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Ask HN: Best place to incorporate a startup?

• ankitoberoi 13y ago
  Wow - was just about to ask the same. I'm based out of India and hate the Taxation system here (it's worse than what you read for the US) - software attracts Service Tax and VAT (Sales Tax) both - you pay reverse service tax for services you take from abroad and you even pay TDS (Withholding Tax) from your pocket for entities not incorporated in India. I could just go on and go on here.... it's just stupid. I'm planning to incorporate my startup soon and want to do it in a country where I can: 1) Use a PG like Stripe. 2) No Service/Sales Tax just flat out corporate tax on profits. 3) Easy, Simple and Affordable Registration and maintenance process.
  • illuminated 13y ago
    Yes, being able to use Stripe would be a great advantage. There are a number of online services offering mostly a hassle free incorporation process, but none explains (or compares) the entrepreneur's side of the experience for an online business.
  • RealGeek 13y ago
    > You pay reverse service tax for services you take from abroad and you even pay TDS (Withholding Tax) from your pocket for entities not incorporated in India This is the most bizzare tax compliance issue I faced in India. If you incorporate in US, you still have to pay taxes in India. This can make things easier in India, but it can create additional compliance and tax burden in US. If you are looking forward to raise Venture Capital, then Delaware C-Corp is the preferred route. If you want to remain a self-funded company, then LLC can be a better option. If you want to carry forward your revenue in India, then you can contract your Indian entity and transfer funds for services. Any funds you transfer to Indian company will be subject to Services tax or VAT and Income tax. You can use services like LegalZoom to incorporate in US online.
    • redtexture 13y ago
      Delaware corporations are not required for venture financing, as more than a few major venture people have said publically and on their blogs. Just use your own state's corporation laws (if you're in the U.S.), until you're a many-multi-million dollar size entity, and avoid the headaches of being a foreign corporation within your own state (meaning out-of-state, but within the U.S.). You've got bigger fish to fry, if you're starting out.
      • RealGeek 13y ago
        ankitoberoi is from India. Since he is not a US resident, he may not have a state preference.
• brudgers 13y ago
  The best place to incorporate is wherever creates the least impedance with potential investors. If the pool of potential investors has not been identified, then incorporation as a C-corporation may create an unproductive tax burden. If the purpose is solely to limit liability, then other limited liability forms of organization might make more financial sense and organizing locally might make sense.
  • illuminated 13y ago
    I don't think that should be the incorporation motive, unless you already have a prospect of having investors. When you're starting a business/service, all you want is to be able to have income and to have such a legal protection that incorporation offers. Once you get to the point that you're profitable and that investors might come, I don't think it's a problem to re-incorporate... I'm all for local incorporation, but only when it's possible/feasable. In my own case, local incorporation would render me unable to process online payments unless I have a yearly profit of at least 50K EUR, which I cannot have at all unless I'm able to process online payments :)
    • brudgers 13y ago
      Smoothing out transactions sounds like a good reason to look at incorporating elsewhere particularly if the overhead of international payment processing can be kept to a manageable level. In the US, there are multiple forms of limited liability businesses some of which are not corporations and several forms of incorporation. That was the context of my response not the suggestion that limiting liability should be avoided. Good luck.
• richsin 13y ago
  Fastest: Incorporate in Delaware, cost $157+$20 overnight Fedex for a C-Corp, 24 hour turnaround, registered agent Incorp which is free for the first year and $99 after, done by fax. 10M shares at .00001 par value. $350~ a year franchise tax. Some banks may require a Certified Copy but my bank did not, which is an additional $50. Merchant accounts are pretty easy, just need to apply for one either at the bank or use a service like Stripe mentioned in other posts. All merchant rates are negotiable on the most part. I can start a new business within 72 Hours with merchant account and bank account, incorporated, full startup documents. Foreign Corporations depend on if you have employees physically located in that state, certain states may differ. Most startups don't follow this rule, it's the wild west in the beginning. Just make sure you keep good records and you get a decent accountant to make sure you don't get surprised come tax season. If your looking at the lowest tax rates on corporations, I believe Singapore and Hong Kong are great STABLE options, however they come with their own issues when it comes to accepting payments and also are much more costly to set up. Get your corporation in order, get a merchant account and start making money. These questions are best left for accountants and even at that, not everyone will give you the same advice. Once you have revenue and you have an idea of what your working with, you can see if it's worth incorporating in another state/country. PS: If your a startup with founders, check out Clerky.com. Very nice guys and will get your corporation done properly. Worry-free. I didn't use them because I was looking at maximum cost savings by doing it myself, but will invest in them later if we need to redo the paperwork or just flat out start a new company.
  • illuminated 13y ago
    Exactly the reply I was looking for. Thanks a lot! Can you share which bank would be best to use in case of a Delaware C-Corp?