If Atlas is implemented as promised (probably a safe assumption given the Stripe team), it will afford founders throughout the world a pain-free entry point into the world's most advanced economy, opening the way for key financing, for seamless payments processing, for ease of banking transactions to get people paid and to move funds easily, and for access to advice and guidance from people in the know to address a whole host of other problems and challenges that are faced by budding ventures who have had initial success in their home countries but need help in breaking out from there to gain potential international success.
This is no small feat.
I can't tell you how often in my many years of working with startups I have had foreign founders reach out to me in bewilderment over how to solve even the most basic problems as they sought to grow internationally and to gain a U.S. presence. It is not that the challenges are daunting or insurmountable. Many companies have dealt with them before. But they have had to do so in the context of having to grope around in the dark until they could figure things out. This cost them time. It cost them money. And it often meant they made mistakes that could set them back.
With a platform such as Atlas, they will now have a turnkey solution to this traditional problem. The solution is standardized and this means it has its limits. In solving the "step one" problem efficiently and at what appears to be low cost, however, it represents a major advance over current solutions and is very impressive indeed. For foreign founders doing amazing things on the talent side but needing to gain greater exposure and take next steps, it is basically a platform for greater credibility. You gain a U.S. presence. You expand your money handling capabilities. You position for greater funding. And you connect with experts who can be there to guide as needed.
The legal piece on this is vital but almost in tow, as it were. A standard Delaware C corp is the only option, which is adequate for a start but will clearly not meet the needs of a potentially huge number of founding teams that may have differing circumstances. It seems that this range of choices will be broadened on the Atlas platform over time. For now (and over time), founders are told to link up with legal counsel (either their own or a default provider) to sort through these issues. This, along with good CPA support, is vital to make sure the right tax and other decisions are made along the way. The platform simplifies the process enormously but significant complexities remain in the substance of what needs to be done. What Atlas does in this regard is to give founders a foundation from which they are well positioned to "take it from there." In this sense, it is a tool, not a legal or CPA resource as such (as it should be).
Stripe appears to have sought out a way to expand demand for its payments processing services and has come up, in effect, with a way of creating a sort of virtual Silicon Valley for the world's startup entrepreneurs. This will not be for everyone but it looks like it will be a great solution for many.
One can say kudos for that but that would almost seem to be a form of understatement. I look forward to seeing how it will continue to develop.
Sounds like a great concept even for a U.S. entrepreneur.
If you are someone new to the business world, figuring out how to take step 1 is a very scary process. At least having a default set of options pre-selected for you sounds like a great starting point. And of course, Stripe could also be in the business of connecting potential entrepreneurs to pre-vetted legal and accounting services.
And Stripe's incentives are perfectly aligned, more businesses using their payment services. Anything putting these businesses into legal or accounting jeopardy is also bad for Stripe.
All in all, this seems like an obvious-in-retrospect, brilliant idea.
> The legal piece on this is vital but almost in tow, as it were. A standard Delaware C corp is the only option, which is adequate for a start but will clearly not meet the needs of a potentially huge number of founding teams that may have differing circumstances.
I know a C corp is the bay area standard, but at least in the midwest many startups still begin as LLCs for simplicity. I hope the Atlas team considers this for future work.
does stripe support personal bank accounts? I have a U.S personal bank account but I don't live in the U.S. nor do I'm a U.S. citizen, in my country there isn't anything as awesome as Stripe, the bank infrastructure here is pretty bad and non existent for online payment processing of credit cards. All my clients will reside outside the U.S. but I want to use U.S/Stripe as a proxy for getting paid.
While we include a new bank account when you incorporate through Atlas, you can update your Stripe account to use a different bank account—like your personal account—if you prefer. That said, using a checking account over a personal bank account might make more sense for your business; you'd want to get advice on this to decide the best setup for you.
Make sure to consider exchange rates and costs for wire transfers if you want to go that route. I think Stripe charges an additional 2% for transactions in foreign currecies, and US banks will charge another 3% (or more) when you transfer that money to a foreign curreny. And there are lots of hidden fees for international wire transfers -- on a recent tranfer that I received, around 7% was missing and I had no clue where it had gone. Additionally, fluctuating exchange rates might eat a lot of money.
I'm still a little confused on whether or not this is better than incorporating in your own country. Is this more geared to accelerator startups who are thinking of moving to the US? Certainly US incorporation is not required (or even all that helpful?) in establishing a US presence?
Great question! I've learned a lot about this as I've gotten to hear from entrepreneurs that tried to setup in their own country, but ultimately came to the US. The video on our site gives some glimpse into the problems these entrepreneurs run into: https://stripe.com/atlas#stories
The gist is that certain countries have a better business and banking infrastructure than others for entrepreneurs looking to establish a global company. This isn't necessarily specific to the US—and we'll be expanding Atlas to more countries—but the US is a solid starting point, based on what many entrepreneurs in emerging markets already do.
For example, incorporating in a place like Delaware allows companies to issue stock to employees, makes it easy to raise money from global investors, and provides the stability of clear corporate rules and case law. (Most Fortune 500 companies are established in Delaware). Getting started with a US incorporation also makes many more services accessible to you, that might not be available if you incorporated in your own country with less support for new businesses.
It's a personal decision, for sure, but if you're in a country where you're finding your business constrained by the lack of particular banking infrastructure or access to business services, we think Atlas can help.
This only really works for people that aren't already setup as a company though.
You can't just open a new company in another country and expect to start moving your revenue to it, it just doesn't work like that. For instance, I'm registered in the UK and would have a tough time telling HMRC 'oh that's my US company, nothing to do with you'. It's a completely different problem if you already run a business and want to open a US branch. That's the same for pretty much anyone in the EU.
I think that needs to be made more clear in the schpiel.
>You can't just open a new company in another country and expect to start moving your revenue to it, it just doesn't work like that.
It kind of does work like that? Granted, it depends on how you structure it.
I confess I'm not privy to how taxes work in the UK, and that further I'm not an accountant but: I too am responsible for a US and non US corp. You may have to declare your US corp as an asset in the UK, for all I know.
That said, if you have a US legal entity that is booking revenue then HMRC doesn't have any jurisdiction. That USCorp pays US corporate taxes just like any other.
If you move any of the US income to your UKCorp or your UK resident person then the Crown will happily takes its cut.
Aha, that's fair. Judging by the site it seems you'll have to take care to demonstrate that you're not shifting UK derived profits; but either way you'll want to chat up an accountant.
In my jurisdiction, to my knowledge and experience, they're considerably more lax.
If it was just about registering a company somewhere else and your home tax authorities had no jurisdiction, every company in the world, small or big would be incorporated in tax havens like the British Virgin Islands only.
If a company is controlled from the UK, you can bet your bottom dollar that the UK tax authorities have jurisdiction. Only a very small minority, mostly less well-developed countries allow you to incorporate elsewhere without having to pay tax and report where you are.
Corporate tax residence internationally tends not to be a matter of where a company is registered, but from where it is effectively controlled. This is a matter of fact, not a matter of paperwork, so you can't get around it by just appointing a buddy to sign papers who lives in the right country.
Not only that, incorporating elsewhere opens a world of complexity, pain and double taxation.
A simple example:
A US LLC with more than one owner is usually taxed as a partnership - eg, US tax is due at individual marginal rates.
The UK on the other hand treats US LLCs as "opaque", which means they'd want to tax it as a corporation (there are legal cases to this fact).
So a UK resident LLC owner could end up having to pay up to 39.6% tax in the US, then 20% AGAIN on the very same income in the UK, before having extracted a single cent from the company.
Then if they extract money from it, there's an additional up to 38.1% dividend tax, for a whopping 90% marginal tax rate.
Now, double taxation treaties _may_ come to the rescue, but I wouldn't bet on it being without a fight through the courts to prove they apply.
Yeah, LLCs don't appear to be the best method unless you can prove to the gov't how things were taxed (or not). That said, I'm not entirely sure things get that bad. First off, it's not a 90% rate, by those (worst case) numbers, it's a 70.08% rate. Still absolutely terrible, but... I'd take advantage of any advice you can find, both on local and US perspectives before committing to any course of action involving this product. Particularly looking forward to additional blog posts and resources on this, along with stories of best practices that are country-specific :)
Check chrisdew's answer above. It just doesn't work like that in the UK, or most places in the EU. If it was a totally different company, doing a totally different type of business, then you could argue the case that it was nothing to do with it. You would still have to pay income tax on any money you remitted into the UK though from your US or other earnings abroad.
In much the same way as the US treasury want's a piece of US citizens worldwide earnings, I believe.
You really do not want to mess with HMRC in the UK. They will chew you up and spit you out without a care in the world if you don't play by the rules.
Why SVB and not WF? Seems odd that the sponsor bank for your payfac distribution, that has more resources than SVB, won't equally house the account for this new vertical. Any particular reason?
Having used SVB at two startups now, they just get startups in a way that the big banks don't. They're not a huge multinational behemoth with its own corporate culture, but rather they specialize completely in the SV business/tech/startup world, it's their DNA. That little intangible is worth a lot.
That's anecdotal testimony really isn't it? and it's not true for fintech startups, SVB doesn't even bank Stripe's core payfac business. Other than the namesake, most fintech payment companies use WF, Fifth Third, Chase, Comerica or Cross-River.
reviseddamage: You were questioning why Atlas went with SVB and noted that SVB doesn't bank fin-tech in general.
There's no reason Stripe's selection of a payfac provider should (strongly) influence it's selection of a corporate/startup banking bizdev partner. Atlas is linking companies up to regular corporate banking services.
That is also not what I was implying. Banking shell companies is a very high risk activity frowned upon by the OCC as most of the time they are mismanaged. Only larger banks have the flexibility and the bandwidth, and the contingency to manage them. It would seem only likely the the bank that is already banking Stripe, would be the likely one to also bank the shell co's that would be processing through Stripe. Easier on the bank to have oversight and line of sight of the business activities. SVB on the other hand without having other oversight on Stripe, really no vested interest in Stripe's success, and much smaller bandwidth and risk management resources is the banking partner for the shell co's, that is strange, which is what I noted. It is not a normal and natural event, hence my original question.
I run an independent business in India and all my clients are in USA. I would rather setup a US based company where the regulatory certainty is much better in India. Keep and invest money within US to the extent taxation is not a problem.
I am pretty sure there are many more people like me.
Ease of payment processing alone might be worth setting up a US corporation.
In a lot of countries where Stripe et al. are not available, PayPal (shudder!) is the only way to collect payment from customers all over the world, and even PayPal isn't available all the time.
For example, in my country of citizenship, I can use PayPal to collect payment from foreigners but not from people in the same country, so I would be forced to maintain two payment processing systems (a domestic-only gateway as well as PayPal for the rest of the world) and add a lot of friction to the sign-up process if I incorporated there.
It's not so much about entering the US market imo as it is about being investor standard ready. This is essentially the step 0 to standard investment contracts
Come on, we can do without the rah-rah. US banking and law is extremely backward. Everything I can do in the US, I can do here in China, and we have massive mobile payment penetration. Most of Europe is far more advanced. Even East Timor has the IBAN. You guys are still stuck with bank backend systems mailing "checks", and multi-day ACH. The only reason the rest of us find it hard to get payments is because the credit card monopoly is tantamount to a global protectionist racket and is supported as such by US politics for intelligence purposes, just as SWIFT is.
I can see a marginal convenience factor but I'm struggling to see anything beyond that. Is it that hard to incorporate and set up a bank account in the US? Incorporation in the UK is a 10 buck 10 minute online process already and opening a business account is only harder really due to money laundering regs which I don't think would be solved by 3rd party automation.
> Is it that hard to incorporate and set up a bank account in the US?
Yes. Yes it is.
Let me put it this way: Setting up a corporation is trivial.
Setting up a bank account can be a literally insurmountable hurdle for a business that is not based in the US.
Banks can choose to let individuals and businesses open new accounts purely within their discretion, and as often as not they want the business owners to be physically present with their identification in order to open accounts.
This is a regulatory requirement, part of the "Know Your Customer" doctrine. In plain words, banks are required to know who is the client who has opened an account.
Most banks will be risk averse and will not open an account to anyone applying online from abroad. Even for US persons applying online, they will ask quite a bit of documentation.
Some banks (but not all) will open an account for a non-US person, when the non-US person physically visits a US branch, with proper identification (typically a passport) and documentation on why they want the account. But even in such cases, it is up to the discretion of the bank employee to decide whether the risk of opening an account for a non-US person is worth the benefit. So, the same bank may give different replies to the same inquiry, depending on the branch asked.
As a concrete example, TD Ameritrade will open easily an account for a foreigner in the Chinatown branch in NYC, but will not open an account when the same customer visits a branch in midtown in NYC.
I live hundreds of miles away from my bank's brick and mortar, and when I call, I think I'm still a bit of a novelty to them. "This customer doesn't actually walk into the building ever? Fun, I want to talk to the mystery person on the phone!"
This sounds about right as the US would have hit market maturity much earlier in the tech cycle. Same with mobile networks, which are also backwards compared to those in Europe which came later and leapfrogged due to advances in tech and incremental improvements. And now we start to see the same effect in Asia, which is beginning to make Europe look like a backwater.
This is cool, but they should not offer a C corp as the default choice. An LLC should be the default for the vast majority of entrepreneurs. The only reason VC-funded companies are C corps is becaused VC LPs don't want to be hit with taxable income (which would flow through the VC to them). An LLC is much better for a variety of reasons:
- Flow through taxation = you only get taxed once. With a C corp you pay corporate income tax and then you get taxed on any distribution
- If you sell the business, you better hope you have enough leverage to get a stock sale and not an asset sale, because in an asset sale, you're again getting majorly double taxed. The vast majority of exits are asset sales though because they shield the purchaser from unknown liabilities
- From an LLC, you can easily become a C corp. From a C corp, it's majorly difficult (practically infeasible) to become an LLC; you retain optionality in one case but not the other
To kick off the beta, we found that the C Corp was the best place to start based on what entrepreneurs in emerging markets were already looking to do. We go into much more detail about C Corps and their tradeoffs when we invite someone to the beta. In addition to other company structures (like LLCs) here in the US, we're also looking at equivalent structures as we expand Atlas globally.
This usually assumes a larger net income for the business - I believe when you are just starting out LLC makes the most sense then you can transits ion to S-Corp once renvues hit a few million
One important point when doing this: you must do payroll.
Depending on if you have no money coming in, or a small amount of money, it may not be worth it to do payroll... but that's only for the smallest of businesses.
In many cases it's true that an S-Corp or LLC will be preferable for a business, because they can be treated as pass through entities (under the IRS check the box regulations) and not subject to federal income tax at the corporate level. But S-Corp's have some significant limitations for a startup company seeking investment--most importantly, they cannot have multiple classes of stock.
As others have mentioned, we've started with the C-Corp form because we think it will be what most of our users would prefer initially, but we'll look at expanding it to other forms.
Not so fast. These are getting formed in Delaware, but I believe if you operate in another state you have to register and may be subject to their taxes.
In California there is a "gross receipts tax" based on revenue for an LLC. Do over a million dollars? Pay $6,000 in LLC Fees. Fine for a software co or a law firm not a huge deal. Ecommerce can be a crazy low margin business though and many Stripe customers could get hurt.
"These are getting formed in Delaware, but I believe if you operate in another state you have to register and may be subject to their taxes."
I think the Delaware corp is a fine idea and a good choice here, but combining that with a Silicon Valley Bank bank account gives me pause ...
California really goes after state tax revenue, and I worry that a corporate entity that has no presence in California, and is not a CA corp has created an opening with a SVB bank account to allow CA FTB right in ... and they are aggressive.
I would feel more comfortable if the bank account was also in Delaware...
While I agree that there are many confusing jurisdictional pitfalls in incorporation and banking, this isn't one of them. SVB in particular has customers all over the nation and it is ludicrous to suggest that a state's tax authorities would go after customers of banks based in their state as if they had jurisdiction over those customers' business conducted outside the state.
Law is a messy business, but they have literally taken the most typical arrangement for startups in US accelerator programs as the first template for Stripe Atlas. I can't imagine a safer set of choices.
You are right and it's also much cheaper to form and maintain an LLC. I think that forming an LLC in Colorado is the cheapest option ~ $250 total costs. That is great if you're just bootstraping and don't know if the business is going to be successful. BTW, if you're not a US citizen + the business is providing services + you're the only owner (single member LLC), then there are NO TAX-paying requirements.
Also, the business might not succeed, so why waste all that time+money on creating a C Corp, which is even more expensive to dissolve? C Corps also have many more expensive legal requirements.
If the business is successful and you plan on getting VC money, convert it later to a C Corp.
> BTW, if you're not a US citizen + the business is providing services + you're the only owner (single member LLC), then there are NO TAX-paying requirements.
Does this mean no state-level tax-paying requirements, or no tax paying requirements at all?
In other words, for an overseas non-citizen sole-owner of a service-providing LLC formed in Colorado, are there no US taxes due at all?
That's right, you owe no US taxes. You don't have what is called "Effectively Connected Income", that is - you provide services from outside the US, not within the US. Since 'single-member LLC' is pass-through entity, that means the person is taxed (Not corporation) and you(person) are outside of the US and owe no US taxes at all.
However, you might owe taxes in your home country.
If you sell goods or there are co-founders, then you have to pay.
> However, you might owe taxes in your home country.
This line is key. You can't escape taxes, you can only change where you pay them (and therefore potentially how much you pay...)
The complication with setting up a business in the US is figuring out both what the IRS expects and what your country's tax agency expects. This varies both based on treaties with the US and based on local interpretation of US company structures. You have to be careful, or a few years later you could owe back taxes either to the IRS or your local tax authority, even if your only mistake was not filing the correct paperwork to say you didn't actually owe taxes.
A better way of saying you don't owe taxes is to say ... understand what taxes you owe, it could be $0. You still have to file, however, and you'll have to file both locally and abroad. :)
It varies state-to-state what constitutes "doing business," but just having a bank account usually doesn't qualify. Coming from harmonized tax laws, the US is an unexpectedly different place. But this is a step in the right direction!
EIN is free, obtained by phone if a foreign individual is setting up the company, or if you've already called, it appears you can use the website to set up an EIN for a local company so long as it's a subsidiary (even international) of a company with an existing EIN. Theoretically slashes $100 off the cost. ;-)
Registered agent... that's a tricky one. I saw this advice on Reddit: "Lots of small business law firms will serve as registered agents for free. Really the only purpose of the RA is to accept service if you get sued, and they figure you're most likely to hire the firm that's already looking at the complaint and forwarding it on to you."
Also some registered agents are national, e.g. Harbour Compliance, just one I found on Google. Here are others: http://registered-agents.credio.com/ (hmm, this website is less useful than I expected, remember to check off "All 50 states" or you'll be missing some...)
And the annual tax is if you're doing business in CA, even if you filed articles of organization in another state. Once you clear $250k it goes up to $1700!
I 100% agree with you on principal, but the initial purpose of this seems to be specifically to set up companies within accelerators, which are all going to be Delaware C corps so the VCs will invest in them (as you say).
An LLC can elect to be taxed as a C corp, but that's not the same thing from an investor point of view. An LLC taxed as a C corp still has interests instead of shares and still has use an Operating Agreement under the relevant state LLC act.
Changing entity types isn't especially hard, but it's tedious. Usually you do some sort of subsidiary merger maneuver.
There are also tax consequences for switching corporate structure. The laws may have changed from when we did a few switches between LLC, S, and C, but those were far from only tedious. There was a lot of money we suddenly became liable in taxes.
It is expensive and time consuming to go from LLC to C Corp. Maybe you mean S Corp which has some similarities with LLC but it is easy to switch to C Corp if you need to.
I generally agree they should not offer C Corp though because the paperwork is extremely complicated and cannot be done correctly by an internet form at least in my experience.
EDIT: I should have said very unlikely to raise VC investment even though it is technically possible to raise investment with most types of businesses such as LLC. [1]
This is wrong. You do not have to be a C Corp to accept investments. Not sure where or how this idea got started. There are even advantages to LLCs that some savvy investors prefer as a matter of fact. It more comes down to the source of the actual money in the fund than the fund itself.
Also they are quite easy to setup. Requiring a simple Internet form and a few checks written here and there.
Additionally it is extremely dependent on the LLC in question as to whether switching will be difficult later on in any way. Sole member LLC with no additional equity holders? You can fill out a form.
EDIT: your edit is wrong too. Whether you switch it from "investments" to "VC investments" or provide a source to attempt to backup your falsehoods.
> EDIT: I should have said very unlikely to raise VC investment even though it is technically possible to raise investment with most types of businesses such as LLC. [1]
We should be careful in how we continue to spread this common misinformation. It is not helping people who are actually new to this and trying to learn. The likelihood of landing VC investment has little to nothing to do with you being an LLC or not.
VC attorneys convert LLCs in their sleep. If they want to invest in only C Corps and you're an LLC, between your legal and their legal: it'll get worked out.
"VCs" is not some catch-all well-defined term. To say that all venture capitalists "require" you to be a C Corp is incorrect and further reinforces the very issue I'm trying to address here. There are lots of different types of venture capitalists. From large funds, to institutional investors, to individuals, and everything in between.
Some of them require C Corps. Some of them require S Corps. Some of them require a specific C Corp like one in Delaware. Some of them are just fine and dandy for LLCs. Some prefer LLCs. For all cases[1]: there are appropriate methods and paperwork to ensure parties can come to agreements.
Continuing to add comments to this site with phrases that characterize VCs as being a single entity is confusing and not helpful.
New founders have a lot to worry about. Whether they created the right type of company or not, is so far removed from initial worries and so often easily taken care of at later dates. I don't think it's helpful at all to continue to try and convince them that there is a wrong or right way to do things.
[1] - I dont have any examples where a business owner and an investor couldn't come to an agreement when both parties wanted to work together.
There's a reason this Atlas thing supports Delaware C Corps and only Delaware C Corps. I agree that founders have a lot to worry about. So just get the Delaware C Corp and move on.
You can laugh all you want but this is a pretty serious topic that most founders get completely wrong. I am a bit adamant about the correctness of this because I've had to repeat the advice and information to a lot of people.
For some reason you, and a lot of other folks, have gotten ideas in your head like:
- an LLC is somehow a lesser entity than a C Corp
- you can't raise money with an LLC
- you're not as well protected with an LLC
These are all completely false in a lot of very important ways that can make differences that have many commas when it comes time for liquidity events or payouts of any sort.
> You can laugh all you want but this is a pretty serious topic that most founders get completely wrong.
I appreciate your passion and agree it is an important topic. I just found that specific sentence funny.
> an LLC is somehow a lesser entity than a C Corp
Personally, I have never thought that. They are just different.
> you're not as well protected with an LLC
I would have agreed with you until recently. I bought a house and the audit for the home loan was extremely thorough. They wanted tax and financial records for all sorts of things that I wouldn't think would be relevant. Since I am self-employed that included my business tax and financial records. I pushed back because I don't think that is any of their business and they relented only because it is a C corp. I have only bought one house and have one loan. I don't know if it is standard practice to audit the business too, but in my case having a C corp saved me from a business audit.
> you can't raise money with an LLC
Technically correct, but I strongly disagree with the blanket advice that first become LLC and then later become C corp if necessary. Likewise I strongly disagree with the blanket advice to just be a C corp.
I always ask people what the ultimate goal is. If the ultimate goal is to become Google, Facebook, etc (forget likelihood), then I say C corp. Otherwise I usually say LLC.
What being a founder really means is your job is to build confidence. Build confidence with employees that you are a good leader and they can depend on a paycheck from you. Build confidence with customers that you can build a good product and you will support them if they have problems. Build confidence with investors that you will make them money.
One way to build confidence with VCs is to have the business set up as a Delaware C Corp. If your goal is to become like Facebook, Google, etc then you will probably need VC money at some point and you will be forced to become a C corp eventually too. Why not just do it at the beginning and show VCs you are serious and have some knowledge about what it takes to become a big, public company. That isn't the only way to build confidence nor is it the best way, but it is a way. Why start with LLC and make it a question you have to constantly answer?
You as an initial member can sell membership interest, but reselling that interest can be difficult or impossible for a VC. They're looking for future liquidity, and an LLC interest just doesn't have the same statutory guarantees that a C corp share has.
That's not really true either. If the operating agreement permits reselling then you can resell. A C corp's operating agreement can also restrict selling to the point that it becomes impossible - if that's what's wanted. It's common for investors to want such restrictions because they don't want to find that the other investors in the business have changed without their agreement, or that one of the founders has sold a share to an investor that they don't approve of.
And you can always go from LLC to C if you're taking VC investment.
And you should be able to stay as an LLC if VCs would learn to use blocker corps like PE shops do. VCs don't do that but not for any principled reason as far as I can tell.
While I don't have much to add, this is very interesting and almost feels patriotic (as an American.) Stripe is, in a way, hacking the global economy and luring entrepreneurs to the do business in the United States. While this iteration may fall short of perfection, or open questions, it also opens up some imagination and interesting ideas or possibilities.
Could this be the beginning of startups offering citizens of one country, the ability to (easily) incorporate / operate a business from any nation? Perhaps this is more interesting when considering crypto-currencies which are already eroding national boundaries in some sense. While I cannot say this is a good or bad thing, it is interesting to think about the consequences and evolution of this concept plus crypto.
To me, the idea of operating a business (pseudo-person or entity) in any nation, is intriguing. Especially mixing in the possibilities of Ethereum, Blockchains. Forex. Hm... Imagination running wild right now.
Most of the worlds capital flows through off-shore finance (Cayman Islands, Isle-of-man, etc), see http://treasureislands.org . For finance, biotech, etc. jurisdiction arbitrage is pretty standard. It's what the big corporations and billionaires do to avoid taxes, and more generally the law. OFC's are strongly tied to the financial centers of NY and London. I doubt that this product is all that useful for entrepreneurs outside developed countries, who have access to legal infrastructure anyway. The real breakthroughs will come from borderless settlement of contracts on the blockchain, i.e. situations where one doesn't rely on lawyers, but computers. One can think about the cost to do an IPO (millions), versus issuing an asset on the blockchain (cents). With Stripe one can really see the hypocrisy of the financial system: they have sponsored an Altcoin called Stellar, but they ban businesses who are dealing with Cryptocurrencies.
My intrigue is more-so the possibilities (extrapolating the idea) of doing this in other countries. Being able to EASILY incorporate a business in another country, regardless of the owner's country of residency, could have profound effects on economies and business models. Yes, conglomerates are already able to do this. However, making incorporation in another country easier for low-budget, small businesses, or new entrepreneurs would be an interesting new capability which is not currently feasible. In other words, lowering the barriers to entry for accomplishing that task.
If a single entrepreneur could configure a multi-national business that would be interesting. For what purposes or benefit, that is up for imagination and debate. But this whole idea is interesting from a globalization standpoint. I do understand where you are coming from regarding crypto-currencies; I was merely referring to them as a transfer of value mechanism.
Without descending into a long topic, there are still issues with issuing colored coins or stocks using crypto-tokens. For example, where do you litigate issues or handle shareholder complaints? Crypto-stocks are still premature and lacking proper frameworks; real world case studies and success stories are needed. Crypto-companies still rely on geography bound jurisdictions to handle hosting, accounting, laws, etc. Perhaps in the future many issues will be resolved with crypto-autonomous contracts (in theory.) Or with other agreements and digital court systems, etc. In the meantime, if you issue a crypto-stock, the reality is shareholders need legal systems to work within, otherwise crypto-stocks are literally dust without any enforceability.
In the livestream they said they are working with another region for Atlas they'll announce soon. My guess is Ireland which has better taxation than the US and the best in EU (12.5%).
Where are you getting that number? Northern Ireland will likely be dropping it's rate to 12.5% in the near future, giving businesses access to the UK at the same rate as Ireland.
>However to qualify for the lower rate, companies must show they are genuine innovators and employ highly skilled people in the country.
Under the policy, dubbed the 'knowledge development box' (KDB), firms will need to demonstrate their earnings are tied to patents and copyrighted software that were created by research and development carried out in Ireland.
>The aim is to encourage local and international businesses to hire skilled workers and boost innovation, rather than simply basing tangential parts of their operations in the country to pay the low headline tax rate.
That's something we are building at BitCorps.co. Stripe Altas is a great alternative if you want to set up your business in the US. We let you operate in our supported countries as if you had a local entity.
This is an excellent point. I would be very interested if this (and similar tools which will undoubtedly rise) will force the governments of nations worldwide to be more business friendly.
This means nothing for me (and should also mean nothing for the targeted audience of the post).
I've been constantly ignored from Stripe since they launched their beta in Mexico (actually way before that, I subscribed years before, when Stripe launched in the US). I can't do business with them because I'm not part of their secret club, while at the same many businesses here somehow get access and start using them. That feels like some kind of unfair competition.
I know, you are going to say, they are not obliged to provide service with you, but then, after reading the kind of PR they publish (like this one) you would feel like it, at least they should be morally obliged to stand by their word.
"Stripe Atlas is invite-only to start. ... You can apply directly or get a referral from one of our partners."
Oh ok, so another secret club, and this time the gatekeepers in Mexico are some guys named Antoni and Lelo de Larrea , which for you outside of Mexico, the Larrea family are a powerful group in Mexico that came to be through corruption, government favors and pretty much all the things you usually hate from Mexico. Remember when the miners in Chile were trapped and then rescued? The same thing happened at more or less the same time in Mexico, a lot of media coverage here in Mexico, the mining company owned by them, it was relatively cheap to rescue them but they decided not to do it, they let them die because it was not worth the money. And now I have to do business with those people if I want to process my payments?
The whole purpose of Stripe is to make basic tools for starting an internet business more broadly available and without barriers. The core of our strategy is to eliminate gatekeepers and secret clubs. We’re openly available in 18 countries today (you can see the complete list stripe.com/global) and hundreds of thousands of businesses use Stripe after openly signing up.
Because businesses’ livelihoods and revenue are at stake, we start new products and countries in an invite-only beta so that we can fully test things and fine-tune the details before rolling them out more broadly. We don’t think it’d be responsible to try to maximize the initial product experience at the expense of doing’s what’s best for the businesses who’ll build on it. So with Atlas (and in Mexico), we’re starting in invite-only mode with the goal of expanding access (and making it openly available!) as soon as we can.
I'm sorry we weren't able to get you signed up sooner, but we’d love to have you on board with the beta in Mexico. If you drop me an email (tmf@stripe.com) we’ll send you an invite.
Atlas is suited for entrepreneurs anywhere in the world, including in African countries. You can apply here: https://stripe.com/atlas
The tax requirements will vary for each company. At a minimum, you'll need to pay US federal income taxes on your US income, and pay the Delaware Franchise Tax each year. Since we know this is a nuanced topic, we've partnered with PwC to give you guidance from a US perspective when you are invited to Atlas.
"The whole purpose of Stripe is to make basic tools for starting an internet business more broadly available and without barriers."
Well, I didn't have to publicly shame PayPal and wait for years to get invited to use their platform. So I guess they fill better the whole purpose of your company.
Stripe was appealing to me (and a whole lot of other developers) because of the developer experience you introduced back then, you kind of felt that Stripe was cool and was made with you in mind. After this experience I felt betrayed (and many others I know).
Taking a step back an evaluating all the choices I currently have Stripe is the most expensive one (no volume discounts). PayPal improved their APIs and are now easier to use, and the things you can implement with them are amazing (chained payments, subscriptions, reserved charges, preauthorizations, etc...) I know you can do some of those things with Stripe too, but not all. And your newer product has the amazing feature of being taxed on another country and then deal with double taxation schemes and all the fiscal issues that come attached?
Obviously depends on your use case but with PayPal you break even at $5,000. Way lower than 80k month. And "get in touch", yeah I know what happens when you try get in touch with them.
Also consider adding: [Disclaimer: I write books about integrating Stripe with your business]
Re: your link
I organize once-yearly events (in de US) with up to 1000 attendees, incl. 30% Western-European cc holders (not from the fraud-prone countries in Europe).
In addition to the higher fee structure for international cards, Paypal's refusal rate of international cards was atrocious.
The final drop in the bucket was that after 5 years (same event, same time-frame, same number of attendees, same volume), Paypal froze all funds 3 days before the event was to take place.
Switched to Stripe 3 years ago rarely have a problem. Great interface, great support, no penalty-for-amex rates, low 'card declined' rates, proper handling of disputes (unlike paypal who typically found in favor of the person paying) Daily automated deposits (after 7 days) are a major plus too. Definitely worth the extra money ($500 on 75k volume as per your table shouldn't make anyone pick Paypal)
They respond quickly if you're doing $80k a month in business with them, in my experience. Besides which, PayPal has way too many caveats, including a different rate for Amex and an additional 1% for international cards, according to the page you linked.
Why should I add a disclaimer that's already in my profile?
"They respond quickly if you're doing $80k a month in business with them"
If I were asked to put into words Stripe's attitude towards its users I wouldn't have come with a better example. Thanks.
"PayPal has way too many caveats"
IKR, like, "setting up a merchant account in minutes".
"Why should I add a disclaimer that's already in my profile?"
Because most people here would assume that you provide an unbiased point of view and wouldn't bother to check your profile. Didn't say you were hiding that, but that's what disclaimers are for.
Btw, disclaimer: I do not work for PayPal I just settled with them and I'm okay. Also (if you're from Mexico) check out PayU (formerly DineroMail), they are really cool too because they also process "offline" payments through banks and convenience stores.
Nothing personal, just business: when they launch a private beta, they want to select the businesses with most cash flow. I believe this is connected to the fact many things may be manually reviewed at a time. And how did you arrive at a conclusion that de Larrea are involved in Atlas? A quick search didn't show anything relevant.
This is huge. As someone who is involved in the digital nomad community here in Chiang Mai, Thailand - getting incorporation and processing set up for a lot of people here is very difficult.
Although places like Thailand are a great place for independent bootstrapping and there’s a solid network of entrepreneurs - one of the biggest hurdles is incorporation, banking and acquiring. This is taken for granted when you’re living in a first world country - but for the new location independent entrepreneur who is building their startup from cafes or coworking spaces in Chiang Mai to Ho Chi Minh or Medellin, getting a corporation, processing and a bank account structured is often a huge problem.
You don't need the US for that though. You can incorporate for example in Hong Kong with ease and even better tax advanteges.
For digital nomads in Thailand I think the bigger problem is that they can't get long term visas and are effectively breaking the law unless they somehow work for a local company which isn't easy as those need 4 Thais employed for every foreigner.
And even if you could get a corporate bank account here, the banks usually don't have good connections to other countries and the systems they use are not exactly flexible. Plus the bank staff usually doesn't know jack shit about anything.
Thailand is great for the food, climate, cheap living costs and culture. But it's really bad for foreigners who want to start a digital business.
Hong Kong is a great place to incorporate for tax advantages, but a terrible place for getting merchant processing or a bank account.
Remote openings are not possible. You can fly to Hong Kong and open a bank account in person, and they may (or may not) open one for you - but getting payment processing for a Hong Kong corporation with no processing history is basically impossible for the average person.
I have a Hong Kong company and I know many people who also have Hong Kong companies, and I speak from experience.
As for your other points about Thailand, you’d be wrong about that also - Thailand has no problem with you working independently or from coffee shops at all, it is not against the law and getting long term visas or even self-funded work permits for long stays is trivial.
As for companies, you can set up a BOI company for technology corps which is tax exempt for the first 8 years and the 4 thais for every foreigner rule is not applied, as I have.
However, in a round about way you have proved my point - living in these types of locations is preferable, but doing business here is usually not. Hence, why people incorporate elsewhere and the Stripe Atlas product nails it.
I have not found it difficult to get a corporate bank account and merchant account in the past in Hong Kong with HSBC. Yes you have to go there in person but I don't see this as a big deal. We had CC processing and your agents should have contacts to get you set up. Things might have changed in recent years.
And no I am not wrong. If you don't have a work permit which you get by working for a Thai company, you are breaking the law as you are not allowed to work without a permit. Full stop. I have not said that working out of a coffeeshop is illegal.
Long term visa again only by working for a local company. And if you go for the fake 4 Thais emploees route, sure that can work but you can get into trouble anyways because you are effectively working around the law.
Setting up a Bord of Investors company is not a trivial thing. It can take up to half a year, you'll have to pass the interview at the HQ in BKK and show some real company prospects. This is not something for someone who does web design or coding for some foreign company out of his condo in Chiang Mai. It's for people who want to build a real physical business in Thailand.
Much easier to incorporate somewhere else.
Yeah, things have changed in recent years in HK. HSBC HK has a horrible reputation now and they are very resistant to do corporate account openings and prefer your company is resident or doing business in HK.
Regarding long stay visas in Thailand - as I said, getting a long term visa or work permit is very simple you can do it through a company who will sponsor you for a modest fee. If you are interested I can provide you with links.
My BOI did take some time, you are right, but the process was relatively simple as I used an agency - but totally worth it.
Yes - much easier to incorporate somewhere else. Your experience with HK/HSBC opening a merchant account is simply not a reality anymore for the majority of people, particularly without processing history, nor is it in other countries using HK.
Anyway, this product offering from Stripe is a genuine game changer for people who want to operate from the US, want a business in a box and want to set it up remotely. I know many, many people who will jump on it.
>> Yeah, things have changed in recent years in HK. HSBC HK has a horrible reputation now and they are very resistant to do corporate account openings and prefer your company is resident or doing business in HK.
Good to know. Though it's kinda sad as HK really used to be a great place for business. I've seen similar changes in
>> Regarding long stay visas in Thailand - as I said, getting a long term visa or work permit is very simple you can do it through a company who will sponsor you for a modest fee. If you are interested I can provide you with links.
Yea but many such offerings are just circumventing the law and here in the south at least a couple of these companies got into trouble. And by trouble I mean the usual extortion by immigration/police.
Especially companies with nominees that hold the other 51% for you are getting more and more attention.
>> My BOI did take some time, you are right, but the process was relatively simple as I used an agency - but totally worth it.
Hehe the typical Thai way. Find someone (agency) who knows someone that makes the decision. Pay the agent a "service fee" from which a nice chunk goes to the official to incentivize a smooth process :)
>> Yes - much easier to incorporate somewhere else. Your experience with HK/HSBC opening a merchant account is simply not a reality anymore for the majority of people, particularly without processing history, nor is it in other countries using HK.
Again said to hear.
>> Anyway, this product offering from Stripe is a genuine game changer for people who want to operate from the US, want a business in a box and want to set it up remotely. I know many, many people who will jump on it.
Undoubtedly the offering from Stripe will be helpful for many people. Somehow I get the feeling that the US pushed other countries hard to make incorporation and especially bank account opening much harder in the guise of fighting terrorism and crime while itself trying to make it simpler. An interesting economic strategy.
> If you are interested I can provide you with links.
Yes, please.
Also may I ask, what's your view of Singapore as a jurisdiction for digital nomad incorporation? Braintree already supports it for payments, and Stripe is in "private beta"...
It's really cheap and easy to incorporate in the UK. Costs £15 and takes ten minutes [1]
The downside, if you care about such things, is that the company register [2] is freely available online too, so it's not one to go for if privacy is your goal.
Of course, never a HN thread about remote working without a Thailand subthread!
> in Thailand I think the bigger problem is that they can't get long term visas
To put this in perspective though, the longest visa I've ever seen here was a 3-year non-working business visa - effectively it's meant for people who regularly travel to Thailand for business meetings/etc but don't regularly "work" here (I know how stupid that sounds).
Other than that, the maximum visa for anything is 12 months. So while the 30/60/90 day stays are not great if you're doing a dodgy and working on a tourist visa, having a business visa + work permit is hardly a barrel of laughs. A Marriage visa is marginally easier, but obviously implies that you have a thai spouse.
> Thailand is great for the food, climate, cheap living costs and culture. But it's really bad for foreigners who want to start a digital business.
Having lived in several parts of Australia and operating as a sole-trader (similar to a single person LLC in the US I guess?), honestly the hassles to live + work in Thailand are a PITA but IMO they're worth it.
I can totally relate to your experience, and this is exactly why I started building a startup one year ago with 2 partners with this exact same goal:
Help companies get online ASAP, company incorporation, facilitate business bank accounts opening, negotiate excellent deals when it comes to online transaction fees and so on. We can also help integrate virtually any payment service provider in your IT system.
We'd love to hear from the issues you encountered and would happily provide you with advice, or more in-depth accompaniment.
Just drop me an email at t+stripe-atlas-HN [at] mekloud.com and we'll get back to you!
i can also vouch for this. I founded and ran a software company in Thailand for 8 years, and regret doing it the "right" way (incorporated) because of the administrative burdens associated with taxation. Additionally due to US banking laws (anti terror yadda yadda) it is very difficult to do business on the internet unless you have a bank account in the USA (or perhaps EU etc.. just an account somewhere besides Thailand).
> due to US banking laws (anti terror yadda yadda) it is very difficult to do business on the internet unless you have a bank account in the USA
Can you expand on what you mean by this some more?
I operated from Australia as a sole trader (similar to single person LLC in the US I believe?) and I'm now the Director of a Thai Limited Company. In neither case did I have a "US" bank account.
With literally one exception in.. 8 years, I've always been paid by clients via bank-to-bank Wire Transfers (the one exception used TransferWise). I've never had any issue with payments not arriving/not being processed?
In the last 12 months I've been using my Thai bank's NYC branch to allow US clients to make an ACH payment, and the NYC branch of my bank then handles the transfer back to Thailand.
Are you talking about B2B payments or consumer payments?
Yup it's really frustrating and ineffective to form a company here in Thailand. They really don't want all that startup money even though they could really make use of it.
Try Hong Kong, Singapore or other stable and modern countries with rule of law. You wont have much trouble doing online business.
There's some really misleading information on that site. Tax rates are misleading and just plain wrong in some cases. I'd take information on that site with a pound of salt.
Unrelated but i'll be in Chiang Mai next month for a couple of days, could you give some names of interesting cafe/coworking space there? I'll be with my gf (a designer) that is also interested in digital nomadism so would be great to meet people doing that
Hate to tell you this but you chose the worst time of year to come. Google “Burning Season Chiang Mai” - I’d recommend sticking to the south of Thailand, particularly the islands, and then come up around April 10 for Songkran. Punspace is the big coworking space, I’d recommend booking a place in Nimman and trying the various cafes there. Kaweh is a good spot if its not too busy.
Yup, ignore anyone who understates the problem (some prominent voices in the nomad forums are either in denial or have a vested interest), it is absolutely lethal during March and April. I love Chiang Mai but will be leaving on Friday night, probably returning mid-May.
With regards to adult content, the perception is that chargebacks would be higher, but in reality this is mostly a relic of the late 90's when credit cards were first accepted online. Porn pioneered the infinite continuity ("recurring subscriptions until you die") that is incredibly widespread nowadays.
At the moment, there are few non-merchant account ways to legally accept payments for adult content. They include such companies with terrible APIs/websites like: CCBill, Epoch and Verotel. They've successfully lobbied Visa & MasterCard to give them exemptions to provide "IPSP" services for "high-risk" adult content. In reality, working with them is probably the biggest risk. They often enforce arbitrary 30/60/90 day payment holds, require 10-20% reserves, and shut down accounts with no warning and withhold the entire amount processed indefinitely.
I'd like to see Stripe continue to do innovative things in the payments space and work with their payment partners to allow adult-content, at the very least with per-account authorization. The status-quo has been set by Ron Cadwell & CCBill: We will keep your money indefinitely, provide an awful API, and require 'hosted payment forms' (with no custom CSS; terrible UX) because no one is allowed to compete with us.
Which in turn is inherited from top-down pressure from the federal gov't[1], who are discriminating against certain categories of business purely ideologically.[2]
Seriously? Sexually-oriented services excludes a lot of legitimate, serious businesses. Seems fairly simple minded to me, but maybe that's the European in me speaking.
I'm sure it's a fraud / charge-back thing.. If you want to run 'riskier' businesses then you need your own merchant account. Although I agree i'm sure there are a few relatively straight-laced buisnesses that unwittingly end up in that bucket!
If something can be described as 'maybe' deceptive, than it probably is deceptive. I don't mean this flippantly - playing cute with being deceptive is not really helpful to customers.
Thanks for posting this. I am curious about the first item:
1. Virtual currency that can be monetized, re-sold or converted to physical or digital products or services or otherwise exit the virtual world
Would this include a digital service for which the user might pre-pay? I.e., the service charges $1 every time one uses it, but for convenience's sake one can pre-pay $20. If one decides not to use the service anymore, one can request and receive an immediate refund.
I can see why a payment provider might wish to prevent such an arrangement, but it isn't clear to me that this rule does prevent it.
Any cc processor has to worry about age restricted products or services using "Enter your credit card details here" to do their ID checks, especially since that is often combined with dark patterns that downplay the fact there's a charge associated with that.
And age-restricted products tend to come with a whole host of other liability issues which they probably don't want connected to Stripe-registered US shell companies.
It also doesn't make that much sense, considering that 15-17 year olds are regularly issued debit cards for checking accounts (though the parent is also usually a joint account owner). AFAIK nothing in the Visa/MC network has "Birthdate" field.
Bear in mind this is not a complete list. They can also arbitrarily decide they don't like you even if your business isn't explicitly mentioned on the list and shut down your account even if you had zero chargebacks and zero refunds made.
Doesn't this cover any website that collects personal information, since the Children's Online Protection Act prohibits that for people under the age of 13?
The Children's Online Protection Act (COPA) was struck down as unconstitutional by the Supreme Court. Are you thinking of the Children's Online Privacy Protection Act (COPPA)?
Except I could argue that most major company's sales pages are deceptive. I mean just look at cellular or cable services in the US, find me ANY that isn't being deceptive in one way or another.
Heck I'd even argue that Google Fiber's page has several statements and claims which are suspect.
Perhaps the least talked about hidden danger with this service is the fact that by establishing a US nexus, you're putting yourself in the crosshairs of patent trolls. Software patents pretty much aren't a thing in the rest of the world, and you can happily trade from abroad with US customers without patent trolls trying to shake you down. That and the vague potential for national security letters should you have possibly interesting information.
It's all a balance of risk though and for a lot of people the benefits will outweigh these risks. For a lot of people these risks will never materialize.
A very nice product it seems. But people should be aware that having a US business, bank account and so on makes you a "US person" in the eyes of the US government which comes with downsides. If you recently tried to open a bank account somewhere you might have seen the form you have to fill out which tries to discover if you are indeed such a "US person". I don't know exactly what the result apart from probably the bank refusing to take you as a customer is since I am careful to not become such a "US person".
Nowerdays it's becoming increasingly a better idea to incorporate in a different country than the US if you can, especially for online businesses including privacy, tax and ease of doing business.
It is of course possible (likely?) that the policy could be expanded at any time... so perhaps maintaining a maximum distance is indeed a prudent policy for those currently outside the grips of the US tax feeders.
For banking purposes you can already be befined as a US person by just having a US phone number, mailing address or generate some brokerage gains from any US business.
You don't have a U.S. phone number, mailing address, etc. You only own shares in the business. Though you may also be an employee and hold other positions within the company. You aren't anymore a U.S. person by owning shares of the corporation you setup than you would be a U.S. person by owning shares in Microsoft.
Owning a US company is exactly the kind of "relation to US" (the phrasing banks use here, not "US person") that will trigger the consequences described by other commenters.
As a US Person, many European banks will either decline your business or only offer you a very expensive special US Person bank account. It's because of the ridiculous requirements the US places on them regarding tax reporting.
I'm very aware that US citizenship comes with legal hurdles when dealing with foreign banks, especially in Europe - but I'm not aware of any such issues with non-US citizens merely owning a US business entity.
I am not a legal expert but this is from the application form of Citibank:
7) US PERSON CERTIFICATION:
I/We certify under penalties of perjury that (Please tick one box)
(i) I am/We are not a U.S. Person (as defined below)
...
“U.S. Person” as used by the Bank means any of the following:
...
(ii) a United States resident; meaning:
...
d. an individual with a U.S. mailing address or U.S. telephone number.
That's on an individual basis. A corporation is an entirely separate legal entity that is not you. (That's the whole purpose of it.)
Generally, indications that a natural person may be a "US person" include[0]:
* A U.S. place of birth
* Identification of the Account Holder as a U.S. citizen or resident
* A current U.S. residence or mailing address (including a U.S. PO box)
* A current U.S. telephone number
* Standing instructions to pay amounts from a foreign (meaning non U.S.) account to an account maintained in the United States
* A current power of attorney or signatory authority granted to a person with a U.S. address
* A U.S. "in-care-of" or "hold mail" address that is the sole address with respect to the account holder
* Special note: Others affected by FATCA include
any non U.S. person who shares a joint account with a U.S. person or otherwise allows a U.S. person to have signatory authority on the account.
* Any business or not for profit organization that allows a U.S. person to have signatory authority on a financial account.
They're basically looking for Americans and permanent residents who have foreign accounts so that they can report the accounts to the US Gov.
IANAL. That said, here's my armchair, never-done-it analysis from Canada: That is what a W8 form is for. So if you have an individual account with a US bank, the bank knows you aren't a US resident, meaning you don't actually reside in the US. Now, as someone non-American but connected to a company doing business, that's another W8 or W9 form. But even then, while you might have reporting obligations to the IRS as an individual (I'm not sure) your company definitely would, as in all scenarios, a US based company is considered a "US person" even if it has foreign shareholders. That you pay taxes on the company should reduce the need to pay taxes as an individual. If you reside in the US more than 50% (IIRC) of a year, you become a US resident even if you don't have a special visa or citizenship. If you don't actually live that long in the US it's easy to argue that you're not connected to the US, but you will likely have to self-report that. It might be a question of how you get paid too. If you set up a subsidiary C-Corp where dividends go back to the parent company, you'll pay taxes on the profits and taxes at home, but as mentioned elsewhere, you shouldn't pay more tax than your rate in both countries, whichever is higher. This is the cost of doing business -- taxes. Alternatively, you could work remotely for the company, thus taking profits before they are subject to tax. This is a more complicated structure and you might end up paying more taxes, it depends on the income brackets at your local jurisdiction. The reason you consult is not because US law is complicated but because most legal systems internationally do not have easy ways of dealing with US company income for taxation. LLCs can be especially interesting internationally, because their tax obligations can change based on how they declare themselves on the IRS form.
I'd have to copy a whole page of various things that make you fall into that definition. Citizens and residents obviously are such US persons but there are others like having a US phone number. See my comment above.
Again, IANAL, and I'm Canadian with a US bank account but yet to "do business" in the US (just having an expense account does not qualify in most/all jurisdictions): Having a US phone number does not make you a US resident -- but having a US bank account means proving to the IRS and your bank that they should not withhold any taxes on your personal account. Having a US phone number does not in any way on its own require you to fill out IRS forms. Having a bank account does because your assets could be frozen, hence W8 and W9. Having a company in the US means potential tax returns, because now you're officially doing business federally and also at a state level for your company. Even then, you are NOT a US resident personally, unless you physically reside within the US more than X% of the year. There are also many different tax treaties under which your W8 forms can provide exemptions, though some declarations might still require annual filing to declare you're not a resident, or pay taxes on dividends. Your US company is considered a US person, however.
Sure, that is correct in theory. In practice most European banks won't touch you with a ten-foot pole if they even just suspect you might need to fulfill US reporting obligations. Therefore they use a much broader definition This is not only about tax but all the cost associated in dealing with all the forms which makes you an expensive customer.
But if you simply own shares in a US company, surely banks will deal with you then? Or if you get paid by a US company as a foreigner? It also is probably on a bank-by-bank basis that things are handled. FATCA was introduced in 2012 but it's been 4 years, long enough that there should be one or two banks at least who will play nice...
To be clear, in Canada, my understanding is that it's very hard to get a bank account as a US person unless actually in Canada. But top banks and some credit unions are prepared to handle FATCA-required forms and reporting.
Big difference too between foreigners with US interests and actual US persons with foreign interests, I would think...
So any tourist who's bought a pre-paid SIM at an airport is an "US person", and probably therefore filled out a form or two incorrectly? (Or even illegally?)
I live in Algeria, and we can't use credit cards here, my bank account doesn't support debit cards transfer and if I veer receive 10$ from outside the country, then I'm in for 1 day of questioning the resources for those money, This is a great use case for my country and great initiative from Stripe, Thank you.
I'm from Tunisia, a country with heavy currency controls, where it is actually impossible to send money out of the country. Of course, if you're a foreign company etc. you can, but not for regular citizens.
So what does that mean? No credit cards online, no bank transfers, no PayPal, and so on. I hope this service can somehow help aspiring local entrepreneurs.
The only way I can think of is Western Union. But the fees are ridiculously high. Even then, the sender is the receiver. I'm not sure how that would work.
I'd be interested to hear how this works out for you too! I live in New York, but my father's family is in Bejaia and a lot of them have similar problems.
Recurring billing is such a pain in India and we have been thinking about registering in the US for a while. More than the high costs some of the lawyers charge, the issue is with opening a bank account.
Applied for the beta. Hopefully, we'll get accepted soon. Even if I don't make it to the free list, I'll gladly pay the 500$ fee. That probably should tell you enough since it's coming from a bootstrapped startup founder.
Wow! This solve so many problems that our startup (www.worldpackers.com in Brazil) have!
We are a global marketplace, so we have to charge people from everywhere, and stripe still doesn't cover Brazil.
Opening a Delaware company is a must have as we are starting a series A fundraising.
And the network, wow!
BUT... I wonder how achievable is the direct application as a way for getting in the beta. We are not part of any accelerator by choice (except YC that rejected us on the interview phase). We have a great company, just not important friends.
So, a question to the community: What is the better aproach: Direct application or look for someone to refer us?
Hey! I work at Stripe. Worldpackers looks pretty cool -- nice job!
We kicked off a private beta in Brazil not too long ago that might interest you. You can sign up here: https://stripe.com/global#br. (Once you have a Stripe account, you can accept payments from anyone, no matter where they're based.)
If you end up deciding to incorporate in the US (say, if it helps with your fundraising), the best approach during the beta is a referral through the Atlas network. We're eager to expand this as we learn more from entrepreneurs like yourself.
That is exactly what I was thinking. Though I am not sure how Stripe will be able to focus on both these schlep problems considering their work isn't finished yet (expanding to all countries).
Expanding to more countries will be a problem. Take India for instance. Tons of regulations and you cannot do a recurring charge. It's easier for Stripe to get people to incorporate in the US and become their customer rather than try to expand to India, comply with all the crazy laws, and then accept Indian customers.
Interesting angle. For a while I've wondered why nobody does a tech/startup version of "Company in a box". This looks like it's exactly that. Incorporation, payment processing, the works.
Is Stripe getting a cut of the eventual revenue from the service providers that are providing the offerings? What's the incentive on their side? Or are they just hoping to scrape by on the transaction fee revenue (which are way less than people think they are because they pay out most of it upstream[1]).
Also, what's the expiration on the $15K of AWS credits? The usual one year or longer?
[1]: If you're wondering why just think about how you get "1% cash back on all purchases!".
The $500 is above market rate for an LLC + US bank account. Do you think this cost will be revised down sometime in the future? Another challenge is that some folks can get in serious trouble (ie. imprisonment) with their local government for even having a foreign bank account. This is because local governments see it as a drain of foreign currency reserves like the USD/EUR, which are much needed by the country in question for imports. So this info needs to be kept top secret. What measures does Stripe take to prevent this kind of info from leaking?
Above market rate? As someone who has vigorously engaged in this process for literally years (due to the needs of myself and also my friends), the best I have ever seen is $800, which is the service I ended up using. Do you have any examples to point to?
A few places offer "Company in a box" but without the automatic bank account (e.g. search google for any "Register a company" keywords or even the more startup focused https://www.clerky.com).
The most amazing this here is obviously the automatic bank account integration. The last time I set up a SVB account I had to drive to their Santa Clara office, meet someone, convince them I'm not a hack fraud (lol, tricked them on that one), then fax over paperwork, then wait a week for things to get enabled. Just a lot of friction before even getting started on the real goal of setting up a business account for accepting iOS platform payments. (side note: let's hope the SVB web interface has gotten better since then. last I checked, it felt like a scaled up 1996 web app... kinda awful all over, but it got the job done.)
This offering does sound like it's more focused on helping non-US people to just start processing US payments easier and not expressly around startups (a la clerkly). It skips some startup-isms we all know and love (83b forms not expressly mentioned, does it allocate "startup levels" of default stock during incorporation, etc), and a big thing not mentioned: it doesn't register you as a foreign entity in a non-delaware state. You'll get a nastygram from your state tax office if you don't register as a local foreign entity (they'll scrape IRS details about you to figure out which companies exist in their state but aren't registered). Registering as a foreign entity is different for every state (more fees) and sometimes more BS ("you must notify the public of your new corporation by paying for notices in two (2) newspapers for six (6) weeks to complete this process" (that could be just for actual corporations and not foreign registrations though)).
Looks like an amazing offering overall, and it's always amusing to see how AWS throws credits all over the place. If Google could wise up to it (assuming it's not an Amazon promotional exclusivity contract), they should be throwing 4x-10x AWS-sized credits at all the same targets too.
Yea, that's a very accurate guess - the way to think about it is that Stripe Atlas will more or less do the bare minimum necessary to get you processing payments on Stripe (though they put you in touch with folks to handle the rest).
Clerky's more of a full-package solution from the legal side of things (but obviously not on the banking / payments side).
There's also no need to apply for Clerky - anyone can just sign up and get it done immediately.
The most curious part about Stripe Atlas is they are just ε away from doing it all themselves now. Doesn't take giant leaps of the imagination to see where it could be headed next.
The whole "apply" stage is probably just because it's a new service. Don't want to have 10,000 people jumping on your as-yet-unproven process without a gating mechanism.
I'm wondering how Atlas compares to Clerky. You mentioned 83b forms, default allocations, and foreign entity registration... Anything else to consider?
Both systems are ways to get you bootstrapped as quickly as possible, but you should always lawyer up to verify the rest. The clerkly offerings go a bit deeper into employment/contracts, and Stripe could actually knock those out too by adding just a few more template forms over the next few months.
(not affiliated with either, just keeping up with the quickest/easiest/legalist ways to start organizations as hassle free as possible)
Part of the reason for this is that most banks, due to the Patriot Act, require a physical presence in order to fulfill their interpretation of their Know Your Customer duties. Am curious to see how Stripe plans to get around this as the precious few services currently on offer are of the 'friend of a friend' wink-wink nudge-nudge type.
To answer your question of why nobody's done a "company in a box" - the gating difficulty is in getting banks to accept companies more or less carte blanche, which gets even more difficult when international companies / founders are involved.
Is there really a market for this? Why would anyone outside the US want to open a US company when you can just as easily open a company and bank account in a tax-free country with little/no oversight?
Because then you can do business in the US (largest English speaking client base) without any trouble?
And accepting debit cards (especially US cards) is still quite hard in most of the world afaik, aside from the UK, so this is a godsend to any entrepreneurs who want a real chance at success.
This was actually the dream just half a decade ago, to incorporate in the US without having to actually get a visa and go there and easily conduct business with anyone in the world...
Nowadays, it's not as pressing, but still a great service imo...
Accepting cards from most locations isn't actually difficult any longer with Stripe, Braintree, Paymill, and others. US cards aren't special in terms of being able to accept them; they're just regular Visa/MC/Amex/Discover/whatever cards.
The neglected payment methods are the country specific ones. Some major countries have very low credit-card penetration, for example in the Netherlands. The common internet payment method there is iDEAL which is a kind of two factor authenticated bank transfer. Even debit cards in the Netherlands have two distinguishing features: there isn't a PAN number on the card which makes it impossible[0] to use online in the way you'd use an embossed Visa/MasterCard, and the Dutch banks all issue their debit cards under the Maestro and V-Pay schemes.
[0] Not really, but very few people know what their debit card's PAN number is. It's possible to calculate the hidden PAN number as it's usually just a regular Maestro card, or to just scan it off the card using NFC and an appropriate app.
(I work for Stripe) Hey! Yes we're definitely aware of the need to take into account local payment landscapes that can be quite specific (you rightly mentioned iDEAL in the Netherlands, there's also EPS in Austria, Bancontact/MrCash in Belgium, to name a few others in Europe...). We're working on this and I'd be happy to connect to learn more about your needs. My email is just gabriel at, feel free to reach out!
Belize, Nevis, British Virgin Islands are all places you can incorporate for little cost and no taxes, there are many online services that will set it up for you just like Stripe is doing in the US. With a corp in one of these countries, you can then open a bank account in Singapore, Hong Kong, etc. where there is no oversight on your account so you are free to do what you want.
If you open an LLC as a foreigner there is basically no US tax and little oversight. And setting up a company and bank account in a tax haven tends to be pretty expensive. (Price list here - http://www.offshoreformations247.com/offshore-jurisdictions/ - Delaware is the cheapest)
Knowing the ridiculous U.S. tax laws (e.g. you once had an Green Card and now they want to tax you pretty much for the rest of your life regardless of where you live and work), overboarding bureaucracy and general lack of legal security (e.g. frivolous patent lawsuits), I would certainly open my business pretty much anywhere else.
"We expect Atlas to be most beneficial for entrepreneurs who have a global customer base, plan to raise money from global investors, or who plan to build an operational presence in the U.S.
While incorporating in the U.S. can make many things much easier, it also comes with long-term legal and tax implications. You should think carefully about whether it’s best for your business and consult advisors as necessary.
(Please note that there are a number of business categories that we can’t support in the U.S.)"
Not for foreigners, for people who want to have a US operations, raise money, or have customers in the US. I think ops, raising money, or having us customers is the right order to think of it too.
Kudos to the Stripers for continuing to innovate in the payments space! Really enjoying the simplicity and elegance of your btc payment solutions ;)
Wondering if Atlas could be used to "port" successful internet business models to "foreign" locales? Setting up a Flipkart in Morocco, or a Youku for Samoans...
Good question! Every company’s situation will be different (which is one of the reasons we’re working with PwC to provide expert tax guidance and education). But generally speaking, companies that are incorporated in the US will need to pay US taxes, and may also pay taxes in their local jurisdiction.
The corporation we help you setup in the US would be a new entity.
While I applaud the idea, if you don't need to be US based:
1. It's ridiculous to incorporate in the US, due to ridiculous tax policies; and
2. It's a great way to upset local tax authorities + there are probably a ton of nasty side effects (e.g. some countries have "see through" taxation that taxes certain profits arriving in foreign entities at the shareholder level, or require board meetings to be held in the jurisdiction the company is based in, etc etc)
If you do this, make sure to get advice from local counsel, or it could end up being a very expensive exercise
> 1. It's ridiculous to incorporate in the US, due to ridiculous tax policies; and
What are these ridiculous tax policies? I've often heard complaints about US taxes for citizens/residents, but nothing yet for companies... (I realize that many companies choose to incorporate in tax havens to evade taxes; but I'm mainly interested in knowing how is incorporating in the US worse than incorporating in e.g. UK, Switzerland, Japan, Australia, Germany, France)
High corporate taxes + global taxation of profits. For example, any profit coming from lower taxed subsidiary (i.e. a dividend) will be taxed at the difference between the local rate and US corporate tax rate. So if you pay 20% in the UK, you will have to pay an additional 15% (35%-20%) in US tax.
Second, the US is very aggressive when it comes to withholding taxes (FATCA and all) - if you’re a shareholder living in a country without a decent tax treaty with the US, you’ll lose an extra 30% on any dividend you declare, unless you include intermediary structures such as holding companies etc
Now, some of these might not matter that much to a startup since they aren’t making a profit anyway. But if you build something profitable it will be relevant for an acquirer. If things are set up properly to pay less tax, they will pay more for your company.
This definitely isn’t for everyone — and people’s situations will be different — but based on what we’ve seen there are plenty of entrepreneurs who have already (painstakingly) done this or would like to do it. Our goal is to make what people are already doing more understandable and remove roadblocks so this is available to everyone who wants to go this route.
Yes, the company will be subject to US taxes but Delaware is a tax haven so it should be lower that wherever you live.
The problem is when you want to get money out of that company, to your home country. You'll have to pay taxes in your home country... Unless you take the plane with a suitcase full of cash once in a while.
While I really like the idea—a one stop-shop company creator I am a bit unsure if Stripe will achieve the same quality level like dedicated registries which do this for several years.
Points I am missing/not seeing:
- Can I decide about the administration location (eg also Delaware or does it have to be my actual location)?
- Can I get some virtual office with address, mail forwarding, etc, sometimes offered by registry?
- Is Stripe a full state approved registry or do they use 3rd party registries? What are the ongoing costs (there can be significant differences)?
- How many people are in customer support?
- Is Stripe stated as the registrant in the Delaware corp database?
The only advantage I've seen is that Stripe is opening the bank account for you and it seems you do not have to visit the States but other than that I am not sure if going all-in with one entity (Stripe) is a bit too risky.
And if looking at dedicated registries there 3-5x more information on their websites—this is not a clear indicator for quality of service but since this is not Stripe's core competency it's something I'd be a bit cautious. But still something Atlas can catch-up.
> - Can I decide about the administration location (eg also Delaware or does it have to be my actual location)?
> - Can I get some virtual office with address, mail forwarding, etc, sometimes offered by registry?
After incorporation, you’ll have a registered agent in Delaware with a corresponding address. We’re looking at adding support for incorporation in other geographies as we expand Atlas.
> - Is Stripe a full state approved registry or do they use 3rd party registries? What are the ongoing costs (there can be significant differences)?
Yeah, the registered agent address would be in Delaware. The third party facilitating the incorporation won't show up in the Delaware filings, though there will be a registered agent and address on file. (You don't need to do anything to fill that out beyond signing up for Atlas.)
No need to come to the US for the bank account or any other part of the process.
Off topic, but as a long term Earth Class Mail customer, so glad to see it mentioned and potentially getting more attention. It has been a lifesaver while living abroad.
I absolutely love this idea - it solves for a HUGE pain point that entrepreneurs have dealing with the logistical, legal, and financial groundwork for a startup and getting to payments easily. Good lord, if Atlas were around for me to setup my startup, I would be crying tears of joy.
What I'm confused about is why they didn't focus more on the convenience advantages and positioned Atlas as a non-geo tied incorporation/setup offer. As many people have noted, the advantages of doing business as a U.S. company if you're not in the U.S. is unclear. It seems far more appropriate as a side note to the much needed advantages of solving a legal, financial, and accounting nightmare just to get payments. Why emphasize international?
We have already incorporated and has been a long and painfull process, but not as painfull as trying to open an account at Silicon Valley Bank. After some back and forth, they rejected our application saying:
I’ve just received your info from client support and my
apologies if no one replied to you sooner.
Unfortunately we won’t be an appropriate banking fit as
we don’t typically bank service providers. We maintain
a focus on venture backed companies and typically teams
that are local to our presence (based in Silicon
Valley, SF Bay Area, NYC, Boston, London).
Just signed up for the beta, pretty excited about this!
I'm legitimately curious - perhaps I'm missing some intricacy of US banking as I'm based in Canada - but why do you need a bank based in Silicon Valley specifically? In the online world, wouldn't any large US-based bank serve?
Does this fulfill the requirement from the YC application? „International founders, please note: if your company is a non-United States entity (corporation, limited liability company, etc.), your participation in YC is conditional on conversion of your foreign company into a United States corporation.“
Could just sell the intellectual property from A to B for a $1.
Many countries are wise to those types of shenanigans. The convoluted legal requirements to move our company from South Africa to the UK was astounding, and we had to abandon our claims to our old IP to boot.
So let me get this straight: instead of simply incorporating in your own sane tax country and accepting payments through Avangate or such, you incorporate in USA and are subjected to high corporate taxed and insane IP laws.
All so that Stripe doesn't have to solve the schlep of sending payments to any country, a schlep already solved by pretty much any other payment processor out there...
> - Pay federal income tax on income generated in the U.S.
> We strongly recommend that you work with tax and legal experts to handle these ongoing requirements. To help, Atlas users get direct access to resources and guidance from Orrick and PwC. You can also chat over the phone for free with a professional from PwC.
^ from the FAQ, should be in bold characters on the home page.
"tax on income generated in the U.S.", what does income generated in the U.S. means? Good luck finding an easy answer to this which will satisfy both your local jurisdiction and the U.S. PwC and the likes thrive because the tax code is a complicated beast that just get bigger every year.
Apart from raising money in the US, as a Canadian company, I don't see any advantage to this.
The amount of knowledge needed to deal with those issues clearly makes it suited to experienced entrepreneurs with the means to get good counselling.
Does this mean Stripe will phase out the ability for Canadians to accept USD and deposit funds directly to Canadian banks offering "US fund" accounts (that are not technically US bank accounts)?
Currently, a Canadian business can accept $USD with Stripe and have it deposited directly into a Canadian US fund account without conversion to CAD.
Stripes competitors can't do this - and have traditionally told Canadian businesses that they would have to incorporate in the US, setup a USD bank account at a US institution, in order to accept USD without conversion back to CAD.
That process is what Stripe Atlas simplifies.
PayPal allows Canadians to accept USD by holding the funds in a USD PayPal account. However, getting the funds to a Canadian bank account always involves converting to CAD.
This is complementary functionality: you can choose whether you want to incorporate locally or using Atlas. We'll stay supporting CA-USD and will be expanding local-country support. We recently launched private beta support for businesses in new countries like Brazil, Mexico, and Singapore, in fact: https://stripe.com/global
And that conversion is expensive. If I could have back the currency conversion margins PayPal has charged my businesses throughout my life, I'd easily be able to live for a year on that money.
Well, 50 weeks, if it were sent to my PayPal account in US dollars :)
You can open a US bank account (I use Harris Bank, since they're owned by BMO) and withdraw USD from paypal to there. I then write a cheque to move USD across the border, and use VBCE to convert USD to CAD at market - 35 basis points (aka. about 2% better than what Paypal offers).
> I then write a cheque to move USD across the border, and use VBCE to convert USD to CAD at market - 35 basis points (aka. about 2% better than what Paypal offers).
I would think using Norbert's gambit with a discount broker would be the cheapest way to convert large amounts of currency (e.g. buy DLR-U.TO, sell DLR.TO.)
Norbert's gambit is good, but not free - you still lose about 20 bp to market spreads using DLR.TO. If I was moving more money I would use that (possibly with a more heavily traded stock) but the marginal advantage wouldn't be worthwhile for my volume.
I hope someone from Stripe is lurking here. What if I already have a US company but just want the bank account etc? The reason is, apparently since 9/11, it's a requirement to be in person to open an account.
Is this primarily aimed at citizens of the US and countries otherwise not serviced by Stripe? What could be a reason for me to want this as if I'm, say, German or Canadian?
Germany and Canada are excellent countries to run a business from. Can I pitch you on the United States? We're a large country with a thriving technology industry that spends billions of dollars on the thing you sell. We have thriving capital markets, including a majority of worldwide dollars in seed stage tech companies, at terms which are better than you will receive anywhere else. We have millions of very smart engineers available for hire. Doing business in the United States: a great idea!
Doing business in the US? Do it as an American entity! We're institutionally equipped to deal with companies from 50 jurisdictions but as soon as you say GMBH or Euro we get very confused. US companies have huge logistical difficulties doing international payments relative to domestic payments; you can find a company with $50 million in the bank whose CFO literally had no button available to her that could possibly authorize an international wire. Many routine acts of commerce will require a number from you which any US entity can get by sneezing and which a foreign entity will take months of effort to achieve. We have a variety of cultures nationwide; essentially none of them routinely interact with foreign corporate entities and essentially all of whom will view those interactions with caution and annoyance rather than the routinely extended trust and assumption of fair dealing that all domestic entities enjoy by default.
You will be in great company! (Ba dum bum?) Substantially every German and Canadian major corporation, and hundreds of thousands of natural German and Canadian people, choose to use a Us entity so that they can conveniently interface with public and private US institutions when their business dealings bring them to the United States.
I want to add a UK-specific viewpoint for anyone with a British business who's wondering if a US entity is a necessity for dealing with US corporations.
I run a service-oriented business with 10 employees in the UK and most of our income is from US-based corporations. Externally we work entirely in USD. Once we determined our tax and legal positions, we've not encountered any problems with payments, wires, forms (W-8BENI is accepted in place of W-9s), or taxes, and our customer roster is a couple hundred tech companies - ranging from F500s with arcane vendor account requirements, through to mid range companies, startups, and small ISVs.
Trade between the UK and US is common and, depending on what you are trading, has a low amount of friction due to the UK's relatively open nature and low level of bureaucracy on matters of banking, international trade and taxation.
(If you sell physical items, need to take on US-based staff, start a US office, are a low margin business that couldn't take exposure to exchange rates or cross-border tax volatility, or need to appeal to US investors, disregard the above and get a US entity! :-))
I might face the decision of incorporating soonish. My current plan was to just incorporate in my country of residency (Germany) as that's the easiest route. How hard is it to migrate an existing company to Dalaware-C (D-C) which seems to be the gold standard for venture backed startups? Or is the recommended way just becoming a D-C from the getgo?
I'll gladly take tax cliff notes on being incorporated in the US as a non-US citizen starting a business.
Basically if it doesn't screw me tax wise I wouldn't mind incorporating as a D-C from the getgo. US taxation seems a bit scary and I don't think it's all that easy to research. Would love some advice from Germans/people not living in the US that are incorporated in the US.
Between the recent "legal papers" post from YC and this it seems like it's never been easier to do the non customer facing stuff of a startup. Very good as this is something I'd worry about way too much.
I wish you could incorporate an S corp for side projects. C corps need boards and stuff - a bit much for my hobby projects. But, event for hobby projects, if I expect to make income (at some point) I usually set up an LLC and maybe even start a bank account. And I also use Stripe to collect payments.
I tend to just use my existing LLC for hobby projects. If any of them actually take off I'll set up a DBA or maybe another LLC subsidiary. Multiple S corps seems like overkill.
While Stripe team is great and it's always good to place all services under one roof, both registering US corporation and opening US bank account online is not something new, Harvard Business Services (www.delawareinc.com) had done company formation for years for startups and the fee is nicer ($250 single payment + $50/year for registered agent vs Atlas $500 single payment + $125/year for registered agent). Atlas is twice more expensive, which may be sensitive for early-stage startups.
We formed a C-corp with HBS. Then opened SVB account for free, printed standard incorporation docs, got EIN from IRS and opened account with Braintree (could be Stripe as well), all for free. We just had to use different websites instead of one, but no additional difficulties.
There is an alternative way to calculate tax that is not based on number of shares. Not going to lie, I about had a heart attack when I got my first annual letter from Delaware. I think it's a right of passage.
He is referring to how the default franchise tax is calculated using the "Authorized Shares Method" which gives many an MI when they see they owe $20k+, without realizing you can use the "Assumed Par Value Capital Method" and your bill suddenly becomes like ~$500.
Global Accelerator Network (GAN) is listed as part of the Stripe Atlas Network. Does this mean that if we are connected to one of the accelerators in the GAN, that we have access?
I use Silicon Valley Bank and honestly while they are by far the most popular choice for bay area companies, their online portal is atrocious. In-fact, I exclusively use their iOS app (https://itunes.apple.com/us/app/silicon-valley-bank-mobile/i...) since it is the only thing that is bearable.
> Silicon Valley Bank will waive account maintenance fees for the first 24 months. SVB will share more details about your account’s complete fee schedule and functionality once your bank account is open.
The purpose of incorporating in the US is just to facilitate opening a US bank account. Given the likely very different circumstances of Atlas members, DE is a reasonable choice that would cause the fewest problems for participants. I do wonder what kind of payment volume is reasonable before it makes sense to touch the US. Also if I am building on top of Stripe as an essential vendor, do I want them to control my very corporate structure itself? Hm...
> Silicon Valley Bank will waive account maintenance fees for the first 24 months. SVB will share more detail about your account’s complete fee schedule and functionality as you open your bank account.
> Pay a registered agent located in Delaware to act as a liaison between your company and the state. Stripe will set you up with a registered agent at a rate of $125 per year. (The first year’s fee is covered by Stripe.)
> File an annual report with Delaware, which costs $50.
> Pay an annual Franchise Tax to the state of Delaware—a minimum of $175 per year.
> Pay federal income tax on income generated in the U.S.
I read from the faq that there are tax and legal obligations, that there are some guides and a free call, and that there won't be any ongoing assistance unless Orrick and PwC are hired.
Do you have any experience with them? Do you suggest any other service that would help on this? A while ago I found tempcfo (used by stripe itself, slack, and others) and indinero, I wonder if they could help on the ongoing assistance and which is the best option
"Once you’re invited to Stripe Atlas, you’ll provide us with some more information about your product, team, and how you’d like to set up your new company (like the name!)."
From the FAQ, [0] Is Stripe creating a startup incubator?
This is really optimized for startups outside of the US, which often have trouble setting up US bank accounts (and thus using Stripe). As a result, the legal side of things gets you far enough to do that - but doesn't cover the whole company formation process like we do.
Thanks. Would be awesome if Clerky and Stripe combined forces to provide a one-stop shop for US startups for incorporation docs and setting up bank accounts.
Our batch at Techstars was almost have foreign companies, and it was amazing to watch how much they struggled with this issue. Many of them could not put their investments in the bank until the program was almost over because of unexpected bureaucratic nightmares. Had that been the case for us, we could not have done the program. Huge barrier. Excited for this!
If it's more convenient for you to setup everything locally, good news: we also have a beta going in Brazil! You can sign up for an invite at https://stripe.com/global#br and we'll send one as soon as we can.
Not really. There is nothing wrong with a BR company having a US subsidiary or the other way around, and many companies big and small do it.
You will need a lawyer, or at least a good accountant, to get the taxes right: pay what you owe in the US and in BR, avoiding at all possible double taxation.
Dumb question: Why is this positioned mainly for non-U.S. entrepreneurs? Isn't a $500 setup kit useful for U.S. startups too?
You get: $15,000 of AWS credits, easy incorporation & bank account setup, tax/legal advice. Even if you don't ever take a consumer payment, that seems useful (even if only for the AWS credits!). No?
Not a bad question! We see the biggest need in non-US markets, especially for banking, but think it's great if Atlas ends up helping US entrepreneurs too!
I don't see the novelty. Honestly, haven't there been dozens if not more companies around helping you to set up a DC corp? And once that is complete, you're free to join any payment processor taking in US corps?
I am curious - what is really new here, except that it's done by a well known payment processor?
This is huge, I had to fly from Europe myself just to open a bank account (before the 9/11 you could do it online). Stripe Atlas opens a business bank account for you with Silicon Valley Bank, the world’s leading bank for tech companies. There’s no need to visit a bank branch in person to get set up.
Wow, $15K in AWS credits for $500. Until now the AWS startup program has only offered that to select accelerators and funds.
Stripe seems to be positioning his as targeted at emerging markets. But it also seems like a good value for self-starter U.S. based companies that are not in accelerators.
What a clever customer acquisition hack from Stripe by basic document workflow automation: customers pay themselves to get in and become clients(hence, CAC is really small if any), and later pay for every single transaction to Stripe. Brilliant.
Estonian e-residency isn't the same. Stripe Atlas is a nearly end-to-end service for establishing a US company with a bank account and tax number.
The Estonian e-residency on the other hand is essentially a just digital ID card that can be used to authenticate yourself when you're transacting with the Estonian government or other select institutions, like banks. E-residency isn't a one-stop shop to setting up an Estonian company and bank account, just the means to authenticate yourself more easily while doing it yourself. (Not that it's hard.)
what e-Residency is doing - you would never need to visit the EU/US to establish location independent business + you wouldn't need a middleman + through digital ID you can access all the other services also. Eventually, the more players in the network the more everybody wins.
Actually, you do need to visit Estonia if you need to open up a bank account with a bank there to go satisfy the AML and KYC requirements. I think one bank will let you use partner banks in a European-wide network, but I haven't tested this.
I am aware that by the end of the year they may be relaxing the requirement to visit a branch in Estonia for lower-risk clients. I'm not sure how they're going to get through the AML and KYC assessment though.
Very interesting. It almost reads like it's oriented to first-time businesses, but makes almost no mention that a Delaware company is probably overkill for most people starting out.
they aim to help global community of entrepreneurs but it is tailored for the specific silicon-valley community.
- c-corp only - investors in the valley work with it mostly. even though for MOST of the businesses s-corp or LLC will be better.
- silicon valley bank - is very popular in the valley, but has limited support if you're outside as opposed to more popular banks. (transfer fees, integrations with other providers like payroll etc)
i like the idea, but they have to think outside of their valley scope to really help people worldwide.
Yeah, you're right: C Corps won't be a perfect fit for every company, though we found they were the right starting place for the beta based on what what people are already doing. We're looking to add support for LLCs: https://stripe.com/atlas/faq#Can-Stripe-help-me-set-up-a-dif....
We've worked closely with Silicon Valley Bank to make the setup tenable for entrepreneurs in emerging markets. Making it easy to start a business from outside the US is the point of this program, and we're looking forward to making more improvements as we work closely with more entrepreneurs outside the US during the beta and continue expanding Atlas globally.
Thanks for the feedback! If you end up taking part in the beta, we'd love to hear more about how it works for you in practice.
Atlas is focused on making it easy for entrepreneurs in emerging markets to make their startups available to a global audience for day one. It won't be useful for things like trading stocks here in the US.
There are tax obligations you'll need to take into account. We've partnered with PwC to help give you guidance from a US perspective. We've put together a bit more info on the costs here:
No, not directly. Briefly, your two best options probably include E-1 (treaty trader) and E-2 (treaty investor). Both come with their issues and restrictions, but they're a common path so long as you either have substantial trade between your home country and the US, or have a certain amount to invest in a US business (generally north of $200k, although this isn't technically a hard requirement).
Have a read through the notes to the relevant sections of 9 FAM.
I always wonder with things like this, when will we be able (with an online business) to essentially say that your business has no fixed abode, and therefore you won't be paying any country any tax.
If everyone was using bitcoin or some other anonymous currency it would be pretty straightforward assuming that was how you took payments.
Your only trouble would be remitting money into your own tax jurisdiction - but then you may not have one of those either, assuming your were floating about the world.
Great with the payment solution. But why would anyone want to pay US corporate tax, US accountants etc. - often on top of the local tax, local accountant etc?
Don't forget that many other countries would still regard the "Stripe Atlas company" as taxable in their local country if the company is actually run from the local country or has offices in the local country. So from day one you would have to deal with international taxation, double taxation etc.
Talented entrepreneurs from all over the world want to start a business, but not all the countries these entrepreneurs are in have access to the business and banking infrastructure entrepreneurs need to establish a company that's global from day one.
Incorporating in the US, for example, allows companies to issue stock to employees, makes it easy to raise money from global investors, and provides the stability of clear corporate rules and case law. (This is why 60% of the Fortune 500 are incorporated in Delaware). There are also many more business services available to US companies than might otherwise be available to companies based in smaller countries with emerging economies.
So while you're right that there are taxes and other things that come into play when running a business, we find people are already coming up against these roadblocks today -- we built Atlas to reduce this complexity. We hope to see more businesses started because of this.
Do you really need an explanation of why people might want to do business in a way that includes the US?
If you don't want that feature, why complain about Stripe - just incorporate and get a bank account in Honduras or wherever you think it is most useful to your business.
For my company in Australia, I'm thinking of making a US subsidiary because it's the easiest way to get a US bank account, so I don't have to pay fees from Stripe for currency conversion to accept US dollars. Also, it would let me accept ACH payments from US customers which is nice.
Next, as I'm doing some hardware stuff and buy parts from distributors in the US, it could save more in currency conversion rates there as well. Just need to talk to someone about how to do that legally (transfer pricing).
If I use Atlas, I'll probably wait for them to support LLCs because I think that would be a lot better for my uses.
Finally, incorporating the business in the US would good for founders wanting to take funds from US investors (but my startup is bootstrapped so I'm not really interested in that).
It would be wonderful if they could provided incorporation in the Cayman Islands or some jurisdiction without corporate income taxes, so that you don't get double taxed.
Ethereum to be honest. I stated this elsewhere but PC isn't dumb and has a lot more data points than I do, although I consider myself someone who knows(maybe incorrectly) a bit about how these things seem to be moving.
Obviously, it would be insanely difficult to de-risk that, but I also assume that some of their assumptions are:
* [x]coin is a solved problem, as it transacts globally by default and has an API already.
OR
* [x]coins aren't there yet, super risky, and for the foreseeable future remain difficult and cumbersome to use programmatically so we will internally build some of that tooling and wait for less risk and hire adoption.
AND
* People, like previous versions of us(from p/j/collisons perspective) need this now and it is a huge pain point for many to do business internationally.
* Even in country this is totally full on wacky.
So, I don't think it is congnitive dissonance to believe both these things, and in fact we are over predicting here. That is why I am put out. Not because of anything Stripe did, but because I think they could be correct about how long this transition will take.
The Stripe team straddle technology, trust and finance at scale. I have seen almost every interview PC has done and the insights the guy brings up are super interesting and he is a lot more measured than most people, and it seems to be true that he is also a lot more correct. Super smart team, super smart vision, seem to have great integrity and provide opportunity to many people. This focus on "building roads while everyone else is building cars" has been really mutually beneficial to the ecosystem.
The "But"
--------------------
To reflect breifly on how Stripe frames itself, their data points, and just the general caliber of the people there lead me to believe this is the best way to solve global commerce. I suspect they have given it quite a bit of thought, and the move seems to be unite all of the things in one place. In the narrative analogy, what about electric vehicles?
On one hand, alternative currency and technology companies have the luxury of, they themselves, being an infrastructure to allow for distributed global commerce, a new framework for growth, and the natural rise of the global internet company unbound by arbitrary lines drawn when imperialist did the carve out of the world. On the other hand, I would have loved to see a structure to derisk, a company and allow them to trade internationally with some semblance of compliance and also speed a structure where a company registers a business as the domain.
Stripe assuredly knows that Ethereum, BTC and Blockchain are super important, and in many ways, solve the problem Stripe sent out to fix. Possibly with a better framework. I think the Atlas program is great, a net good, and a phenomenal way to solve what(as a US citizen I luckily haven't been subjected to) is a huge painpoint of just selling into America, trying to work in America, and the regulatory complexity of that shitshow.
I am a bit bummed because Stripe is often correct, and while I suspect to some extent it is tough to de-risk this, they just see the timeline being much longer than I do. They're probably right, I am looking at it at the "S" bend of technology adoption, and they are looking at it from a corporate standpoint.
Just sucks that centralizing all of these new companies into the USA ends up being the best way. I have to hand it to the Stripe guys/gals, this was such a feat of complex coordination that it is absolutely staggering they were able to manage several verticals of beurocratic inertia in parallel like this. I work in fintech where one of the guys in the accelerator I was talking to today was explaining how we might need a quick restructure of a few assumptions, he explained his implementation like this:
The API ends up literally being a call. You call a human for credit appraisal, the backend has the data and his system has a rest API for fetching and pushing data, and still a human reads the huge red text: "please copy and paste from [othersystem name] & hit enter", then his system generates all the regulatory compliance stuff and all the actually useful stuff needed, but a human is in the loop because it is too complicated for the internal dev team to allow (or to post) the fucking data.
* Sales team loves this process innovation.
* Friend responded (as I am assuming everyone is thinking) that it is NOT regulatory hurdle, purely tech.
* You have heard of this bank.
So kudos to Stripe, awesome job, complexity is immense and I am sure this could be life changing for many. I would still love to see them embrace something like Ethereum near-term, but congrats.
Not only that, but Larry Summers wants to abolish cash so that banks and governments get to loot us whenever they want to, and monitor all of our transactions: http://www.campaignforliberty.org/war-cash
Remember the Cyprus "bail-in"? Greece's bank holiday?
Funny, I have a Delaware LLC company registered in USA (it's an offshore company) but my bank account is outside the US (completely legal), yet Stripe denies me right to open an account and accept the payments.
It would be hypocrisy if they claimed one thing and then did/acted another. Non-US bank accounts are listed in their FAQ and their general policy (not supported, use a US bankaccount as proxy) remains the same.
I hope Stripe changes their policy in the future (though you would have to rename your HN username then).
Shameless plug: we are working on this at Tundra (http://www.tundra.com) for global B2B e-commerce and logistics. We allow suppliers to easily sell their products to other businesses.
This is no small feat.
I can't tell you how often in my many years of working with startups I have had foreign founders reach out to me in bewilderment over how to solve even the most basic problems as they sought to grow internationally and to gain a U.S. presence. It is not that the challenges are daunting or insurmountable. Many companies have dealt with them before. But they have had to do so in the context of having to grope around in the dark until they could figure things out. This cost them time. It cost them money. And it often meant they made mistakes that could set them back.
With a platform such as Atlas, they will now have a turnkey solution to this traditional problem. The solution is standardized and this means it has its limits. In solving the "step one" problem efficiently and at what appears to be low cost, however, it represents a major advance over current solutions and is very impressive indeed. For foreign founders doing amazing things on the talent side but needing to gain greater exposure and take next steps, it is basically a platform for greater credibility. You gain a U.S. presence. You expand your money handling capabilities. You position for greater funding. And you connect with experts who can be there to guide as needed.
The legal piece on this is vital but almost in tow, as it were. A standard Delaware C corp is the only option, which is adequate for a start but will clearly not meet the needs of a potentially huge number of founding teams that may have differing circumstances. It seems that this range of choices will be broadened on the Atlas platform over time. For now (and over time), founders are told to link up with legal counsel (either their own or a default provider) to sort through these issues. This, along with good CPA support, is vital to make sure the right tax and other decisions are made along the way. The platform simplifies the process enormously but significant complexities remain in the substance of what needs to be done. What Atlas does in this regard is to give founders a foundation from which they are well positioned to "take it from there." In this sense, it is a tool, not a legal or CPA resource as such (as it should be).
Stripe appears to have sought out a way to expand demand for its payments processing services and has come up, in effect, with a way of creating a sort of virtual Silicon Valley for the world's startup entrepreneurs. This will not be for everyone but it looks like it will be a great solution for many.
One can say kudos for that but that would almost seem to be a form of understatement. I look forward to seeing how it will continue to develop.