What better to incorporate a Deleware C-Corp. Clerky or Stripe Atlas and why?
Any idea which one is better to use? Will I need a lawyer at all? Does stripe atlas allow you to appoint directors and then buy stock from the directors?
10 comments
Be careful when deciding C Corp vs LLC! Brian's story here was crazy but a great lesson! https://twitter.com/arjunmahadevan_/status/14059908807674839...
Stripe Atlas simply for the peace of mind that Stripe will work. There’s no other great processor that accepts startups business if they block ur account U’re done.
Delaware C-corps are not do it yourself. Use your lawyer and your accountant. If you don't have a lawyer and an accountant, then there is a significant probability that a Delaware C-corp is not the right move right now.
In a lot of places, you can make a throw-away LLC with two sheets of paper and less than fifty bucks. Delaware C-corps are not that way.
In the earlier days of HN, "Ask HN: I have an expensive legal issue with my Delaware C-corp" questions were rather common. The lessons were often price of a new BMW expensive just for letting one sit with no activity.
The main reason to form a Delaware C-corp is to take outside investment that requires it. This is typical of Silicon Valley venture capital and much much less typical of any other form of investment and of most investors just about everyplace else.
Or to put it anther way, a Delaware C-corp exists to manage capital. If there isn't enough capital to justify a lawyer and accountant, then there is an impedance mismatch. Good luck.
In a lot of places, you can make a throw-away LLC with two sheets of paper and less than fifty bucks. Delaware C-corps are not that way.
In the earlier days of HN, "Ask HN: I have an expensive legal issue with my Delaware C-corp" questions were rather common. The lessons were often price of a new BMW expensive just for letting one sit with no activity.
The main reason to form a Delaware C-corp is to take outside investment that requires it. This is typical of Silicon Valley venture capital and much much less typical of any other form of investment and of most investors just about everyplace else.
Or to put it anther way, a Delaware C-corp exists to manage capital. If there isn't enough capital to justify a lawyer and accountant, then there is an impedance mismatch. Good luck.
Thank you for this comment!
I was not aware of the _why_ for creating a c corp over an LLC for a new company
I was not aware of the _why_ for creating a c corp over an LLC for a new company
I haven't used Clerky, but I've been VERY impressed with Stripe Atlas. They handled everything from formation to issuing shares, obtaining an EIN, and even setting up a bank account.
My only minor gripes are I wish they offered more options for banking and registered agent services.
Banking: SVB is the only bank option, which has a $25/mo. fee until your balance is over a certain limit. Other options like Mercury would be good. Though, if I recall correctly, the bank setup is optional, so you can skip it and pick your own bank after formation.
Registered agent: The service they use was $100/yr (first year free). But after some research, I ended up switching to virtualpostmail.com, which gives you a virtual business address (which we needed anyway since we're fully remote) and includes free registered agent services.
Those are relatively minor issues though, I highly recommend Stripe Atlas. And it works well regardless of whether or not you use Stripe. They also include credits/discounts for various services.
I discovered Stripe Atlas through YC's startupschool.org (which is excellent). They had a 50% discount on Stripe Atlas (and other things) when you went through the program.
I used Stripe Atlas in mid-2020, so not sure what has changed since then.
My only minor gripes are I wish they offered more options for banking and registered agent services.
Banking: SVB is the only bank option, which has a $25/mo. fee until your balance is over a certain limit. Other options like Mercury would be good. Though, if I recall correctly, the bank setup is optional, so you can skip it and pick your own bank after formation.
Registered agent: The service they use was $100/yr (first year free). But after some research, I ended up switching to virtualpostmail.com, which gives you a virtual business address (which we needed anyway since we're fully remote) and includes free registered agent services.
Those are relatively minor issues though, I highly recommend Stripe Atlas. And it works well regardless of whether or not you use Stripe. They also include credits/discounts for various services.
I discovered Stripe Atlas through YC's startupschool.org (which is excellent). They had a 50% discount on Stripe Atlas (and other things) when you went through the program.
I used Stripe Atlas in mid-2020, so not sure what has changed since then.
> Banking: SVB is the only bank option
I’ve used SVB for over 20 years in multiple startups, but they have sadly really lost it and won’t use them anymore. One of my partners, who used to go skiing (etc) with the SVB team has given up on them too.
First Republic (which I would not have guessed) has really built a good startup practice (and poached a bunch of people from SVB).
The big banks are terrible and at best treat startups like small businesses, though the two have different needs.
I’ve used SVB for over 20 years in multiple startups, but they have sadly really lost it and won’t use them anymore. One of my partners, who used to go skiing (etc) with the SVB team has given up on them too.
First Republic (which I would not have guessed) has really built a good startup practice (and poached a bunch of people from SVB).
The big banks are terrible and at best treat startups like small businesses, though the two have different needs.
SVB is not the only option now, Mercury is also an option now and it's much better than SVB.
https://stripe.com/docs/atlas/next#bank-account
https://stripe.com/docs/atlas/next#bank-account
How do taxes work? And legal an accounting fees?
Those are separate. Though, they do provide a lot of guidance via documentation. They also offer discounted EOY tax services through a partner, which we used and were very affordable.
But there are a number of things you'll have to track and handle yourself, like filing your 83b election with the IRS.
But there are a number of things you'll have to track and handle yourself, like filing your 83b election with the IRS.
Going through the Clerky process right now. It's OK not blown away. Used Gust Launch in the past and recall that being super easy