- First get a federal EIN number online (free, self-service) for the LLC. - When filing out the Nolo form, use your virtual mailing address as this will be public record. I signed up for Virtual Post Mail at $10/month. - When filing out the Nolo form, answer "I already have a registered agent". If you use Virtual Post mail, your subscription includes free registered agent service. If you answer no and agree to use their service partner Incorporate.com, it'll cost you $235/year.
+1 Create a business checking account so your personal vs. business financial records are kept separate.
The tricky things to remember are to get an EIN from the IRS (it's free) [1] and to create a bank / credit union account for the business (free at my credit union).
[1] https://www.irs.gov/businesses/small-businesses-self-employe...
There's no equivalent to LLC's in Canada so you'll need to create a corporation up here. You can incorporate in the federal jurisdiction or a provincial one; you'll want to read the relevant acts that you'd be incorporating under to figure out the differences. BC corporations, for example, require at least one director to be a BC resident; federal for-profit corporations, on the other hand, require 25% of the board to be Canadian citizens.
I created a federal corporation in Canada last year, mainly relying on the info and "how-to" guides on Corporations Canada's website to educate myself: http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/h...
I also went through the Canada Business Corporations Act and Not-for-profit Corporations Act a few times; they lay out the bureaucratic details you need to be aware of.
The most awkward part was opening a US-based bank account afterward; BMO Harris was one of very few US banks I came across that was willing to talk shop with a Canadian company (I'd love to hear if anyone knows of any other foreign company-friendly US banks).
If you name yourself as the only director and shareholder (or voting member, in the case of a nonprofit), you still have to hold board and shareholder/member meetings but they'll be very straightforward since you'll be their only attendee. _Definitely_ consult with a lawyer if you're contemplating a voting structure that extends beyond yourself or the directors.
For creating a nonprofit in particular, you may be able to get pro-bono legal advice through an organization like Access Probono (http://accessprobono.ca). Corporations Canada also offers a super-useful By-law Builder tool which gives you "sane defaults" for the corporation's structure: https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/h_cs04734.html
If you don't mind sharing, why did you need an American bank account?
Since my organization mainly operates with USD, and many of its paying users really like PayPal, a US bank account was a necessity.
As for gotchas... be aware that directors cannot hire-and-fire each other unless they also happen to be the corporation's voting members or hold its voting shares. This might be weird to wrap your mind around if you've only been a sole proprietor before, and is why I advise consulting with a lawyer if you plan to split up control.
Also, how do you manage taxes? (especially for revenue earned from other countries for example).
- The bureaucratic details differ between the various provincial jurisdictions and the federal one (like the one I mentioned with requirements for the makeup of the board). This could make a particular province's corporate rules a better fit for your business than the federal ones.
- That provincial incorporation is cheaper can matter for local businesses that have no intention of expanding nationally.
- Some provinces may require corporations from other jurisdictions (other provinces or the federal jurisdiction) to "register extraprovincially" to operate there, at extra cost. This is avoided by incorporating locally.
- If your business name is already taken by a provincial corporation in another province, you may have an easier time creating a provincial corporation by the same name than a federal one.
*
> obligatory "I'm not an accountant or tax expert" note
Taxes... I'm still figuring those out but CRA allows corporations to file in USD [1]. To the best of my knowledge, a Canadian corporation that only has Canada-resident employees and shareholders, and doesn't own property or servers in other countries, only has to deal with Canadian taxes. Expect to fill out a few W-8BEN-E forms to assert this. Depending on what your company does, you may have to charge your Canadian users sales tax.
[1] http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/fnctcrncy/men...
Other than that you usually need a local address (which can be yours if you incorporate in the state you live). A bank account is useful to show a separation between business assets and personal assets should you ever need the 'limited-liability' part in court.
The major thing is that you pick a structure that does what you want (LLC versus C or S Corp, etc), and that you understand the tax implications. The IRS and other folks have circulars on that as well as employer tax guides, etc.
The SoS of the state you want to file in will probably have more information on the requirements.
That being said, Clerky is an excellent choice for those looking to form a C Corp in Delaware and focus on their startup full-time.
It's worth asking your accountant/counsel if you should consider setting up a LLC that files taxes as a corporation. You probably only want to do this if you are able to pay yourself a consistent, set payroll (I'm not a lawyer or accountant, but I can speak from experience that this is one of the cases where filing in this manner is not helpful, and will actually be detrimental).
While it's easy to create an LLC, it's very easy to create one that can be broken through if someone wants to come after you. Pony up the $200 or so to talk to a proper lawyer with experience setting up corporate entities, even if you only have them tell you what to do on your own.
I used Launch by Legalshield[0]. It's like the LegalZoom option, but they do provide legal counsel. After you signup, the member lawyer of your region calls you to finalize the documents and ensure everything's sorted. I paid around $460 overall for the formation, agent, and all the documents neatly organized in a binder with a really nice rubber logo stamper. Every step has some information to the right to help explain the process, and if you get it wrong, your member lawyer should catch it pretty easily.
Again, I work for them, but it's both not my project in the company, I don't receive anything special for saying good things about it, and I really did like the flow. So I might be biased, but I do highly recommend it.
Longer thoughts here: https://stripe.com/atlas/guide#incorporation
Short thoughts: in my official capacity I have to tell you that this is a legal question and you should talk to your qualified professional advisors, but unofficially, let me observe that you can form a sole member LLC in Nevada or Wyoming approximately as easy as buying a book from Amazon. You don't need to pay any expediter to do this; both of them have web apps that will walk you through it.
If you want to incorporate a Delaware C corp, perhaps because you want to raise investment, you can use Atlas. If anyone on HN needs an invite drop me an email (this username @stripe.com would work) and hum a few bars as to your situation; I'd be happy to help.
Wyoming LLC.
Find a local agent, best bet use BizFilings to do papers if you hit snags, they provide legal help to resolve. Smooth, just use wyoming's site.
You may want BizFilings to maintain recurring filings and local agent address for you, or you can do recurring WY filing online and get cheap local agent.
Nice reasons to use Wyoming, just google. Think carefully about name and address steps, you don't have to be popping up in every public DB.
Citi let me do a biz acct with just the above.
Then, do yourself a favor and get insured. I like Hiscox, via http://www.techinsurance.com.
Otherwise, it would more expensive and more complicated each year than a local LLC.
Beyond that; look for specific information in your state. My state, Connecticut, has a government web site that gives you step by step instructions on setting up a company in the state; including what paperwork to file and how to get taxID Numbers...
Incorporating a limited-liability business in Germany is hell.
There's also a requirement to register with the state if you're an LLC incorporated in another state and will be doing business in Illinois. $500 filing fee and you have to have a registered agent within the state. The relevant law is http://law.onecle.com/illinois/805ilcs180/45-5.html, but it's not entirely clear to me what "transacting business" really means. The seemingly obvious meaning would imply that every little LLC selling anything would be required to spend $500 once plus annual fees to a registered agent before selling to anyone in Illinois.
A California S Corp pays a 1.5% franchise tax on income with an $800 minimum. There is no income level at which the S Corp franchise tax is less than the combination of the LLC tax of $800 + the income-dependent LLC fee.
http://www.nolo.com/legal-encyclopedia/california-state-busi...
The problem with using generic services is that they may work fine in the beginning but you may end up contacting an accountant anyway for best advice on tax and planning. Yes, even for side projects that bring in some money.
I am in California so this information will only apply to people there. Obligatory, I am not a lawyer.
Pre steps:
- pick a name that is available: https://businesssearch.sos.ca.gov/
- Register the domain name you are going to use
- Get a mailbox (like one at the UPS store, NOT a PO Box!) to use as your business address so you will not have to use your home address if it bothers you.
Now, for the real stuff -
1) Get a registered agent (even if you want to do it yourself, I recommend getting one anyway). I used freeregisteredagent.com for 1 year free. Required before you file the next step.
2) File an LLC-1 (http://bpd.cdn.sos.ca.gov/llc/forms/llc-1.pdf) articles of organization. It requires a $70 filing fee, send off the form and $70 money order.
3) Grab an EIN from the IRS: https://www.irs.gov/businesses/small-businesses-self-employe...
4) Wait for the Secretary of State of send a copy of the file articles of organization (form LLC-1). Now, file a Statement of Information, form LLC-12: http://bpd.cdn.sos.ca.gov/llc/forms/llc-12.pdf This is due within 90 days of the file date (on the filed LLC-1 form) All the information here will become public information. Send that in to the SoS with a $20 money-order and wait.
5) Use your filed articles of organization, the EIN you got in step 3, and a state issued personal ID to get a bank account. US Bank and CapitalOne Spark have free checking accounts for business, you can also try a credit union as local ones have them for free.
6) Look for any local licenses you need, some cities require business licenses, some require a "Business Operation Tax" (BOT) certificate - check your city or county website(s). CalGold is useful: http://www.calgold.ca.gov/
7) Conduct business, keep records, etc
Recurring items:
- An $800 minimum tax is due every year to the state of California.
- You must file a new LLC-12 (if the information has changed) or an LLC-12NC (if nothing about your LLC has changed) biannually (every two years).
See all forms here: http://www.sos.ca.gov/business-programs/business-entities/fo...
Because I am impatient, I found this page to further fuel my silent rage against the time it take for the state to process anything: http://www.sos.ca.gov/business-programs/business-entities/pr...
I got my copy of LLC-1 returned to me 8 business days after they stated they had processed it. Your LLC will show up in the business search the next day after they processed yours.
Only thing I might add is the operating agreement, which is critical for multi-member LLC's as it defines everything. Maybe fits into step 7 above, and worth having a lawyer assist with some clauses.
I formed an LLC a couple times, and both times I probably shouldn't have bothered until the business could pay for the fees, and an official entity offered me something a sole proprietorship couldn't.
If you aren't PLANNING FOR SURE to get investment.. C corp is a pretty awful thing to voluntarily subject yourself to.
I know "double taxation" is the bogeyman and is undoubtedly an issue in some cases, but for truly small setups of expect taxes to either be passed through S-Corp style or for larger businesses to be low because a lot of income may be offset by expenses (e.g. paying a salary or wage for time spent).
Series LLC is not available in all states and is fairly new but it allows for a master or an umbrella LLC and other LLCs which are separated from each other for liability purposes.
Each LLC has assets separate from the others, while the master LLC controls all the LLCs in the series. Each unit has its own owners (members) and is liable only for its own debts and obligations. A series LLC can be thought of as a corporation with several subsidiaries.
Lawyers for this kind of thing cater to people that would also find it hard to use the internet.