If I Launched a Startup | Hacker News Reader

If I Launched a Startup

startuplawyer.com

44 pointsrpledge11 comments

Regarding #2, his second link: "Top 5 Reasons To Incorporate in Delaware": http://startuplawyer.com/incorporation/top-5-reasons-to-inco...

IANAL, but that all sounds like good advice to me. He adds that you shouldn't consider DE to be the default choice, but here's another take from a corporate attorney that was posted on HN:

http://www.grellas.com/faq_business_startup_002.html

My takeaway from this is to avoid being tempted to skip deep and prolonged consideration of Step #2.

I've always thought handling legal documents and doing taxes for a startup would be difficult.

I assume most don't actually keep a lawyer on hand, but what about accountants for taxes in small 10-person companies?

Do you need one or is it possible to do it yourself? Does H&R Block handle that sort of stuff?

I personally strongly recommend against using H&R Block for business needs. Their focus IMHO is on personal taxes not business taxes.

In the general case, it seems wiser and more efficient to do as little paperwork as possible before you have paying customers. (Assuming software/website-only business, assuming not going into field with more extreme/bureaucratic regulation, or lives are on the line, etc.) This is another argument for being a sole founder -- don't have to worry about a partnership breaking down and having to figure out who has what. Again, at least until you have revenue coming in.

Why waste time incorporating? I'd just put it under some umbrella LLC (cheap & quick) until it has traction. After traction then you can move to C corp only if it's necessary to raise capital.

If you click on the second "Corporation" link, you'll find that there's a whole post explaining why you shouldn't go with an LLC.

In any case, if you're going to incorporate "cheap and quick" as an LLC, you can do the same as an C-corporation. There are online services that will do it for you.

At the same time though, this isn't an unfixable problem (I think I remember Mark Zuckerberg saying in a talk once that Facebook started out as a Florida (or something) LLC, and that was one of the first things the lawyers fixed for them when they raised money).

I'm trying things solo this time and don't plan on incorporating at all until I have traction. Just seems like too much hassle and unnecessary expense that gets me no closer to product/market fit.

So does that mean you aren't charging from the start? I'd hate to be collecting money and not have some sort of entity for the company set up.

If I make it out of private beta, I will charge at launch. In the mean time, I don't have to actually collect money to answer my biggest question: do people find my service valuable enough to pay?

just curious, is there a reason why you list the par value of common at $0.0001 and not $0.00001 (note the extra 0 there)?

i'm guessing there would be a difference in taxes under delaware (ie $100 for 10mm at $0.0001 vs. $1,000 for 10mm at $0.0001 under the "total authorized shares" tax calculation method).

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