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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

by mythz 5y ago

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.

ericd 5y ago
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/ 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.
vmception 5y ago
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.

by mythz 5y ago

ericd 5y ago

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/ 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.

vmception 5y ago

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.