Hacker News Reader

Comment by onetwothreefour | Hacker News Reader

Actually, this is a horrible idea, because it's easier to run a software company outside the US, since you don't have to deal with the IRS.

Once you gain a physical presence, you're now liable for both federal and state taxes (depending on where your location is). This is much worse than your 5% revenue share or equity fee.

Add to that any legal and accounting fees you've just added for the company in the US, and you're essentially giving up 5% for a whole heap of pain.

Keep in mind that most law firms already provide this service. And they don't ask for 5%.

Your "pain points" are also over-exaggerated. The only reason for a company to consider a US presence is dealing with VCs or if they want to use something like Stripe or Braintree. Both of those are expanding (or have already expanded) globally.

View on HN

While I see some good points, if the US was such an inferior place to start software companies, I think we'd see more US-originated entrepreneurs setting up shop in Canada, Europe, or other places. I don't hear of that too often, but I do hear of the reverse frequently.

The US' corporate taxation policies are an improvement on those in many other countries. We're not Singapore, but we're closer to them than many of these other nations when it comes to heavy taxation.

Most law firms provide a proxy server? I seriously doubt this. And though they don't ask for 5%, they ask for a dollar sign with some numbers to follow. 5% is cheap if you're starting with almost nothing.

Dealing with VC's? Seems like it could happen.

Stripe and Braintree are two among dozens of technology providers who are unavailable, more expensive, and/or more time-consuming if you're overseas. Seems like 5% to save a few months of red tape (and in many cases a few thousand dollars) may not be such a bad deal for a number of startups. Would be really nice to get a foreign entrepreneur's take on this.

I don't know how to say this nicely, but you don't know what you're talking about.

Having done the move and spent considerable amounts of none trivial money, this is not worth it for anyone unless you need a physical presence in the US (wanting to open an office with employees, wanting some USG contracts, whatever). In that case, you don't need your hypothetical service. There's very little that requires a phsyical prescence when you're selling software or SaaS.

The US tax system is one of the worst in the world (compared to even "high tax" countries), on both a corporate and personal level, if you're running a company where your intention is to make money. Why do you think every big US software company keeps all their non-US profits offshore?

Avoiding all interaction with the IRS is the best thing going for any company outside the US -- it's worth its weight in gold. This makes things difficult when you want to hold USD balances or process USD transactions, but not impossible.

If you're taking VC funding, then it doesn't matter. If you're a small startup where 5% of revenue doesn't matter, than you have no reason to be wasting money on a US presence, because it's completely unnecessary in 2013. And no, lawyers don't provide proxy servers, but a micro instance at AWS is like $15/m.

Reply on news.ycombinator.com