Commit cb2d3f52 authored by BlackStripeWhite's avatar BlackStripeWhite

spelling|grammar

parent f486aa52
......@@ -32,7 +32,7 @@ Background
We wanted to set up a simple, legitimate business without spending a lot of money. One of our initial side projects
(`Hamiltix.net <https://www.hamiltix.net>`_) was generating a small amount of revenue and with other small
potential revenue generating projects in the pipeline, we needed a way to separate the finances and also to
potential revenue generating projects in the pipeline, we needed a way to separate the finances and
professionally interact with other businesses (for example, we would eventually like to publish apps in the Apple App
Store / Google Play Store under our company name instead of using our names).
......@@ -58,8 +58,8 @@ Determine Which Type of Business You Are / Are Going to Be / Want to Be
* If you have some or all of the below characteristics, a Delaware C Corporation is likely the way to go:
* Expect to raise money from outside parties such as venture capital firms or sell your business to a larger company
* Expect to hire employees and incent them with ownership in your company
* The easiest, cheapest, and best way to go seems to be to use `Clerky <https://www.clerky.com/>`_ or `Stripe Atlas <https://stripe.com/atlas>`_ and pay the ~$500+ and just be done with it (note we haven’t used these services or tried them, this is solely based on our research. However, Y Combinator backed and uses Clerky for its companies). We won’t spend anymore time detailing this path as this does not describe us
* If you align more with the characteristics below you may want to create an Limited Liability Company (LLC) or S Corporation
* The easiest, cheapest, and best way to go seems to be to use `Clerky <https://www.clerky.com/>`_ or `Stripe Atlas <https://stripe.com/atlas>`_ and pay the ~$500+ and just be done with it (note we haven’t used these services or tried them, this is solely based on our research. However, Y Combinator backed and uses Clerky for its companies). We won’t spend any more time detailing this path as this does not describe us
* If you align more with the characteristics below you may want to create a Limited Liability Company (LLC) or S Corporation
* Expect to be profitable in the near term
* Have one founder or a limited number of founders / investors who are mostly friends or family `Stripe <https://stripe.com/atlas/guides/llc-vs-c-corp#where-is-the-llc-formed>`_ does a good job of explaining the difference of LLCs and C Corporations in more detail.
......@@ -95,7 +95,7 @@ or have members in the same state, it may make sense to form the business in you
In our case however, there are two of us located in different states and we were planning on operating an online
business with no physical presence. As a result, we decided to form our business in Delaware (even though neither of us
live in Delaware). The reason why Delaware is one of the the most popular choices for registering a business is because
live in Delaware). The reason why Delaware is one of the most popular choices for registering a business is because
it has significant historical business legal case law (which makes investors, lawyers, etc. more comfortable that they
know how certain legal situations will unfold). Delaware charges a $90 formation fee (for an LLC) and has a $300 annual
“tax” beginning at the end of year 1 and each year thereafter to maintain registration. Different states have different
......@@ -105,7 +105,7 @@ Finally there is the potential to have to register in multiple states if you are
a state other than the state in which you formed. We haven't been able to find a good answer on what the definition of
"doing business" is just yet, but in our situation when we had our initial conversation with the tax accountant our
arrangement of filling in Delaware only for now seemed appropriate. We think that since we are an online business,
and do not have a physical store front or office, or have physical product at anytime (software only), we do not need
and do not have a physical store front or office, or have physical product at any time (software only), we do not need
to register in other states, but check back with us next April on that one... It would seem a bit extreme (and
prohibitively expensive) for us to have to register in all 50 states, for example, just because we might sell to a
customer in one of those states. I can't say we fully understand this yet but the tax accountants were ok with only a
......@@ -119,7 +119,7 @@ Name Picked? Good, It's Formation Time
---------------------------------------
Once you have chosen a state to form your business you will need to determine who will be the registered agent.
All business must have a registered agent whose address and information is
All business must have a registered agent whose address and information are
`publicly available <https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx>`_
and is the location where the business is to receive process of service (court documents if the business is sued).
You can be your own registered agent (if you have an address in the state you a registering) but then your information
......@@ -160,7 +160,7 @@ register as a "church or church controlled organization"
(which enjoy some pretty nice `tax exemptions <https://youtu.be/7y1xJAVZxXg?t=8m16s>`_), we went with the default for a
multi-member LLC, a partnership. The thing to understand here is now you have an LLC
that will be taxed as a partnership for tax purposes. This is what we (and probably you if you're in a similar
situation) wanted as this allows us to pass through any profits to each of the members annual tax fillings
situation) wanted as this allows us to pass through any profits to each of the members' annual tax fillings
(and avoid double taxation of a C corporation). We also do not plan to have any employees - it will just be us (the owners / members) running the business - and as a result we made sure to check the employment tax liability checkbox (item 14
on the paper SS-4), we only will need to make one annual employer federal tax return filing on `form 944 <https://www.irs.gov/pub/irs-pdf/f944.pdf>`_
versus quarterly federal tax returns on `form 941 <https://www.irs.gov/pub/irs-pdf/f941.pdf>`_. If you were to have
......@@ -227,7 +227,7 @@ We then tried another national bank and after walking into a branch with all doc
in hand (formation document, initial resolutions, EIN letter, operating agreement) they weren't sure either if they
could open an account for a Delaware LLC since the branch was not in Delaware. They copied our LLC Operating Agreement,
formation document, and initial resolutions and said they would check with someone outside the branch and get back to
us. The next day they called back saying they could open the account. We did get the account opend but only I was listed
us. The next day they called back saying they could open the account. We did get the account opened but only I was listed
on the account since they required my business partner (who is in a different state) to be physically
present with me in order for him to be added to the account. Fortunately, he was planning to be in town in a few weeks
but this is another hurdle to be aware of. Also, apparently there is such a difference between a personal checking
......@@ -245,7 +245,7 @@ checking accounts and to us just feel like ways for banks to charge additional l
Our bank also required us to sign a banking resolution. This is just a legal document signed by the LLC members that
officially gives the members authority to open an account for the LLC.
Lastly, now that we have an account set up we need to track the money and each members capital accounts (remember for
Lastly, now that we have an account set up we need to track the money and each member's capital accounts (remember for
taxes in the next year, you will need to fill forms that show how much money the LLC made and how it is allocated to
its members). We haven't figured out the optimal solution here yet, but it seems `Wave <https://www.waveapps.com/>`_
might be a good free option based on research (vs. paying monthly fees for some other services).
......
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