WHERE and WHEN incorporate a internet startup?
Suppose to have a very clear BusinessModel. The startup won't make money for some time (maybe 1-2years).
Main markets (in order): USA, Europe, Asia
1) WHEN incorporate ?
Do you think I need to incorporate before I launch my product?
Do you think I can incorporate when it will start to make money ? (this way I reduce costs for company management while it makes no money)
2) WHERE incorporate ?
I am a EU citizen, I would not prefer to incorporate where I live (italy) due to high costs ( incorporation and maintenance).
Can I incorporate where is my target market ?
If I incorporate in the USA or UK I need a registered agent because I am not a citizen of those countries, what do you think about that ?
I saw many online services selling these options.
thank you for your advices
I believe you should incorporate prior to launching the product because it helps to legitimize you int he business world, especially if you are seeking investors.
Yes you will need a Registered agent in the USA. Many charge reasonable yearly fees.
I am an Attorney and provide business formation services, business plan writing, contract drafting and reviewing, trademark and patent registration for 18 years. I can be reached at (301) 408-1082.
1. It is better to legally incorporate before you launch a product your business because of the legitimatize and taxation laws for corporation. For example, the OECD definition of a legal business partnership depends on each country members’ common or civil law practices that are currently being used for contractual agreements.
2. According to the Italy government’ tax treaty of 90s, a UK company maybe characterized as a ‘body corporate’, which probably means that it would be taxed as a corporation. Hence, the nonresident might find it difficult to claim taxation benefits from this country, if is not subject to the same taxation of the UK. The reason why this matter, it is because the taxation realization requirement could be applied to the taxpayers if the gains occurred prior to the event, but providing that the end results of such occurrence will be recollected as the whole or part of the tax deductions and credits or other allowances that were previously accorded upon by the taxpayer.
You can incorporate at any time. There is no problem with that. The other thing is that if you incorporate, it will help owners, entrepreneurs and anyone similar to find out about your product without trouble.
It is easy to apply in the US.However I heard that in the UK it takes only 48 hours. You can get the incorporation papers within the same day or no later than 4-6 weeks.
Won't go over the areas already covered by others, but just wanted to point out from a marketing perspective, customers tend to prefer businesses that are in their own region/culture. So if your top market is the USA, then that may be a top choice for location, if all else is relatively equal. You could of course, expand to have multiple regional sites, so location is de-emphasized.
On the corporate side, you may also wish to consider a U.S. limited liability company structure. Also be sure to consider taxes as well as the legal implications if choosing a state in the U.S. As others have pointed out, the legal structure may be best advised by a good law firm.
Good luck to you!
You've had some fantastic answers so far, so I'll stick to headlines to re-enforce what has already been said.
1. Incorporate just before you start trading. Its has more advantages to do so and gives more credibility to you, the business and more confidence to the potential customers.
2. Where you incorporate may very much depend on the tax laws, financial compliance and other regulatory issues surrounding the business you want to run. Its more straightforward to incorporate where you are a citizen, but yes you can use agents if the regulatory compliance in Italy does not favour your business. Please consider the tax implications of registering elsewhere though and the hidden costs of using an agent.
3. Incidentally, when you say the business won't make money for the first couple of years, do you mean it won't make a profit or are you saying the cash flow will be negative. If the former, then that's ok, but if the later, then you don't have a business.
Good questions. There really isn't one right answer. As others have suggested, incorporate when you have liabilities that need to be isolated from you personally and assets that need protected by the new entity.
Liabilities can include debts as well as contracts. These should be in the company name to protect you personally. Assets can be anything from equipment and financial resources to patents.
Here in the US, it's really not that expensive to incorporate. Most states charge less than US$500. You will need a registered agent which you will pay for annually. But this cost is typically less than US$200/yr. You also have options (LLC, C Corp, S Corp, etc.)
One advantage right now about incorporating in the UK vs US is crowdfunding legislation. If you feel you have a business that is amenable to crowdfunding, then the UK is far more ahead of the US in regulating this form of investing.
While I'm not familiar with corporate taxation in the UK, I would assume that you would have more favorable tax considerations if you incorporated in the US. But that's an assumption, you would need to consult with a corporate taxation expert to be clear.
There are many answers to your questions and it all depends again on many factors.
You definitely want your business registered as first and foremost, it's required by law. Aside from that, you want to make sure the name you've selected is available.
Whether your incorporate or not, that should be discussed with an accountant and lawyer so they can address your specific needs. There are many reasons for different structures and this will depend on how they advise you to structure the company based on legalities and tax benefits.
As far as setting up in another jurisdiction, it isn't quite as simple as what people from the internet may have led you to believe. I don't know specifically how Italy's tax laws work, however most countries are very similar when it comes to doing business offshore. And they clearly state that in order to qualify you most have "mind and management" in that said jurisdiction. So in simple terms, you need to actually be operating out of the jurisdiction you want to set up in. And yes, there are many ways to accomplish this as well and again this is where an accountant and lawyer can help you.
So sorry that I can't provide you with a direct answer, however you are asking a VERY general question.
Best of luck to you in whichever route you take! =)
Things may be different in your neck of the woods.. but here in the US .. having a corporate structure provides you with some protection from certain liabilities.. many people start off as a sole proprietor until cash starts to flow.. or large liabilities start to pile up.. so it really depends.. This is nothing you want to guess at.. you truly should seek the advice of both an attorney and a tax accountant.. between the two you will most likely get two different opinions to which you will then need to weight the potential down side to each choice.
By the way.. for full disclosure I am not an attorney nor a tax professional.. so nothing I mentioned above can or should be construed as legal advice..
Good luck with your endeavor.
I can not speak for the advantages of incorporating in the USA, but about those of incorporating in Canada where I live.
An incorporation is not that costly in itself (less than 500 $ CAD) if you have models of the paperwork necessary to set up your corporation and can do the registration process yourself (can be done by mail). If you don't have such models, you need a lawyer and they don't come cheap.
Wherever you set it up, you will need an accountant from that country to produce the yearly financial reports after you get your charter. That is compulsory.
It is a good idea to get those things organized before you get too busy with your company's business. You might have more time and energy now to work on your papers than you will later. Also, this incorporation will give you credentials for the development of your business, especially if it is going to involve international transactions.
You will need credit for your sales and expansion in two or three years' time and the fact that your corporation already exist for some years will count.
Think about it carefully and buona fortuna!
So many great answers already......
That is a great question and there is a very long answer and a short answer. The short answer is I would worry about incorporating once you have the business up and running, or more precisely JUST before it starts making any money.
If it is just you as the owner this is very easy. Make sure you track all your expenses and then when you do incorporate you can include those into the business. Currently I have several incorporated businesses and several that are not. All depends on where they are at.
I have seen a lot of people focus on the admin side of a business rather than actually making the business work...personally I think one should focus on getting business going before incorporating.
In terms of where...they all have pros and cons. I have a businesses in the UK and USA. Different companies for different reasons. I would say as a short answer depends on where most of your 'service' of business will be conducted.