y ago
• brianwawok 8y ago
  Nice, this is why I didn't use Atlas despite being offered a beta slot. I ended up forming a local state LLC. This is still delaware LLC, which seems an extra hoop for (potentially dubious consult your lawyer) gain... but still good to see them going this direction. That send - end to end to form a LLC in the state of Indiana, it took about a half day and $250. I do not need to file anything in delaware or deal with my company as a foreign entity or any of the extra stuff you would get going this route.
• deleted 8y ago
  [deleted]
• mechwarrior 8y ago
  I am particularly interested in the liability protection provided by an LLC (selling physical products). How much legally grounded advice is provided as a part of the service about how to avoid activities that could make the corporate veil easier to pierce in the event of a lawsuit? I've heard anecdotally about doing a good job of keeping business and personal accounts completely separate, for example. This is the type of advice that I would typically lean on a lawyer for, but it seems could be easily provided as a part of this service.
  • patio11 8y ago
    We're not lawyers and we cannot licitly give legal advice, but part of the service is that we can introduce you to lawyers. We do have guides about topics including that topic specifically; you can find them at https://stripe.com/atlas/guides https://stripe.com/atlas/guides ; I can't remember which one addresses that issue off the top of my head.
• shubidubi 8y ago
  I recently opened an LLC in NYC for $200 and took me less than an hour. All I did is to follow the (free) instructions here (https://www.llcuniversity.com/new-york-llc/ https://www.llcuniversity.com/new-york-llc/), was super simple and worth it. Opening a business account took me less than an hour and nowadays you can do it online.
  • burntwater 8y ago
    The New York State fee by itself is $200. Unless I'm missing something, you paid significantly more than that for the publication requirement (it was around $1,000, give or take a couple hundred, last I checked).
• vioyul 8y ago
  Thanks Patrick. I've heard of Atlas recently and am seriously considering it. I was simply wondering if you provide any tax advice for people living in different countries but who own a Delaware LLC (or C-Corp) through Atlas?
• artur_makly 8y ago
  Re: SVB bank I heard you can’t even get a debit card. What other restrictions are there? Is it only good for using Stripe and nothing else?
• allochthon 8y ago
  Looks like you have to have a Web site up and running to be invited to the preview.
• rolleiflex 8y ago
  Heads up, if you’re not a US citizen, Azlo (the underlying checking account provider they use) doesn’t let you open an account. I’m not sure if they have a special deal with Stripe that lets you through, but they definitely don’t let their regular customers through without a US passport.
  • wbmstrmjb 8y ago
    Hi @rolleiflex, this is not exactly correct. You do not need a passport to sign up for Azlo. It certainly is accepted as a form of identification, but not the only one. Also, we will be accepting both resident aliens and non-resident aliens this month!
    • challenge 8y ago
      @wbmstrmjb Just tried to sign up as nra a few days ago. It told me it was not available. Also sadly I forgot the password and now can't even recover it because it complains that there's no verified phone number (???), it never asked for one as the procedure failed as soon I selected a different country than USA.
      • challenge 8y ago
        nvm got answer from support.
• blahman2000 8y ago
  @patio11 does the LLC package come with a DUNS number?
  • patio11 8y ago
    It doesn't, but we help people get them on an ad hoc basis. Mind if I make a guess? You're probably wondering "Can I get a DUNS number so that I can list something on the App Store?" if you're like 90% of people who ask us this. If so, let me just tell you now what we'd tell you in the future: > My most recent understanding is that if they’re using the DUNS number as a part of the Apple Developer program, we should recommend that they email appdeveloper@dnb.com and they will advise you how to apply for your situation. Just let them know that you’re representing a US company trying to get a DUNS number but that you’re headquartered in [country outside of the US if that’s an additional consideration].
    • SeanLockItUp 8y ago
      Not OP but that's my only use case for the DUNS number. Are you saying we may not need it? Or that there's an expedited / cheaper way if we're just getting it for that sole purpose?
• fiatjaf 8y ago
  Apparently Stripe Atlas is being used by and tailored for US residents only, which is odd.
  • patio11 8y ago
    We have thousands of users in over 125 countries, and do substantial amounts of work to ensure that we're making our services available as widely as possible. If there is a particular thing you'd want to improve the service for folks outside the US, I'd love to hear about it -- feel free to email me at my HN name at stripe.com
• zawerf 8y ago
  Is the LLC anonymous by default? For privacy reasons, not legal. I know I can still get subpoenaed. I just don't want my name/address associated with the company on anything public. It seems to do this I will need a lawyer to be my registered agent for mail forwarding (a regular mail forwarding service such as https://www.virtualpostmail.com/services/registered-agent/ https://www.virtualpostmail.com/services/registered-agent/ was apparently not enough since it doesn't have attorney-client protection). That was as far as I got when I last tried to start a LLC for my side project.
  • xapata 8y ago
    Delaware ain't the Caribbean.
    • zawerf 8y ago
      I didn't understand the Caribbean reference which led me down a pretty fun rabbit hole trying to figure out how that world works. Apparently it's fairly common to incorporate in British Virgin Islands (and a few others like Cayman islands, Bahamas, or Panama) for international companies. I was sincerely asking about it because of privacy and not tax reasons though.
      • xapata 8y ago
        To clarify: Many countries allow "anonymous associations", which provide privacy and the side effect of enabling tax evasion.
• jlongster 8y ago
  Does this support converting an existing LLC into one that Atlas would set up?
  • EGreg 8y ago
    No. I asked them. They said We're still in the growing phases and constantly looking for ways to expand and improve, but I'm afraid, the Atlas program is only accessible as a package deal.
• annerajb 8y ago
  I wish atlas allow transferring over our Delaware c Corp to them. They launched around 3 months after we incorporated :(
• HIPisTheAnswer 8y ago
  Liability can not be limited. Someone is either liable or not.
• chrisweekly 8y ago
  S-Corp always seems to get short shrift compared to LLC. I live in MA, where I registered my S-Corp, and it simply costs less, w/ no downside. Do your research (or, better, ask your accountant) before following the herd! :)
  • nodesocket 8y ago
    There is downside to S-Corps. Lots more regulatory requirements, minutes, and tax forms required. As a general rule of thumb assuming you are a single person company it doesn't make sense unless profits are greater than at a minimum of $150,000 a year. At that level you can pay yourself a "reasonable" salary say $80,000 and then lump dividend for the rest which is taxed at 15%.
    • chrisweekly 8y ago
      "unless profits are greater than at a minimum of $150,000 a year." Ok, sure. Similarly, an LLC is probably overkill if you're making under $100k. I'd argue it's a minority of entrepreneurial software consultants who make over $100 but under $150. Finding a good accountant to help you figure it out (and to handle the paperwork) is also likely to help you join the S-Corp cohort.
      • brianwawok 8y ago
        You just setup a straw-man. No one else agrees LLC is overkill if making under 100k profit. I would in fact encourage LLC from day 1 for anyone making anything. (and just auto converting to S-Corp at 150k is also silly, talk to an accountant. Many reasons to be a LLC even if making millions of dollars a year, see many real estate LLCs or companies with 100-1000 employees but still a LLC)
• inertial 8y ago
  Relevant for non-residents / foreign owned LLC : https://onlinetaxman.com/us-llc-tax-haven-for-foreigners/ https://onlinetaxman.com/us-llc-tax-haven-for-foreigners/ If you don’t have a dependent agent that substantially furthers your business in the US and don’t have an office in the US, you are not subject to US tax. Even if the LLC generates income in the US, the income is not taxed in the US. Furthermore, if you reside in a country with an applicable tax treaty with the US, then you would not be subject to US tax. Since you reside in your tax home, you can claim you operate a “permanent establishment” (e.g., an office or other fixed place of business) in your home country.
  • sireat 8y ago
    When does it makes sense for a European to start a Delaware LLC? Let's say you have a lifestyle side-business and many clients in US. Where is the legal tax avoidance here? You still have to report the pass-through income to your home country. You can't just keep the money in the LLC and delay the tax? Maybe you want to buy 10 servers in US to be used and shipped home to Europe to be used for the same business. Would you be able to deduct those kind of expenses? PS I had a vanity Delaware C Corp in in the 90s which I did absolutely nothing with besides getting all the cool corporate knick knacks.
    • inertial 8y ago
      There are many countries where Stripe etc. aren't available. Starting an LLC in USA is an easy route to get that going albeit at additional compliance cost (e.g. filing informational returns). The article above clarifies that a foreign owned LLC with no income connected with US doesn't have to pay taxes in US. They just have to pay tax in their home country. It makes it more appealing & easier to start an LLC.