4 ms·

Why not incorporate off-shore? Ireland's corporate tax is 12.5%; British Virgin Islands' is 0%

Xichekolas 19y ago
From what I read, the legal environment in your place of incorporation matters as much as, if not more than, the tax rate. So many companies incorporate in Delaware because it has extremely detailed corporate case law history (and separate courts for corporate law), even though it is more expensive to incorporate there than most other states. I would imagine for the average startup it's more an issue of overhead costs. Incorporating in Ireland, for instance, would require you to have a legal expert in Irish law on the payroll (most likely an Irish Lawyer) and deal with all the fancy tax forms I'm sure the IRS has for offshore companies doing business in the US. I highly doubt either of those places is a hostile legal climate by any means (but IANAL!), but it seems like all that paperwork would be distracting from your business when you are that small.
waleedka 19y ago
You won't save on taxes because you pay where you're doing business. So, if your office is in California, or you hire people in California, then you'll have to pay CA taxes. At lease that's how it is in CA, AFAIK.
steve 19y ago
Ireland and London are good for gambling or related ventures. Not sure why you'd want to do it there otherwise.
SwellJoe 19y ago
Don't bother, if you plan to ever raise money, get acquired, or go public. I took the advice of an attorney in Texas and incorporated in Texas, with plans to switch to an LLC/Corporation holding company combo when it began making money--there's a well-known loophole in Texas tax law that allows the first 15 million to go untaxed (SBC LLC are the most famous beneficiaries of this loophole, and the most generous to politicians who keep it on the books). But when I began talking to folks in the rest of the business world it became apparent that those benefits were out-weighed by the negatives for a tech company that plans to be acquired or go IPO. Just incorporate in Delaware, and don't worry about it.

From what I read, the legal environment in your place of incorporation matters as much as, if not more than, the tax rate. So many companies incorporate in Delaware because it has extremely detailed corporate case law history (and separate courts for corporate law), even though it is more expensive to incorporate there than most other states. I would imagine for the average startup it's more an issue of overhead costs. Incorporating in Ireland, for instance, would require you to have a legal expert in Irish law on the payroll (most likely an Irish Lawyer) and deal with all the fancy tax forms I'm sure the IRS has for offshore companies doing business in the US. I highly doubt either of those places is a hostile legal climate by any means (but IANAL!), but it seems like all that paperwork would be distracting from your business when you are that small.

waleedka 19y ago

You won't save on taxes because you pay where you're doing business. So, if your office is in California, or you hire people in California, then you'll have to pay CA taxes. At lease that's how it is in CA, AFAIK.

steve 19y ago

Ireland and London are good for gambling or related ventures. Not sure why you'd want to do it there otherwise.

SwellJoe 19y ago

Don't bother, if you plan to ever raise money, get acquired, or go public. I took the advice of an attorney in Texas and incorporated in Texas, with plans to switch to an LLC/Corporation holding company combo when it began making money--there's a well-known loophole in Texas tax law that allows the first 15 million to go untaxed (SBC LLC are the most famous beneficiaries of this loophole, and the most generous to politicians who keep it on the books). But when I began talking to folks in the rest of the business world it became apparent that those benefits were out-weighed by the negatives for a tech company that plans to be acquired or go IPO. Just incorporate in Delaware, and don't worry about it.