19 ms·

Why you might not want to incorporate in the USA

386 points by nitai 13y ago

jdimov 13y ago
Spot-on. Also, don't get me started on mobile internet and broadband. Every time I go to America it's like going to a 3rd world country.
- mjolk 13y ago
  Yes, American cities are literally akin to 3rd world countries.
  - TazeTSchnitzel 13y ago
    Some of them, yes. The poverty...
  - aet 13y ago
    Proof?
- digitalengineer 13y ago
  America is big and as different as Europe. Even though most Americans speak English, it's not a uniform country as us Europeans think. But don't confuse the people with the state. They're not the same. The Americans I met were generally quite nice and willing to help an (obvious) tourist out. Bureaucrats? They thrive in chaos.
  - Dewie 13y ago
    > and as different as Europe. How? I just have a hard time imagining how a place with dozens of languages and cultures (I think that cultures with very different languages are likely to be very different from each other) and all of that can be less varied than a place like the US.
    - workhere-io 13y ago
      Exactly. The difference between NYC and a rural Mississippian town may seem big, but it's nothing compared to the difference between, say, Copenhagen and a rural Spanish town.
      - digitalengineer 13y ago
        No, it's not. America was formed by European immigrants remember? Each sought out their own place. The Bayou, NY City, Texas, North Dakota, San Fransico… All with their own culture. This struck me as I drove from New Orleans through Alabama. I couldn't even understand the Alabama-english..
        workhere-io 13y ago
        I couldn't even understand the Alabama-english.. They still speak English, though, just like the vast majority of Americans. Europe has a huge number of different languages, and especially in Southern Europe it's not uncommon for even young people to not speak any English at all - meaning there's not even a common language that all Europeans speak. I'm certainly not saying that all of US is the same. I'm saying that the differences are smaller than the differences you see in Europe. And I'm saying that as someone who've lived in the US and Europe and visited a great number of European countries.
    - Glyptodon 13y ago
      I feel more like I'm in a foreign country in Mississippi than I do when in Germany. And I'm an American who doesn't even speak German.
- kartikkumar 13y ago
  By definition the US can't be like a 3rd world country (hint: 3rd world country is not what I think you mean to say [1]) [1] http://en.wikipedia.org/wiki/Third_World http://en.wikipedia.org/wiki/Third_World
  - Orangeair 13y ago
    Since we're smugly throwing around Wikipedia articles: https://en.wikipedia.org/wiki/Simile https://en.wikipedia.org/wiki/Simile
    - kartikkumar 13y ago
      Had you seen my body language when I posted the comment, you might not have decided that it was made out of any sense of smugness. NOTE: Since my comments in this thread were downvoted, implying that they were not taken in the spirit they were intended, my contribution to this thread should be considered obsolete. I'll leave my original comments in place to serve as a reminder to myself to be careful about what I say around here in future. [OBSOLETE]
      - arjie 13y ago
        No need to play the martyr. It's a tangential issue. If you brought it up in conversation people would say something like "ha ha yeah, you know what I mean" and continue discussing the original topic. There it quickly dissipates because voice is quickly damped but here it is just noise that takes time to be damped out.
        kartikkumar 13y ago
        I absolutely am not playing the martyr. I raised an issue that I felt was of importance. The fact that others disagree is something I'm willing to live with, but it by no means sways me.
  - sourceless 13y ago
    First, no, key word being 'like' - it's a comparison. Second, yes, you're right, but no need to be a pedant, the meaning original commenter employed is widely accepted and understood.
- josefresco 13y ago
  Care to fill us in with details to go along with your snark? Which part of 3rd world America did you visit? Anecdotally I enjoy decently fast broadband and mobile data coverage.
  - dijit 13y ago
    I went to NYC/Philly/NJ last summer.. T-Mobile barely exists out of the city itself, and yeah, speeds are abysmal. $50 for a sim card too... Anecdotally I went to the Swedish countryside in january; where I got 16Mb/s over 3g. (and it was free because: EU roaming is free on my carrier)
    - josefresco 13y ago
      To be fair, you're talking about a distant 4th place provider that most in the US understand will not work great outside of major population areas. I would understand if you had issues with one of the big two (VZ/ATT). Also to be fair, Sweden is about the size of California.
      - samastur 13y ago
        But with far fewer people living there.
    - wagerlabs 13y ago
      What carrier offers free EU roaming?
      - nitai 13y ago
        T-Mobile!
      - dijit 13y ago
        3 (Hutchinson) also free 4G with no data caps.. they might be slower than the others but they own their own cell towers and offer the best deals.
- cubancigar11 13y ago
  I just want to pitch in saying that India has faster and cheaper internet than San Jose. Sad, true and 'WTF' unbelievable.
- apa-sl 13y ago
  True. I was VERY surprised by the quality of mobile internet (and mobile phone connection in general) when I was in San Francisco and around Silicon Valley). Here in Poland I've got 4g connection practically everywhere in bigger cities (15-20mbits download 3-6mbits upload, ping ~50-70ms tested several times) and in SF I was sometimes struggling to get some decent signal...
yardie 13y ago
* You could have saved yourself a load of headache and incorporate in Delaware. * If you don't have a physical office in each state you don't have a presence there. You shouldn't have needed to pay sales tax. Amazon only pays taxes in states they have a physical presence (warehouse, office, callcenter).
- anemitz 13y ago
  Yup, I'm skeptical of the OP's tax advice. With the right direction this should have been a very easy transition, especially with what looks like a SaaS business.
- clarkevans 13y ago
  Hiring an employee in another state may create a nexus in that state, and this may require you to file income tax in that state. For example, if you incorporate in Delaware, and then hire someone for >$50k in Texas, you may have to file company income taxes in Texas. Not that Texas income attributed to your company (or partners) will be much, but, computing and filing is best done by hiring an accountant.
  - davidw 13y ago
    I'm not sure about EU law - but if you have a company in Denmark, and want to hire someone who works in Portugal as a permanent employee, and not a contractor, what do you need to do?
    - Spearchucker 13y ago
      Not sure about Portugal but suspect it's not much different than other European countries. When I did a freelance job for Nokia in Berlin I effectively worked for a Swiss company, which sent me off to Berlin. I registered myself in Switzerland, got a social security number there, and paid my income tax in Germany. As far as I understand it, Nokia paid the Swiss company, who paid their tax in Switzerland. Much as you'd expect - you (be it an organization or an individual) pay tax in the country in which you're situated.
oesmith 13y ago
Is this a test of whether anyone actually reads these articles? Every 3rd paragraph has a viagra spam-link inserted in the middle of a sentence.
- rwallace 13y ago
  Not for me it doesn't. Try running a virus scan on your machine?
  - romanovcode 13y ago
    But.. ..but he's > reading on an iPad, so the risk of system infection is negligible.
- Gomer1800 13y ago
  I think you need to run some anti-spy ware software on your computer. I don't see any ads of that sort on the blog page.
- darklajid 13y ago
  > Is this a test of whether anyone actually reads these articles? Every 3rd paragraph has a viagra spam-link inserted in the middle of a sentence. Eh.. What? Are you commenting on the wrong article by chance? I don't see any of that. If you're even remotely serious I'd take a good look at your machine/system.
  - oesmith 13y ago
    I'm reading on an iPad, so the risk of system infection is negligible. However, I just switched on my home VPN and the links disappeared. Time to talk to someone in netops, methinks.
    - oesmith 13y ago
      Looks like a hacked wordpress install. http://wp.smashingmagazine.com/2012/10/09/four-malware-infections-wordpress/#pharma-hack http://wp.smashingmagazine.com/2012/10/09/four-malware-infec...
xvirk 13y ago
whenever someone is boasting about how the scandinavia is a paradise I'd suggest reading this article in Guardian http://www.theguardian.com/world/2014/jan/27/scandinavian-miracle-brutal-truth-denmark-norway-sweden http://www.theguardian.com/world/2014/jan/27/scandinavian-mi...
- a_bonobo 13y ago
  There's a good follow-up to your article, where 5 writers answer: http://www.theguardian.com/world/2014/feb/05/scandinavian-miracle-denmark-finland-iceland-norway-sweden http://www.theguardian.com/world/2014/feb/05/scandinavian-mi...
- sebcat 13y ago
  I'm apparently not supposed to cry at funerals and I'm less of a man because of my nationality. The more you know...
- vidarh 13y ago
  If that's the worst he managed to come up with, I guess we're doing pretty ok.
- arethuza 13y ago
  I think this comment on the article sums it up nicely: "I have this feeling that Michael Booth was simply trying to respond to the highly selective, often fallacious Nordic image currently being peddled in the UK (with the Guardian as the worst offender) with an article employing the same kind of distortions. A rhetorical device, if you like."
mjolk 13y ago
> All of a sudden, we were forced to figure out, how much we actually sold in each of those states, where we hired people Not to be offensive, but differences in state rules should have been expected, given the name of the country. How hard do you think it would be to get a random sample of 50 people to decide on a movie? Now swap people with territories and movie with governance. This blog post is just ranting and whinging that some paperwork had to be done when starting a business on foreign soil. I worry about the quality of Razuna as a product if attention to filling out a form is a huge ask.
- shadowmint 13y ago
  oh come on, if you're going to be a jerk just do it, don't fill your post with trite crap like 'not to be offensive, but...'
  - mjolk 13y ago
    It was softening it so the reader would know that I'm not trying to be obtuse. Part of language is communicating meaning, not just trying to get a string of words together. None of that was being a jerk.
- mcv 13y ago
  It's not just ranting about some paperwork. It's pointing out that the paperwork is far worse than in the EU (which is far less unified than the US, but at least the labour market is pretty transparent), and actively discourages companies from incorporating in the US. The US is hurting its own bottomline here. Now countries shouldn't make it too attractive for companies either; then you get a race to the bottom where companies get tax exemptions just for creating a handful of extra jobs. And this absolutely happens; I believe there are some European countries where taxes for foreign companies are ridiculously low. So the EU isn't doing everything right either. But shouldn't there be some sensible middle ground where it's easy to open up shop in a different country, without having to jump through insane hoops, while paying a normal, sane amount of tax?
  - davidw 13y ago
dan_bk 13y ago
> In the US, however, it’s like being in the 70’s in Denmark. In a country, where the NSA supposedly reads all my email, knows how much money I make, what I ate for breakfast and what color underwear I prefer, I cannot report electronically to the authorities! Well, the plan was to keep the incredible advancements in (mass surveillance) technology secret from the citizens, in order not to be stopped.
- vixen99 13y ago
  'I cannot report electronically to the authorities!' - I am amazed. In the UK, individuals and virtually all companies and organisations must file their Company Tax Returns online.
davidw 13y ago
It's indubitable that the nordic countries are well-run places. Occasionally though, the amount of "smug" they export is a bit on the high side.
- tomelders 13y ago
  Is being frustrated and correct the same as being smug?
  - davidw 13y ago
    Smug doesn't mean wrong, it means being a bit loud proud about being right.
    - chris_wot 13y ago
      Sort of like this: https://www.youtube.com/watch?v=JD9d0ZrBnLE https://www.youtube.com/watch?v=JD9d0ZrBnLE
- deleted 13y ago
  [deleted]
- masklinn 13y ago
  > It's indubitable that the nordic countries are well-run places. Note that the online stuff isn't limited to nordic countries, even in France (a country which nobody would say is well-run) you've been able (and encouraged) to fill taxes online for a decade.
ari_ 13y ago
A lot of this could have been solved by (pick a few): 1. forming a 1099 relationship with your devs if they weren't working full time. 2.Using a Personal Employment Organization. 3. Doing your research before blindly incorporating in Texas. We could debate for ages the merits of the state and federal system, but if you were going down this whole road of opening a company in another country and hiring there, then it would have been useful to talk to a tax lawyer and an accountant who are familiar with the issues involved. TLDR;Europeans whining about things they didn't research, again.
- raverbashing 13y ago
  Researching should have been the job of the CPA
- nitai 13y ago
  Who said we didn't get professional lawyers and CPA's?
  - ari_ 13y ago
    if you did then please name them so I know not to use them. Hiring employees in other states should be bread and butter for any tax accountant working with businesses.
    - scott_karana 13y ago
      As I read the article, hiring the employees wasn't the issue at all. Nitai was just aghast that the laws were so strange.
CalRobert 13y ago
I really don't understand this fetishization of the US for business. If you want to be sued into utter oblivion and live on the streets with a nonexistent social safety net I guess it's all right. I'm in Ireland and if you want to start a real business (not some rinkydink app that mysteriously needs €30 million in funding so you can fail more spectacularly) the climate seems quite good.
- dcc1 13y ago
  As someone who has been in business here since 2007, i would stop you right there! We have our share of a bureaucracy (example: took 6 months to get reply from Revenue as to what VAT to pay or not on sales of hosting packages, 23% sales tax (VAT) on customers from EU-28 was the answer eventually) and you quickly realise there are 3 types of companies here: 1. Large corporations setting up shops to launder money onto somewhere warmer in Caribbean, these often dont hire many people or pay much in any tax despite moving billions (example Apple in Cork) 2. Small indigenous companies who dont receive much support, run by small families who never really grow to become large companies EU or worldwide, ask anyone outside of Ireland to name an Irish company beside Ryanair! And no Guinness are UK company 3. Zombie companies still clinging on from the haydays of the last boom, supported by taxpayers bailing out the banks, surviving thanks to the inbred gombeenism that is still prevailent despite the largest recession in any of the developed countries since 2007, see this great lecture https://www.youtube.com/watch?v=8LCofepdUzE https://www.youtube.com/watch?v=8LCofepdUzE
  - merrua 13y ago
    Ireland doesnt have sales price, do you mean VAT? Edit. Sorry you have it on brackets on the next line.
    - dcc1 13y ago
      Yes sorry VAT (i called it sales tax for US readers to relate) We have a lowish corporation tax of 12.5% yes paid on company profits, but everything else is very high! For example out of a ~€39000 salary last year after all taxes i was left with €25000, things get rapidly worse from there if you want to move money from your company to yourself, people can check http://www.deloitte.ie/tc/ http://www.deloitte.ie/tc/ for ideas of what income taxes people pay here As a director one could take a company loan (illegal above certain % but dont think anyone checks) but this would be liable to witholding tax of about 20% Capital gains is 33% here. And of course VAT of 23%.. tl.dr: the taxation structure here works great for large corporations who can hire expensive accountants to launder literally billions thru' Ireland to warmer climes BUT for anyone running a normal small business, expect to hand over 20-40% of your earnings and anything left after you pay income taxes for example, is heavily taxed with loads of stealth taxes (tv license, house tax, soon water tax etc etc) and of course 23% on anything you buy (essentials like food aside, some of these have lower VAT tax rate)
alexeisadeski3 13y ago
Whilst I do not wish the hell that is American business regulation on anyone, I am at least happy to see some Europeans realizing that America does in fact have more onerous regulation, all things considered, than nice nations like Denmark. Scott Sumner of Bentley University, in Boston, has written on this topic quite a bit. Sumner, in fact, considers Denmark the most free market oriented non-postage-stamp nation on earth. A sample: On taxes: http://www.themoneyillusion.com/?p=24759 http://www.themoneyillusion.com/?p=24759 On regulation: http://www.themoneyillusion.com/?p=21601 http://www.themoneyillusion.com/?p=21601 On inequality: http://www.themoneyillusion.com/?p=22400 http://www.themoneyillusion.com/?p=22400
- mjolk 13y ago
  >"than nice nations like Denmark." Qualify what you mean by "nice."
  - randallsquared 13y ago
    On the next line, he did: "the most free market oriented non-postage-stamp nation on earth".
    - levosmetalo 13y ago
      What is a postage-stamp nation then?
      - estebank 13y ago
        Liechtenstein http://en.wikipedia.org/wiki/Liechtenstein http://en.wikipedia.org/wiki/Liechtenstein
      - cwp 13y ago
        A very small one.
      - workhere-io 13y ago
        Tiny nations such as Monaco, Liechtenstein, The Vatican, San Marino, Andorra, etc.
yashg 13y ago
How big a threat are patent trolls while incorporating in the US? Companies get sued for scanning and emailing documents!
- teachingaway 13y ago
  Its not incorporation itself that attracts patent trolls. They go after the scent of money. Like, after you announce a round of funding, a troll will suddenly realize you are 'infringing' on their patents.
mamcx 13y ago
My biggest hurle is payments processors. Everything good work in USA (think stripe). So, if not USA, when? That make possible to be in latinamerica but be incorporate elsewhere?
- workhere-io 13y ago
  https://www.braintreepayments.com https://www.braintreepayments.com is just as easy as Stripe to use, and can be used in Denmark and other European countries right now. Stripe is coming to Denmark soon and is already in several other European countries. I don't see the problem?
  - hackerboos 13y ago
    Braintree is actually better for international companies as forex doesn't incur extra charges like it does with Stripe.
  - mamcx 13y ago
    "to be in latinamerica" I'm in a dark corner on the planet on this...
    - workhere-io 13y ago
      http://adyen.com http://adyen.com might work for you.
      - mamcx 13y ago
        The website look truly dated, and they not answer the emails.
beagle3 13y ago
And ... the article doesn't touch on it, but that goes triple on personal tax issues -- especially if you do not sever your ties to your previous states of residence. The US tax code, as evidenced by FBAR and FATCA, assumes that the only purpose of any financial transaction or account outside the US, is to hide money from the IRS. You have to report each and every "account", with contact details at the institution, every year, on two independent forms (similar yet different), as well as every transaction in securities (if you can actually do them anymore - most places won't even let you if they know you are paying taxes in the US). If you are not a US taxpayer already and planning to do anything in the US, be sure to talk to a CPA that specializes in those kinds of things (preferably, one who is also familiar with the treaties and tax code in the country you are moving from). You need to do this both on the business front and the personal front, or you are likely to be seriously and horribly surprised one day.
- ryankask 13y ago
  I moved to the UK a few years ago and I couldn't agree more that the IRS rules and regulations unfairly penalize "average" US citizens that live and operate abroad. FBAR, FATCA and if you start a business, form 5471 and friends. I got some quotes from a few accountants and I will likely have to pay thousands of dollars for assistance just to fill out informational forms and pay (maybe) a few hundred dollars in US taxes.
  - beagle3 13y ago
    I think that's the most ridiculous thing about it: Whether you are an American who moved to a treaty country, or a treaty country resident who moved to the US, it is not likely that you'll have to pay a lot of US taxes if at all. (The treaties I am familiar with are quite reasonable). However, unless you are a tax professional yourself, you are going to be "taxed" by a professional to prepare all those papers that you must file. I know someone who moved to the US, and whose tax filing on one year topped 150 pages of "informational data" despite not having to pay one cent. I have never met a person who is in any way familiar with the US tax code who thinks it is makes any sense or is reasonable. Only people who never had to really deal with it think so.
workhere-io 13y ago
As the article states, Denmark, while having high taxes, is very business-friendly: Very little bureaucracy, almost zero corruption, English-speaking population, relatively cheap apartments ($1,850 per month for a newly constructed two-bedroom apartment in central Copenhagen) and very low expenses of health care and firing people. Also, while wages are generally very high, they're not high compared to Silicon Valley wages, which is an advantage if you want to start a business here. We rank as no. 4 on Forbes' list of Best Countries for Business (http://www.forbes.com/best-countries-for-business/list/ http://www.forbes.com/best-countries-for-business/list/) and as no. 5 on World Banks' Ease of Doing Business list (http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings). So what's bad about doing business in Denmark? The cloudy weather (think UK) and the personal income taxes :) The corporate tax isn't particularly high, though (24%).
- akumen 13y ago
  Very good point. We are in a country that's No.33 on business friendliness list and it shows. More hoops to jump through than there are in Northern Europe or the US. So incorporation in the US was an improvement.
- Systemic33 13y ago
  And god forbid, the 180% registration tax on vehicles (basicly any type of vehicle becomes twice as expensive) PS. Electric vehicles are an exception, making the Tesla very cheap in terms of premium cars (think Mercedes-Benz S class, BMW 7-series)
  - workhere-io 13y ago
    True, but note that public transportation is much better, and riding your bicycle is easier. Denmark has one of the lowest daily commute times in the OECD countries according to the graph on http://www.theatlanticcities.com/commute/2011/10/american-commute-times-so-difficult-to-measure/307/ http://www.theatlanticcities.com/commute/2011/10/american-co... Basicly any type of vehicle becomes twice as expensive No, not vehicles used for business. The high taxes are on personal cars.
brador 13y ago
So where's the optimal location to setup a no-physical-location-required business? I've heard Hong Kong, Singapore, Delaware...any thoughts?
- jzwinck 13y ago
  It depends on what kind of business, and what languages are understood by the people involved.
  - brador 13y ago
    How about token startup: all English speakers, cloud based businesses, sass, no inventory, both business owners US citizens?
    - STRML 13y ago
      There are quite a few of those here in Hong Kong - the corporate and personal tax rates are quite friendly, and capital gains/dividends are not taxed at all. There are quite a few ways to keep most of your money here, and the regulations are simple. That said, while the technical community is growing, it is still very small. Hiring can be quite difficult and you have to prove to the government that you worked hard to find a local before they will let you hire an expat. But it can be done.
    - dublinben 13y ago
      I'm no expert, but Delaware is likely going to be a strong contender. It's the most popular place to incorporate in the US for a number of reasons.
- dragonbonheur 13y ago
  Mauritius: the best place to do business in all of Africa. Good connectivity, great tax rates, no corporate gains tax, awesome beaches. http://www.investmauritius.com/ http://www.investmauritius.com/
  - 13y ago
tempodox 13y ago
The requested URL /2014/03/12/why-you-might-not-want-to-incorporate-in-the-usa/ was not found on this server.
darksim905 13y ago
This article is funny. Makes it sound like the USA is all complex, in the stone age, etc. I lost it at the green card part/to work in the USA was hilarious as the USA grants so many of those it isn't even funny. That's the whole point of people in this country complaining that foreigners take our jobs.
gopi 13y ago
Hmm, Seems the Google Cache version of this article is full of viagara links? - http://webcache.googleusercontent.com/search?q=cache:xBaBObiy8FMJ:thenitai.com/2014/03/12/why-you-might-not-want-to-incorporate-in-the-usa/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:xBaBObi...
- nitai 13y ago
  Cleaned it up. Should be fine by now. But still working on it.
  - gopi 13y ago
    What was the problem?
    - nitai 13y ago
      It looked like someone got access through a plugin to the htaccess file and some db entries. This article helped (http://blog.sucuri.net/2010/07/understanding-and-cleaning-the-pharma-hack-on-wordpress.html http://blog.sucuri.net/2010/07/understanding-and-cleaning-th...) though I only found one db entry. However fixed the htaccess file.
      - aiiane 13y ago
        Unfortunately there's still stuff there when viewed from a Google IP - http://i.imgur.com/59qW1EM.png http://i.imgur.com/59qW1EM.png (Source: I'm currently at my desk, at Google.)
        nitai 13y ago
        Done just about everything and can't get get it out. Funny is that it only exists in this one article. Rest of the site is ok.
  - nitai 13y ago
    Ok, wasn't good before. Now completely reinstalled WP and all good again. Sorry guys.
philiphodgen 13y ago
I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't want to be -- AMA.
- STRML 13y ago
  It's something I've considered. As a now resident of Hong Kong, I was surprised - and delighted - with how incredibly easy it was to handle my taxes. Front-to-back, I could do the whole thing, including payment, in less than an hour and understand the whole system. Unfortunately, it is nowhere near so simple in the US, and they have no regard for expats. The US treats its expats worse than any other country in the world. The forms are atrocious. And I could go on about being taxed heavily for services I don't use. Unfortunately, relinquishing citizenship is just not possible for most, including me. With family and obligations, it's just not realistic. But it is appealing.
  - philiphodgen 13y ago
    I think it is Clay Shirky who said something to the effect that bureaucracies have every incentive to not solve problems. Otherwise the reason for the bureaucrats' existence would cease. We won't see solutions from the US government. Ever. Yes the tax stuff is painful but as in your case there are reasons to keep the citizenship.
    - M2Ys4U 13y ago
      The bureaucracy expands to meet the expanding needs of the bureaucracy.
    - bayesianhorse 13y ago
      Actually bureaucracy was invented to battle corruption. But back then you really couldn't call it corruption, because without bureaucracy there were no rules or laws that could be faithfully executed or their faithful execution monitored. Kleptocracy and outright feudalism was the norm. So in essence, without bureaucracy there is no corruption just as there is no shadow without the light. Whenever bureaucracy has to be simplified, keep in mind that the potential for abuse usually increases unless the legislators take very much care.
slowdown 13y ago
Call me stupid, but the only reason why I incorporated an LLC in the States is because I wanted get access to the Stripe API for production (yeah, it's a huge compliment to the Stripe guys ;) The payment gateways in my country are shit..Also, the US account is only used for the payment gateway, all the IP of my software is owned by the company in my home country. You know, just so someone doesn't sue me for rounded corners and having anchor links on my webpage, stuff like that. So far so good, I just report EFI (Effectively connected income) to the IRS, which means only the businesses that I do with USA, all signups from other countries aren't taxed by the IRS believe.
- nitai 13y ago
  I hear you. The payment gateways in DK simply suck. However, Braintree and Stripe are now all over Europe too.
- beachstartup 13y ago
  > incorporated an LLC in the States LLC aren't incorporated, because they aren't corporations. they're companies. there's a big difference.
cbp 13y ago
So if I'm neither american or european. Is it actually easier for me to move to europe, get a visa there and start an european company than an american one?
- tormeh 13y ago
  Probably easier in Europe, is my guess. Few first-world countries are worse than the US. Note that the EU is not a uniform place, so you need to do a bit of research on which country you want. As noted previously, the Scandinavian countries are good places to start. They all speak English as well, knowledge of the relevant Scandinavian language is not required for basically anything. I would assume the same is true for Switzerland and The Netherlands. Think twice before going for Germany (a popular choice for many good reasons not including bureaucracy) and don't even consider the southern countries.
karangoeluw 13y ago
Any ideas on how it would work if I inc in India, but operate in the US (I'm in the US on F1 visa)
hartator 13y ago
I had a similar experience. I run a france-based company specialized in online advertising and I wanted to expand our activities to the US, who does not? Obviously France is way worst than Denmark and the US for business, tax and work laws, so I can't really relate for the tax part. I relate mostly for the visa stuff. What I am getting from the OP post, Nitai was doing L1-A. I have been doing L1-A too. (I recognized the list of documents scanned the OP has posted! :) ) Same hassle, same huge amount of documents needed, we didn't give up though after the first request for evidences but the requirements are kind of high so we finally didn't get it. US now sucks for immigration and it seems to worsen. BUT, Europe seems harder too than before for immigration. It seems a tendency that in the world with Internet, cheap transportation and desire for better file, people immigrate more and countries make stronger bureaucratic walls. That's sad. :'(
- dusanbab 13y ago
  Sorry to hear L-1 was unsuccessful for you. Care to share what the eventual denial reason was?
wathars 13y ago
So seeing all these problems, how are YC companies solving them or better yet how do they handle the whole process to avoid this? PG said they are incorporating in Delaware but their offices most probably are in CA. Shouldn't this be a problem being in different states? Or it applies only to foreign related companies? Thanks.
- ghaff 13y ago
  It's pretty common to incorporate in Delaware even if you have little or no physical nexus there, for a variety of reasons: http://www.newsworks.org/index.php/local/brandywine-to-broad/18206-why-do-so-many-corporations-choose-to-incorporate-in-delaware http://www.newsworks.org/index.php/local/brandywine-to-broad.... This probably applies more to large companies though. I imagine there's some overhead relative to incorporating locally if you're a small business. What constitutes a physical nexus can be a bit hard to define at the margins. (See e.g. Amazon's fights with a number of states.) But it usually means you're selling something there as opposed to just having employees. A physical nexus usually just relates to collecting sales taxes though. I've never heard of having to incorporate in additional states although maybe that's sometimes the case. (I know that the small NH company I used to work for certainly didn't incorporate in additional states when they hired non-NH residents. They DID have to handle state withholding on payroll but that sort of thing is handled pretty transparently by payroll processing companies like ADP.)
chetanahuja 13y ago
As a US based startup founder, this was an illuminating read. And this part in particualar is brilliant: "I immediately sent an email, to nobody in particular, asking the NSA to get those tax figures themselves and pass them on to the IRS"
EGreg 13y ago
"In Europe, you can live in whichever country you like. Most countries here seem happy to receive taxes." I think the analogy is the same for states in the US - yo can live in any of the states and they'd be happy to collect your taxes. When your business has a substantial business presence in a particular state, it expects you to start reporting there. States in the USA are like countries in the EU, except they all have the same language and restaurant chains.
dude3 13y ago
Denmark's defense budget is really small 3.2 % of government spending vs 18.2% for the United States. Therefore, Denmark has much more cash to spend and is a richer nation relying on US for defense.
- vacri 13y ago
  The US gets considerable economic and political advantages from that defence outlay. It's quite normal to park a fleet outside someone's capital (in international waters) as a show of political force. It's still a ridiculously high percentage, but the concept of the World Cop needs to be put to rest. It's more like World Vigilante Strongman.
bayesianhorse 13y ago
Here in the EU the EU has a reputation for being extremely bureaucratic and hard to fathom. As the writer points out, you ain't seen nothing. Just imagine 28 members plus privileged partners agreeing on regulations for international trade through bilateral agreements. And probably every policy that is less bureaucratic is either quite small or has bigger problems with corruption.
runewell 13y ago
Yeah, our tax/employment/visa system sucks, although European rumors of our impending demise are greatly exaggerated. If you're not from the USA it is understandable that you may not be aware of the nightmare that is our state legislation. Our states are like grumpy siblings in the big dysfunctional family we call our nation. They each have their own method of handling taxation and employment and each have their own irrational set of processes. As a nation we could certainly improve the way we handle such matters.
esbranson 13y ago
Riiiight. Because you can do the same in the European Union and get less paperwork, in one language? How do you comply with Spanish and Italian employment requirements, by registering and filing paperwork with Danish employment authorities, in Danish? That's hogwash.
a3n 13y ago
> We sent endless amounts of documents, translated documents, notarized documents and copies of this and that. ... a detailed list of all transactions from our Danish bank accounts for the past 3 years. ... our lease agreement for the office. ... pictures of the office from the outside. in Denmark and the USA. ... pictures of the inside – and we needed to make sure that the pictures had employees in them. We had to get the main lease agreement from our lessor to prove that they could actually sublease to us. > ... We needed to explain, why we needed the space. We needed to explain, why we didn’t need more. Then why we didn’t need less. Then we had to send copies of all Nitai’s diplomas. Then we had to explain, why nobody else could run the operation in the USA for us. I've read that we do this shit to make sure that people don't come here and take advantage of the business and benefit paradise that we've created. I have this picture of the US as a 1970s asshole dressed in a leisure suit, wide collars and bell bottoms and a vest, who think's he's God's gift to women, where actually everyone is laughing at him for the clown that he his. And he rarely gets laid, despite bragging to the contrary.
dleskov 13y ago
Solely from the taxation perspective, my home country now looks surprisingly friendly for small IT businesses. We have a so called Simplified Taxation System for small businesses (not just IT.) Basically, as a company we can choose to pay either 6% of annual revenue, or the bigger of 15% of profit and 1% of revenue. That's it, no VAT or anything. As far as wage taxes go, there is a 20% Unified Social Tax charged on the wage amount before income tax. Moreover, there is an annual cap on that tax, which a senior developer in a big city is likely to hit as early as mid-year. Otherwise, small IT businesses can qualify to lower that tax to 14%. All that's left after that is the income tax - 13% flat. Which country you would ask? Russia. That's why I wrote "Solely from the taxation perspective" in the opening statement...
elf25 13y ago
why are there a lot of links in this article referencing cialis? Site been hacked?
clouds 13y ago
You can't just buy 'Murica with money!
dusanbab 13y ago
I think the frustration with the various state differences is less interesting, to be honest. That's part of what makes the US great IMO - states have to compete with each other as people and businesses can vote with their feet. The difficulty you encountered during what I would have thought should be a routine L-1 is most concerning & perplexing. I really never understand this point - more than a million new green cards were issued in 2012 [1] but you can't even easily get a temporary work visa. To make matters worse every year 50K new green cards are issued to completely random people, I mean it's a lottery after all [2]. Why does the US want to hand out residency en masse and then stop people who can create jobs and grow the economy? As an outsider looking in I would think you're getting the worst of both outcomes. I don't believe there is a good answer. Regrettably decision making has become so paralyzed in the US Congress and Senate and the whole machine only exists to serve itself. [1] - http://www.voanews.com/content/us-issues-million-green-cards-and-naturalizes-757000-in-2012/1627155.html http://www.voanews.com/content/us-issues-million-green-cards... [2] - http://en.wikipedia.org/wiki/Diversity_Immigrant_Visa http://en.wikipedia.org/wiki/Diversity_Immigrant_Visa Edit: references
deleted 13y ago
[deleted]

386 points by nitai 13y ago

Spot-on. Also, don't get me started on mobile internet and broadband. Every time I go to America it's like going to a 3rd world country.

mjolk 13y ago
Yes, American cities are literally akin to 3rd world countries.
- TazeTSchnitzel 13y ago
  Some of them, yes. The poverty...
- aet 13y ago
  Proof?
digitalengineer 13y ago
America is big and as different as Europe. Even though most Americans speak English, it's not a uniform country as us Europeans think. But don't confuse the people with the state. They're not the same. The Americans I met were generally quite nice and willing to help an (obvious) tourist out. Bureaucrats? They thrive in chaos.
- Dewie 13y ago
  > and as different as Europe. How? I just have a hard time imagining how a place with dozens of languages and cultures (I think that cultures with very different languages are likely to be very different from each other) and all of that can be less varied than a place like the US.
  - workhere-io 13y ago
    Exactly. The difference between NYC and a rural Mississippian town may seem big, but it's nothing compared to the difference between, say, Copenhagen and a rural Spanish town.
    - digitalengineer 13y ago
      No, it's not. America was formed by European immigrants remember? Each sought out their own place. The Bayou, NY City, Texas, North Dakota, San Fransico… All with their own culture. This struck me as I drove from New Orleans through Alabama. I couldn't even understand the Alabama-english..
      - workhere-io 13y ago
        I couldn't even understand the Alabama-english.. They still speak English, though, just like the vast majority of Americans. Europe has a huge number of different languages, and especially in Southern Europe it's not uncommon for even young people to not speak any English at all - meaning there's not even a common language that all Europeans speak. I'm certainly not saying that all of US is the same. I'm saying that the differences are smaller than the differences you see in Europe. And I'm saying that as someone who've lived in the US and Europe and visited a great number of European countries.
  - Glyptodon 13y ago
    I feel more like I'm in a foreign country in Mississippi than I do when in Germany. And I'm an American who doesn't even speak German.
kartikkumar 13y ago
By definition the US can't be like a 3rd world country (hint: 3rd world country is not what I think you mean to say [1]) [1] http://en.wikipedia.org/wiki/Third_World http://en.wikipedia.org/wiki/Third_World
- Orangeair 13y ago
  Since we're smugly throwing around Wikipedia articles: https://en.wikipedia.org/wiki/Simile https://en.wikipedia.org/wiki/Simile
  - kartikkumar 13y ago
    Had you seen my body language when I posted the comment, you might not have decided that it was made out of any sense of smugness. NOTE: Since my comments in this thread were downvoted, implying that they were not taken in the spirit they were intended, my contribution to this thread should be considered obsolete. I'll leave my original comments in place to serve as a reminder to myself to be careful about what I say around here in future. [OBSOLETE]
    - arjie 13y ago
      No need to play the martyr. It's a tangential issue. If you brought it up in conversation people would say something like "ha ha yeah, you know what I mean" and continue discussing the original topic. There it quickly dissipates because voice is quickly damped but here it is just noise that takes time to be damped out.
      - kartikkumar 13y ago
        I absolutely am not playing the martyr. I raised an issue that I felt was of importance. The fact that others disagree is something I'm willing to live with, but it by no means sways me.
- sourceless 13y ago
  First, no, key word being 'like' - it's a comparison. Second, yes, you're right, but no need to be a pedant, the meaning original commenter employed is widely accepted and understood.
josefresco 13y ago
Care to fill us in with details to go along with your snark? Which part of 3rd world America did you visit? Anecdotally I enjoy decently fast broadband and mobile data coverage.
- dijit 13y ago
  I went to NYC/Philly/NJ last summer.. T-Mobile barely exists out of the city itself, and yeah, speeds are abysmal. $50 for a sim card too... Anecdotally I went to the Swedish countryside in january; where I got 16Mb/s over 3g. (and it was free because: EU roaming is free on my carrier)
  - josefresco 13y ago
    To be fair, you're talking about a distant 4th place provider that most in the US understand will not work great outside of major population areas. I would understand if you had issues with one of the big two (VZ/ATT). Also to be fair, Sweden is about the size of California.
    - samastur 13y ago
      But with far fewer people living there.
  - wagerlabs 13y ago
    What carrier offers free EU roaming?
    - nitai 13y ago
      T-Mobile!
    - dijit 13y ago
      3 (Hutchinson) also free 4G with no data caps.. they might be slower than the others but they own their own cell towers and offer the best deals.
cubancigar11 13y ago
I just want to pitch in saying that India has faster and cheaper internet than San Jose. Sad, true and 'WTF' unbelievable.
apa-sl 13y ago
True. I was VERY surprised by the quality of mobile internet (and mobile phone connection in general) when I was in San Francisco and around Silicon Valley). Here in Poland I've got 4g connection practically everywhere in bigger cities (15-20mbits download 3-6mbits upload, ping ~50-70ms tested several times) and in SF I was sometimes struggling to get some decent signal...

yardie 13y ago

* You could have saved yourself a load of headache and incorporate in Delaware. * If you don't have a physical office in each state you don't have a presence there. You shouldn't have needed to pay sales tax. Amazon only pays taxes in states they have a physical presence (warehouse, office, callcenter).

anemitz 13y ago
Yup, I'm skeptical of the OP's tax advice. With the right direction this should have been a very easy transition, especially with what looks like a SaaS business.
clarkevans 13y ago
Hiring an employee in another state may create a nexus in that state, and this may require you to file income tax in that state. For example, if you incorporate in Delaware, and then hire someone for >$50k in Texas, you may have to file company income taxes in Texas. Not that Texas income attributed to your company (or partners) will be much, but, computing and filing is best done by hiring an accountant.
- davidw 13y ago
  I'm not sure about EU law - but if you have a company in Denmark, and want to hire someone who works in Portugal as a permanent employee, and not a contractor, what do you need to do?
  - Spearchucker 13y ago
    Not sure about Portugal but suspect it's not much different than other European countries. When I did a freelance job for Nokia in Berlin I effectively worked for a Swiss company, which sent me off to Berlin. I registered myself in Switzerland, got a social security number there, and paid my income tax in Germany. As far as I understand it, Nokia paid the Swiss company, who paid their tax in Switzerland. Much as you'd expect - you (be it an organization or an individual) pay tax in the country in which you're situated.

oesmith 13y ago

Is this a test of whether anyone actually reads these articles? Every 3rd paragraph has a viagra spam-link inserted in the middle of a sentence.

rwallace 13y ago
Not for me it doesn't. Try running a virus scan on your machine?
- romanovcode 13y ago
  But.. ..but he's > reading on an iPad, so the risk of system infection is negligible.
Gomer1800 13y ago
I think you need to run some anti-spy ware software on your computer. I don't see any ads of that sort on the blog page.
darklajid 13y ago
> Is this a test of whether anyone actually reads these articles? Every 3rd paragraph has a viagra spam-link inserted in the middle of a sentence. Eh.. What? Are you commenting on the wrong article by chance? I don't see any of that. If you're even remotely serious I'd take a good look at your machine/system.
- oesmith 13y ago
  I'm reading on an iPad, so the risk of system infection is negligible. However, I just switched on my home VPN and the links disappeared. Time to talk to someone in netops, methinks.
  - oesmith 13y ago
    Looks like a hacked wordpress install. http://wp.smashingmagazine.com/2012/10/09/four-malware-infections-wordpress/#pharma-hack http://wp.smashingmagazine.com/2012/10/09/four-malware-infec...

xvirk 13y ago

whenever someone is boasting about how the scandinavia is a paradise I'd suggest reading this article in Guardian http://www.theguardian.com/world/2014/jan/27/scandinavian-miracle-brutal-truth-denmark-norway-sweden http://www.theguardian.com/world/2014/jan/27/scandinavian-mi...

a_bonobo 13y ago
There's a good follow-up to your article, where 5 writers answer: http://www.theguardian.com/world/2014/feb/05/scandinavian-miracle-denmark-finland-iceland-norway-sweden http://www.theguardian.com/world/2014/feb/05/scandinavian-mi...
sebcat 13y ago
I'm apparently not supposed to cry at funerals and I'm less of a man because of my nationality. The more you know...
vidarh 13y ago
If that's the worst he managed to come up with, I guess we're doing pretty ok.
arethuza 13y ago
I think this comment on the article sums it up nicely: "I have this feeling that Michael Booth was simply trying to respond to the highly selective, often fallacious Nordic image currently being peddled in the UK (with the Guardian as the worst offender) with an article employing the same kind of distortions. A rhetorical device, if you like."

mjolk 13y ago

> All of a sudden, we were forced to figure out, how much we actually sold in each of those states, where we hired people Not to be offensive, but differences in state rules should have been expected, given the name of the country. How hard do you think it would be to get a random sample of 50 people to decide on a movie? Now swap people with territories and movie with governance. This blog post is just ranting and whinging that some paperwork had to be done when starting a business on foreign soil. I worry about the quality of Razuna as a product if attention to filling out a form is a huge ask.

shadowmint 13y ago
oh come on, if you're going to be a jerk just do it, don't fill your post with trite crap like 'not to be offensive, but...'
- mjolk 13y ago
  It was softening it so the reader would know that I'm not trying to be obtuse. Part of language is communicating meaning, not just trying to get a string of words together. None of that was being a jerk.
mcv 13y ago
It's not just ranting about some paperwork. It's pointing out that the paperwork is far worse than in the EU (which is far less unified than the US, but at least the labour market is pretty transparent), and actively discourages companies from incorporating in the US. The US is hurting its own bottomline here. Now countries shouldn't make it too attractive for companies either; then you get a race to the bottom where companies get tax exemptions just for creating a handful of extra jobs. And this absolutely happens; I believe there are some European countries where taxes for foreign companies are ridiculously low. So the EU isn't doing everything right either. But shouldn't there be some sensible middle ground where it's easy to open up shop in a different country, without having to jump through insane hoops, while paying a normal, sane amount of tax?
- davidw 13y ago

dan_bk 13y ago

> In the US, however, it’s like being in the 70’s in Denmark. In a country, where the NSA supposedly reads all my email, knows how much money I make, what I ate for breakfast and what color underwear I prefer, I cannot report electronically to the authorities! Well, the plan was to keep the incredible advancements in (mass surveillance) technology secret from the citizens, in order not to be stopped.

vixen99 13y ago
'I cannot report electronically to the authorities!' - I am amazed. In the UK, individuals and virtually all companies and organisations must file their Company Tax Returns online.

davidw 13y ago

It's indubitable that the nordic countries are well-run places. Occasionally though, the amount of "smug" they export is a bit on the high side.

tomelders 13y ago
Is being frustrated and correct the same as being smug?
- davidw 13y ago
  Smug doesn't mean wrong, it means being a bit loud proud about being right.
  - chris_wot 13y ago
    Sort of like this: https://www.youtube.com/watch?v=JD9d0ZrBnLE https://www.youtube.com/watch?v=JD9d0ZrBnLE
deleted 13y ago
[deleted]
masklinn 13y ago
> It's indubitable that the nordic countries are well-run places. Note that the online stuff isn't limited to nordic countries, even in France (a country which nobody would say is well-run) you've been able (and encouraged) to fill taxes online for a decade.

ari_ 13y ago

A lot of this could have been solved by (pick a few): 1. forming a 1099 relationship with your devs if they weren't working full time. 2.Using a Personal Employment Organization. 3. Doing your research before blindly incorporating in Texas. We could debate for ages the merits of the state and federal system, but if you were going down this whole road of opening a company in another country and hiring there, then it would have been useful to talk to a tax lawyer and an accountant who are familiar with the issues involved. TLDR;Europeans whining about things they didn't research, again.

raverbashing 13y ago
Researching should have been the job of the CPA
nitai 13y ago
Who said we didn't get professional lawyers and CPA's?
- ari_ 13y ago
  if you did then please name them so I know not to use them. Hiring employees in other states should be bread and butter for any tax accountant working with businesses.
  - scott_karana 13y ago
    As I read the article, hiring the employees wasn't the issue at all. Nitai was just aghast that the laws were so strange.

CalRobert 13y ago

I really don't understand this fetishization of the US for business. If you want to be sued into utter oblivion and live on the streets with a nonexistent social safety net I guess it's all right. I'm in Ireland and if you want to start a real business (not some rinkydink app that mysteriously needs €30 million in funding so you can fail more spectacularly) the climate seems quite good.

dcc1 13y ago
As someone who has been in business here since 2007, i would stop you right there! We have our share of a bureaucracy (example: took 6 months to get reply from Revenue as to what VAT to pay or not on sales of hosting packages, 23% sales tax (VAT) on customers from EU-28 was the answer eventually) and you quickly realise there are 3 types of companies here: 1. Large corporations setting up shops to launder money onto somewhere warmer in Caribbean, these often dont hire many people or pay much in any tax despite moving billions (example Apple in Cork) 2. Small indigenous companies who dont receive much support, run by small families who never really grow to become large companies EU or worldwide, ask anyone outside of Ireland to name an Irish company beside Ryanair! And no Guinness are UK company 3. Zombie companies still clinging on from the haydays of the last boom, supported by taxpayers bailing out the banks, surviving thanks to the inbred gombeenism that is still prevailent despite the largest recession in any of the developed countries since 2007, see this great lecture https://www.youtube.com/watch?v=8LCofepdUzE https://www.youtube.com/watch?v=8LCofepdUzE
- merrua 13y ago
  Ireland doesnt have sales price, do you mean VAT? Edit. Sorry you have it on brackets on the next line.
  - dcc1 13y ago
    Yes sorry VAT (i called it sales tax for US readers to relate) We have a lowish corporation tax of 12.5% yes paid on company profits, but everything else is very high! For example out of a ~€39000 salary last year after all taxes i was left with €25000, things get rapidly worse from there if you want to move money from your company to yourself, people can check http://www.deloitte.ie/tc/ http://www.deloitte.ie/tc/ for ideas of what income taxes people pay here As a director one could take a company loan (illegal above certain % but dont think anyone checks) but this would be liable to witholding tax of about 20% Capital gains is 33% here. And of course VAT of 23%.. tl.dr: the taxation structure here works great for large corporations who can hire expensive accountants to launder literally billions thru' Ireland to warmer climes BUT for anyone running a normal small business, expect to hand over 20-40% of your earnings and anything left after you pay income taxes for example, is heavily taxed with loads of stealth taxes (tv license, house tax, soon water tax etc etc) and of course 23% on anything you buy (essentials like food aside, some of these have lower VAT tax rate)

alexeisadeski3 13y ago

Whilst I do not wish the hell that is American business regulation on anyone, I am at least happy to see some Europeans realizing that America does in fact have more onerous regulation, all things considered, than nice nations like Denmark. Scott Sumner of Bentley University, in Boston, has written on this topic quite a bit. Sumner, in fact, considers Denmark the most free market oriented non-postage-stamp nation on earth. A sample: On taxes: http://www.themoneyillusion.com/?p=24759 http://www.themoneyillusion.com/?p=24759 On regulation: http://www.themoneyillusion.com/?p=21601 http://www.themoneyillusion.com/?p=21601 On inequality: http://www.themoneyillusion.com/?p=22400 http://www.themoneyillusion.com/?p=22400

mjolk 13y ago
>"than nice nations like Denmark." Qualify what you mean by "nice."
- randallsquared 13y ago
  On the next line, he did: "the most free market oriented non-postage-stamp nation on earth".
  - levosmetalo 13y ago
    What is a postage-stamp nation then?
    - estebank 13y ago
      Liechtenstein http://en.wikipedia.org/wiki/Liechtenstein http://en.wikipedia.org/wiki/Liechtenstein
    - cwp 13y ago
      A very small one.
    - workhere-io 13y ago
      Tiny nations such as Monaco, Liechtenstein, The Vatican, San Marino, Andorra, etc.

yashg 13y ago

How big a threat are patent trolls while incorporating in the US? Companies get sued for scanning and emailing documents!

teachingaway 13y ago
Its not incorporation itself that attracts patent trolls. They go after the scent of money. Like, after you announce a round of funding, a troll will suddenly realize you are 'infringing' on their patents.

mamcx 13y ago

My biggest hurle is payments processors. Everything good work in USA (think stripe). So, if not USA, when? That make possible to be in latinamerica but be incorporate elsewhere?

workhere-io 13y ago
https://www.braintreepayments.com https://www.braintreepayments.com is just as easy as Stripe to use, and can be used in Denmark and other European countries right now. Stripe is coming to Denmark soon and is already in several other European countries. I don't see the problem?
- hackerboos 13y ago
  Braintree is actually better for international companies as forex doesn't incur extra charges like it does with Stripe.
- mamcx 13y ago
  "to be in latinamerica" I'm in a dark corner on the planet on this...
  - workhere-io 13y ago
    http://adyen.com http://adyen.com might work for you.
    - mamcx 13y ago
      The website look truly dated, and they not answer the emails.

beagle3 13y ago

And ... the article doesn't touch on it, but that goes triple on personal tax issues -- especially if you do not sever your ties to your previous states of residence. The US tax code, as evidenced by FBAR and FATCA, assumes that the only purpose of any financial transaction or account outside the US, is to hide money from the IRS. You have to report each and every "account", with contact details at the institution, every year, on two independent forms (similar yet different), as well as every transaction in securities (if you can actually do them anymore - most places won't even let you if they know you are paying taxes in the US). If you are not a US taxpayer already and planning to do anything in the US, be sure to talk to a CPA that specializes in those kinds of things (preferably, one who is also familiar with the treaties and tax code in the country you are moving from). You need to do this both on the business front and the personal front, or you are likely to be seriously and horribly surprised one day.

ryankask 13y ago
I moved to the UK a few years ago and I couldn't agree more that the IRS rules and regulations unfairly penalize "average" US citizens that live and operate abroad. FBAR, FATCA and if you start a business, form 5471 and friends. I got some quotes from a few accountants and I will likely have to pay thousands of dollars for assistance just to fill out informational forms and pay (maybe) a few hundred dollars in US taxes.
- beagle3 13y ago
  I think that's the most ridiculous thing about it: Whether you are an American who moved to a treaty country, or a treaty country resident who moved to the US, it is not likely that you'll have to pay a lot of US taxes if at all. (The treaties I am familiar with are quite reasonable). However, unless you are a tax professional yourself, you are going to be "taxed" by a professional to prepare all those papers that you must file. I know someone who moved to the US, and whose tax filing on one year topped 150 pages of "informational data" despite not having to pay one cent. I have never met a person who is in any way familiar with the US tax code who thinks it is makes any sense or is reasonable. Only people who never had to really deal with it think so.

workhere-io 13y ago

As the article states, Denmark, while having high taxes, is very business-friendly: Very little bureaucracy, almost zero corruption, English-speaking population, relatively cheap apartments ($1,850 per month for a newly constructed two-bedroom apartment in central Copenhagen) and very low expenses of health care and firing people. Also, while wages are generally very high, they're not high compared to Silicon Valley wages, which is an advantage if you want to start a business here. We rank as no. 4 on Forbes' list of Best Countries for Business (http://www.forbes.com/best-countries-for-business/list/ http://www.forbes.com/best-countries-for-business/list/) and as no. 5 on World Banks' Ease of Doing Business list (http://www.doingbusiness.org/rankings http://www.doingbusiness.org/rankings). So what's bad about doing business in Denmark? The cloudy weather (think UK) and the personal income taxes :) The corporate tax isn't particularly high, though (24%).

akumen 13y ago
Very good point. We are in a country that's No.33 on business friendliness list and it shows. More hoops to jump through than there are in Northern Europe or the US. So incorporation in the US was an improvement.
Systemic33 13y ago
And god forbid, the 180% registration tax on vehicles (basicly any type of vehicle becomes twice as expensive) PS. Electric vehicles are an exception, making the Tesla very cheap in terms of premium cars (think Mercedes-Benz S class, BMW 7-series)
- workhere-io 13y ago
  True, but note that public transportation is much better, and riding your bicycle is easier. Denmark has one of the lowest daily commute times in the OECD countries according to the graph on http://www.theatlanticcities.com/commute/2011/10/american-commute-times-so-difficult-to-measure/307/ http://www.theatlanticcities.com/commute/2011/10/american-co... Basicly any type of vehicle becomes twice as expensive No, not vehicles used for business. The high taxes are on personal cars.

brador 13y ago

So where's the optimal location to setup a no-physical-location-required business? I've heard Hong Kong, Singapore, Delaware...any thoughts?

jzwinck 13y ago
It depends on what kind of business, and what languages are understood by the people involved.
- brador 13y ago
  How about token startup: all English speakers, cloud based businesses, sass, no inventory, both business owners US citizens?
  - STRML 13y ago
    There are quite a few of those here in Hong Kong - the corporate and personal tax rates are quite friendly, and capital gains/dividends are not taxed at all. There are quite a few ways to keep most of your money here, and the regulations are simple. That said, while the technical community is growing, it is still very small. Hiring can be quite difficult and you have to prove to the government that you worked hard to find a local before they will let you hire an expat. But it can be done.
  - dublinben 13y ago
    I'm no expert, but Delaware is likely going to be a strong contender. It's the most popular place to incorporate in the US for a number of reasons.
dragonbonheur 13y ago
Mauritius: the best place to do business in all of Africa. Good connectivity, great tax rates, no corporate gains tax, awesome beaches. http://www.investmauritius.com/ http://www.investmauritius.com/
- 13y ago

tempodox 13y ago

The requested URL /2014/03/12/why-you-might-not-want-to-incorporate-in-the-usa/ was not found on this server.

darksim905 13y ago

This article is funny. Makes it sound like the USA is all complex, in the stone age, etc. I lost it at the green card part/to work in the USA was hilarious as the USA grants so many of those it isn't even funny. That's the whole point of people in this country complaining that foreigners take our jobs.

gopi 13y ago

Hmm, Seems the Google Cache version of this article is full of viagara links? - http://webcache.googleusercontent.com/search?q=cache:xBaBObiy8FMJ:thenitai.com/2014/03/12/why-you-might-not-want-to-incorporate-in-the-usa/+&cd=1&hl=en&ct=clnk&gl=us http://webcache.googleusercontent.com/search?q=cache:xBaBObi...

nitai 13y ago
Cleaned it up. Should be fine by now. But still working on it.
- gopi 13y ago
  What was the problem?
  - nitai 13y ago
    It looked like someone got access through a plugin to the htaccess file and some db entries. This article helped (http://blog.sucuri.net/2010/07/understanding-and-cleaning-the-pharma-hack-on-wordpress.html http://blog.sucuri.net/2010/07/understanding-and-cleaning-th...) though I only found one db entry. However fixed the htaccess file.
    - aiiane 13y ago
      Unfortunately there's still stuff there when viewed from a Google IP - http://i.imgur.com/59qW1EM.png http://i.imgur.com/59qW1EM.png (Source: I'm currently at my desk, at Google.)
      - nitai 13y ago
        Done just about everything and can't get get it out. Funny is that it only exists in this one article. Rest of the site is ok.
- nitai 13y ago
  Ok, wasn't good before. Now completely reinstalled WP and all good again. Sorry guys.

philiphodgen 13y ago

I am an international tax lawyer and this stuff is my day job. Consider this comment an AMA. For smaller companies, the bureaucratic cost of international tax systems is insane. For US citizens abroad ... I will just say that my biggest area of growth is helping people shed their US citizenship and tax paperwork/penalties is the number 1 reason. Anyway. If you are in a position like The One and Only Netai -- or don't want to be -- AMA.

STRML 13y ago
It's something I've considered. As a now resident of Hong Kong, I was surprised - and delighted - with how incredibly easy it was to handle my taxes. Front-to-back, I could do the whole thing, including payment, in less than an hour and understand the whole system. Unfortunately, it is nowhere near so simple in the US, and they have no regard for expats. The US treats its expats worse than any other country in the world. The forms are atrocious. And I could go on about being taxed heavily for services I don't use. Unfortunately, relinquishing citizenship is just not possible for most, including me. With family and obligations, it's just not realistic. But it is appealing.
- philiphodgen 13y ago
  I think it is Clay Shirky who said something to the effect that bureaucracies have every incentive to not solve problems. Otherwise the reason for the bureaucrats' existence would cease. We won't see solutions from the US government. Ever. Yes the tax stuff is painful but as in your case there are reasons to keep the citizenship.
  - M2Ys4U 13y ago
    The bureaucracy expands to meet the expanding needs of the bureaucracy.
  - bayesianhorse 13y ago
    Actually bureaucracy was invented to battle corruption. But back then you really couldn't call it corruption, because without bureaucracy there were no rules or laws that could be faithfully executed or their faithful execution monitored. Kleptocracy and outright feudalism was the norm. So in essence, without bureaucracy there is no corruption just as there is no shadow without the light. Whenever bureaucracy has to be simplified, keep in mind that the potential for abuse usually increases unless the legislators take very much care.

slowdown 13y ago

Call me stupid, but the only reason why I incorporated an LLC in the States is because I wanted get access to the Stripe API for production (yeah, it's a huge compliment to the Stripe guys ;) The payment gateways in my country are shit..Also, the US account is only used for the payment gateway, all the IP of my software is owned by the company in my home country. You know, just so someone doesn't sue me for rounded corners and having anchor links on my webpage, stuff like that. So far so good, I just report EFI (Effectively connected income) to the IRS, which means only the businesses that I do with USA, all signups from other countries aren't taxed by the IRS believe.

nitai 13y ago
I hear you. The payment gateways in DK simply suck. However, Braintree and Stripe are now all over Europe too.
beachstartup 13y ago
> incorporated an LLC in the States LLC aren't incorporated, because they aren't corporations. they're companies. there's a big difference.

cbp 13y ago

So if I'm neither american or european. Is it actually easier for me to move to europe, get a visa there and start an european company than an american one?

tormeh 13y ago
Probably easier in Europe, is my guess. Few first-world countries are worse than the US. Note that the EU is not a uniform place, so you need to do a bit of research on which country you want. As noted previously, the Scandinavian countries are good places to start. They all speak English as well, knowledge of the relevant Scandinavian language is not required for basically anything. I would assume the same is true for Switzerland and The Netherlands. Think twice before going for Germany (a popular choice for many good reasons not including bureaucracy) and don't even consider the southern countries.

karangoeluw 13y ago

Any ideas on how it would work if I inc in India, but operate in the US (I'm in the US on F1 visa)

hartator 13y ago

I had a similar experience. I run a france-based company specialized in online advertising and I wanted to expand our activities to the US, who does not? Obviously France is way worst than Denmark and the US for business, tax and work laws, so I can't really relate for the tax part. I relate mostly for the visa stuff. What I am getting from the OP post, Nitai was doing L1-A. I have been doing L1-A too. (I recognized the list of documents scanned the OP has posted! :) ) Same hassle, same huge amount of documents needed, we didn't give up though after the first request for evidences but the requirements are kind of high so we finally didn't get it. US now sucks for immigration and it seems to worsen. BUT, Europe seems harder too than before for immigration. It seems a tendency that in the world with Internet, cheap transportation and desire for better file, people immigrate more and countries make stronger bureaucratic walls. That's sad. :'(

dusanbab 13y ago
Sorry to hear L-1 was unsuccessful for you. Care to share what the eventual denial reason was?

wathars 13y ago

So seeing all these problems, how are YC companies solving them or better yet how do they handle the whole process to avoid this? PG said they are incorporating in Delaware but their offices most probably are in CA. Shouldn't this be a problem being in different states? Or it applies only to foreign related companies? Thanks.

ghaff 13y ago
It's pretty common to incorporate in Delaware even if you have little or no physical nexus there, for a variety of reasons: http://www.newsworks.org/index.php/local/brandywine-to-broad/18206-why-do-so-many-corporations-choose-to-incorporate-in-delaware http://www.newsworks.org/index.php/local/brandywine-to-broad.... This probably applies more to large companies though. I imagine there's some overhead relative to incorporating locally if you're a small business. What constitutes a physical nexus can be a bit hard to define at the margins. (See e.g. Amazon's fights with a number of states.) But it usually means you're selling something there as opposed to just having employees. A physical nexus usually just relates to collecting sales taxes though. I've never heard of having to incorporate in additional states although maybe that's sometimes the case. (I know that the small NH company I used to work for certainly didn't incorporate in additional states when they hired non-NH residents. They DID have to handle state withholding on payroll but that sort of thing is handled pretty transparently by payroll processing companies like ADP.)

chetanahuja 13y ago

As a US based startup founder, this was an illuminating read. And this part in particualar is brilliant: "I immediately sent an email, to nobody in particular, asking the NSA to get those tax figures themselves and pass them on to the IRS"

EGreg 13y ago

"In Europe, you can live in whichever country you like. Most countries here seem happy to receive taxes." I think the analogy is the same for states in the US - yo can live in any of the states and they'd be happy to collect your taxes. When your business has a substantial business presence in a particular state, it expects you to start reporting there. States in the USA are like countries in the EU, except they all have the same language and restaurant chains.

dude3 13y ago

Denmark's defense budget is really small 3.2 % of government spending vs 18.2% for the United States. Therefore, Denmark has much more cash to spend and is a richer nation relying on US for defense.

vacri 13y ago
The US gets considerable economic and political advantages from that defence outlay. It's quite normal to park a fleet outside someone's capital (in international waters) as a show of political force. It's still a ridiculously high percentage, but the concept of the World Cop needs to be put to rest. It's more like World Vigilante Strongman.

bayesianhorse 13y ago

Here in the EU the EU has a reputation for being extremely bureaucratic and hard to fathom. As the writer points out, you ain't seen nothing. Just imagine 28 members plus privileged partners agreeing on regulations for international trade through bilateral agreements. And probably every policy that is less bureaucratic is either quite small or has bigger problems with corruption.

runewell 13y ago

Yeah, our tax/employment/visa system sucks, although European rumors of our impending demise are greatly exaggerated. If you're not from the USA it is understandable that you may not be aware of the nightmare that is our state legislation. Our states are like grumpy siblings in the big dysfunctional family we call our nation. They each have their own method of handling taxation and employment and each have their own irrational set of processes. As a nation we could certainly improve the way we handle such matters.

esbranson 13y ago

Riiiight. Because you can do the same in the European Union and get less paperwork, in one language? How do you comply with Spanish and Italian employment requirements, by registering and filing paperwork with Danish employment authorities, in Danish? That's hogwash.

a3n 13y ago

> We sent endless amounts of documents, translated documents, notarized documents and copies of this and that. ... a detailed list of all transactions from our Danish bank accounts for the past 3 years. ... our lease agreement for the office. ... pictures of the office from the outside. in Denmark and the USA. ... pictures of the inside – and we needed to make sure that the pictures had employees in them. We had to get the main lease agreement from our lessor to prove that they could actually sublease to us. > ... We needed to explain, why we needed the space. We needed to explain, why we didn’t need more. Then why we didn’t need less. Then we had to send copies of all Nitai’s diplomas. Then we had to explain, why nobody else could run the operation in the USA for us. I've read that we do this shit to make sure that people don't come here and take advantage of the business and benefit paradise that we've created. I have this picture of the US as a 1970s asshole dressed in a leisure suit, wide collars and bell bottoms and a vest, who think's he's God's gift to women, where actually everyone is laughing at him for the clown that he his. And he rarely gets laid, despite bragging to the contrary.

dleskov 13y ago

Solely from the taxation perspective, my home country now looks surprisingly friendly for small IT businesses. We have a so called Simplified Taxation System for small businesses (not just IT.) Basically, as a company we can choose to pay either 6% of annual revenue, or the bigger of 15% of profit and 1% of revenue. That's it, no VAT or anything. As far as wage taxes go, there is a 20% Unified Social Tax charged on the wage amount before income tax. Moreover, there is an annual cap on that tax, which a senior developer in a big city is likely to hit as early as mid-year. Otherwise, small IT businesses can qualify to lower that tax to 14%. All that's left after that is the income tax - 13% flat. Which country you would ask? Russia. That's why I wrote "Solely from the taxation perspective" in the opening statement...

elf25 13y ago

why are there a lot of links in this article referencing cialis? Site been hacked?

clouds 13y ago

You can't just buy 'Murica with money!

dusanbab 13y ago

I think the frustration with the various state differences is less interesting, to be honest. That's part of what makes the US great IMO - states have to compete with each other as people and businesses can vote with their feet. The difficulty you encountered during what I would have thought should be a routine L-1 is most concerning & perplexing. I really never understand this point - more than a million new green cards were issued in 2012 [1] but you can't even easily get a temporary work visa. To make matters worse every year 50K new green cards are issued to completely random people, I mean it's a lottery after all [2]. Why does the US want to hand out residency en masse and then stop people who can create jobs and grow the economy? As an outsider looking in I would think you're getting the worst of both outcomes. I don't believe there is a good answer. Regrettably decision making has become so paralyzed in the US Congress and Senate and the whole machine only exists to serve itself. [1] - http://www.voanews.com/content/us-issues-million-green-cards-and-naturalizes-757000-in-2012/1627155.html http://www.voanews.com/content/us-issues-million-green-cards... [2] - http://en.wikipedia.org/wiki/Diversity_Immigrant_Visa http://en.wikipedia.org/wiki/Diversity_Immigrant_Visa Edit: references

deleted 13y ago

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