Well, I’m sure I’ve made bucket loads more but thought this one would be a helpful start to first-time entrepreneurs.
You see, last year when I arrived in the States, I started thinking about setting up the company entity for my startup. At the time, we were still early days and I wasn’t entirely sure what our growth journey and resourcing would look like. I therefore set up an LLC in Delaware (a popular jurisdiction for startups). It cost around $500 using a third party to help with the registration and to expedite it.
Six months later and things get serious – I realise we should change to a DE Corporation. It’s relatively easy to change the structure but we need to pay the state taxes applicable – regardless of if the entity was active or not. The US runs its tax years by calendar year – so we then have to pay $250 for each year, totalling an additional $500 for 2012 and 2013 (despite it only being two weeks in the latter). This whole conversion process now starts to be a thousand-dollar-plus affair.
It’s a a waste, especially when sites like Clerky offer new company registration from just $99.
While annoying, fortunately it’s not a massive amount. The thing is many startups aren’t on a production line being fed knowledge by an incubator or accelerator, or are yet in a position to engage a lawyer. It can be tricky knowing what the best things to do is. I’ve since started thinking about other things like shares, employee arrangements and the like. If you’re about to reach a similar stage, the following links can kick you off:
- If I Launched a Startup by Startup Lawyer, Ryan Roberts
- Step By Step Instructions For Forming Your Corporation In Delaware
- All content on Startup Company Lawyer
- Quora
- Example seed-round documents from Y Combinator
- AngelList and AngelList Docs
Cheers and happy incorporating!
Kate
P.S. Insert generic disclaimer saying this post isn’t offering or substitute for legal advice.
P.P.S. I’m so American now!
P.P.P.S. Regular readers not in startups – regular programming returning soon.
Kate Kendall 
Right after startup abroad, I incorporated as a Delaware Corp. Since I was 95% sure I was planning to take money from investors, I went ahead and used a lawyer since I really did want a partner in the process who has my best interests at heart — even though that comes with a price.