Questions

I'm a Canadian citizen/resident and startup founder, my co-founder is an American citizen/resident living in San Francisco, we've got one employee who's also American living in Colorado. We expect a handful of American employees and handful of globally dispersed employees from outside the U.S. Does it make sense to incorporate in Delaware? Some possible advantages that are on our mind to not incorporating in Delaware: - As a Canadian, I can't visit the states while working for our company if it's a U.S. incorporated company - but I can visit up to 6 months if it's a non-U.S. company. - Lower Taxes - Simpler law / less bureaucracy Some possible disadvantages: - Harder to raise money - Harder to IPO - Harder to get an acquisition - Negative tax implications we're not aware of When you've got a physical office the "where to incorporate" question is straightforward, but when you've got a remote team of multiple nationalities it gets complicated and we're unsure how to weight these options. Does it make sense for a globally dispersed team to incorporate in Delaware?

Delaware C-Corp
I usually Delaware is the best choice for any startup looking for fundraising with a US focus.

However, if you are a remote and global team, an overseas or foreign corporation or US tax purposes might make sense.

You'd have to talk to an advisor who can dive into your situation, but it would be more difficult for the US owner come tax time, as he'd likely have to file form 5471 to the IRS for any controlled foreign corporation, and form 90-22.1 for any foreign bank accounts.

There are a lot of other concerns I didn't hear you raise that entrepreneurs usually have and ask me about, namely banking and merchant accounts/ payment processors.

In terms of accepting online payments, any US corporation or LLC is far and away the best option for a company.

It's difficult to suggest without knowing more about the company but you might explore Delaware, Wyoming, Hong Kong and other offshore jurisdictions for your legal entity. Each tend to have positives and negatives and there is no one size fits all solution.

I do write about issues of incorporation quite regularly on my website FlagTheory.com - so you can read those articles for free, or we can schedule a call - Clarity.fm/incorporation when you have specific questions.

Thank you and hope this was helpful!


Answered 6 years ago

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