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I'm going to take the opposite view and suggest that this is not a good idea. While I whole-heartedly endorse bootstrapping when you can, there is a huge risk t

I'm going to take the opposite view and suggest that this is not a good idea. While I whole-heartedly endorse bootstrapping when you can, there is a huge risk to not having a professional look at your incorporating documents, especially when there are multiple co-founders involved. That's why this is the first thing incubators like YC and AlphaLab require. Many attorneys (if you ask) will do incorporation for a flat fee (ours was $2500). Specifically our attorney helped us with the following issues: - What is the structure of the shareholder agreement? - What happens if a co-founder leaves? - Filling out the 83(b) Election Form (so that you pay capital gains taxes on the shares you're about to be issued now rather than later) - Mutual confidentiality agreement amongst co-founders - Proprietary rights agreement Believe me, I know what it's like to be a starving startup. Any cash outlay is terrifying. But you must be able to separate fear from the decision making process. $2500 is not a lot of money. And if you can't bring yourself to pay that much for something as important as an attorney, are you really starting a business? Or is it just a side project that you hope will become a business? There is a serious difference. One last thought. We (http://www.shoefitr.com http://www.shoefitr.com) didn't incorporate until we quit our "real" jobs to go full time. This gave us time to mitigate some technology risk and get comfortable working with each other before shelling out $2500. I think that's ok too. But if you're at the full-time stage of things, consult a professional.

csmeder 16y ago
However, if your startup depends on having a merchant account, you need to incorporate before you can get the merchant account correct? I would really like to put off incorporating but I need a merchant account so I can bill people based on their usage. Also even PayPal let me bill people based on usage, I hear horror stories about pay pal every day.
- marquis 16y ago
  I don't believe you need to be incorporated to have a merchant account. I've had a merchant account without incorporating (US). Get in touch with a bank directly for info on how they can help you.
- rprasad 16y ago
  You don't need to incorporate, but you need to at least file a DBA (doing business as).
  - csmeder 16y ago
    You need to become an LLC or sole proprietor to have a DBA right? And Isn't the common advice don't become an LLC or sole proprietor if you want VC money in the future?
_pius 16y ago
I was with you until this: $2500 is not a lot of money. And if you can't bring yourself to pay that much for something as important as an attorney, are you really starting a business? Or is it just a side project that you hope will become a business? There is a serious difference. That's a bit obnoxious ... $2500 is a fairly large chunk of money for a new business. Even on a reasonably high developer's salary, the average person would have to save aggressively for a couple months to pay that. It's a bit heavy handed to imply that if you don't have $2500 to blow on attorneys upfront, you aren't actually starting a business. Especially when there are boilerplate documents that get you pretty damn close without you paying a dime: http://www.goodwinfoundersworkbench.com/ http://www.goodwinfoundersworkbench.com/

csmeder 16y ago

However, if your startup depends on having a merchant account, you need to incorporate before you can get the merchant account correct? I would really like to put off incorporating but I need a merchant account so I can bill people based on their usage. Also even PayPal let me bill people based on usage, I hear horror stories about pay pal every day.

marquis 16y ago
I don't believe you need to be incorporated to have a merchant account. I've had a merchant account without incorporating (US). Get in touch with a bank directly for info on how they can help you.
rprasad 16y ago
You don't need to incorporate, but you need to at least file a DBA (doing business as).
- csmeder 16y ago
  You need to become an LLC or sole proprietor to have a DBA right? And Isn't the common advice don't become an LLC or sole proprietor if you want VC money in the future?

_pius 16y ago

I was with you until this: $2500 is not a lot of money. And if you can't bring yourself to pay that much for something as important as an attorney, are you really starting a business? Or is it just a side project that you hope will become a business? There is a serious difference. That's a bit obnoxious ... $2500 is a fairly large chunk of money for a new business. Even on a reasonably high developer's salary, the average person would have to save aggressively for a couple months to pay that. It's a bit heavy handed to imply that if you don't have $2500 to blow on attorneys upfront, you aren't actually starting a business. Especially when there are boilerplate documents that get you pretty damn close without you paying a dime: http://www.goodwinfoundersworkbench.com/ http://www.goodwinfoundersworkbench.com/