TL;DR — an investor insists on a US company to invest in. They like your product but you have a (insert country) company. Can you just open a US subsidiary for a few hundred dollars online and then send them the bank details to take in the cash? Short answer, no.
Even pre covid, start-ups were looking internationally for investment overseas with more and more are applying to overseas accelerators. A few years ago, wandering around SaaStock, the signs were there that international accelerators were becoming less sensitive to your location. …
TL;DR — Delaware Franchise Tax is a fee payable each year before March 1st for companies incorporated in Delaware. The steps to calculate are fairly simple and the whole process can be done in under 15 mins.
The franchise tax is more similar to a fee than a tax. It is charged by the state of Delaware for companies registered there, in order to keep in good standing. It is based on the number of shares, not on profits or income like a ‘normal’ tax.
It also doesn’t replace any other taxes, it’s simply just a new charge you must…
Remote working is more popular than ever. With distributed teams scattered across the globe, the question of how to work with your international team is an important one. Should you contract or employ full-time, which is better, and what’s the impact. We discuss the pros and cons to help you navigate the uncertainty.
Your startup needs the best talent, not just the best of the local area, but the best possible and that means your team could be scattered across the globe.
Plus, paying thousands in rent each month is definitely better avoided.
With this attitude becoming more common, plenty…
“How do startups manage without an in-house accountant?” I was asked this question by a junior accountant this week. To those of you who are entrepreneurs, it may sound silly, because of course you manage, and how else would it be? You cant afford luxuries like accountants in the early days, right?
But for someone who is used to bigger companies, and especially those who have seen the mountain of work an in-house accountant does, it does seem impossible to live without one.
I started by explaining it’s often not through choice, and that startups have a unique scrappy attitude…
So once you are over the ‘I’ve-finally-closed-my-round’ hangover, and sufficiently rehydrated, you will be pleased to know there is yet more admin coming up. Lucky you, right?
Being a founder means being scrappy and getting help when needed — we’ll help signpost you with things to do (and the MVP of each of course) and things you should outsource.
Having been there and done that, we know all too well that putting a little effort into housekeeping straight after the round helps ensure you stay focused on your priorities and avoid having to fight unnecessary fires.
Every company will have…
Flipping your company to Delaware means changing your corporate structure to create a holding company in Delaware and insert it above your existing company, creating a group with the Delaware parent company at the top.
Typically you would want to do this because your potential angel or venture capital investors are insisting.
Remember, if you need a US company for expanding into the US but it doesn’t need to be at the top of the group, you could open a subsidiary, which is a company below your existing company legal entity. …
🥳 You did it, and you even paid that eye watering legal bill that went with it.
We will try and make this easy for you, as by now you are probably so over this process and very eager to get back to doing what you do best, building something amazing.
Heres our cheat sheet of tasks:
The IRS (the tax authority in the US) issues an Employer ID Number (EIN) to businesses to identify them for tax purposes. You will need this number for your tax filings, employing staff and even to open a bank account.
Your company’s legal structure is the last thing on the mind of most founders when they first get started. In the beginning, it’s all about building something amazing, something the market desperately needs and maybe even something that will make the world a better place ;)
Then off we all go, to incorporate as quickly as possible, to make that thought a reality. For most, that’s a quick few minutes online and done. Problem solved, right? You have an official company, a brilliant MVP and the team to execute.
So why do people keep talking about ‘flipping’ the company, and…
In an early-stage company, when you are still in the development phase and a while before you can even imagine paying customers, being asked exactly how much money you will make and when can feel like a silly question.
Investors will want to know how much you will make and how that number will grow month on month to inform their decision to invest. Of course, you have told them the total market size and the percentage that you’re going to acquire, but you’ll need to get into the details.
It’s also beneficial to know how you intend to grow…
As a Y Combinator company ourselves, we are no stranger to the famous ‘Delaware Flip’, used to create a holding company in Delaware in order to raise money from Venture Capital firms based in the states. Lots of our fellow alumni have had these same questions and so we have put together this short piece on the main considerations of cash movements in this scenario.
More and more start-ups are structuring their legal entities using holding companies (parent companies, or top companies, however you choose to call it) to take in investments. They then use a subsidiary company to actually…