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At what point in the start-up process should we legally register our company?

Hi, I have a detailed concept and strategy as well as a domain name but am still in the process of developing the website; at which stage is it recommended to actually register my company and have a legal entity (with regards to 3rd party services or even VC fundraising for eg.)? For info I am bootstrapping this project and currently have limited financial guaranty that the project will go live (expecting to raise capital). Thanks

19 Replies

Eric Stone
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Eric Stone Entrepreneur
Founder at Telesocial, Inc.
It's always best to incorporate quickly to afford you the personal protection and reduce your own liability. That said, when you engage in activities where you may become liable -- personally -- then it's time to create the corporation. For example, hiring people, entering into agreements of any sort with third parties -- you want to have this protection.

If you are the only one involved, you're probably safe not to incorporate until you reach a point of liability or success -- collecting fees and / or personal information from your web site may be a source of liability as well, so when in doubt, incorporate.
Andy Zaayenga
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Andy Zaayenga Advisor
Laboratory Automation for Biobanking and Drug Discovery | Business Development | Workflow Analysis | Project Management
We had two co-founders. When we added employees we created an LLC which took us through angel investment and then converted to a C-Corp when we grew and were preparing for VC investment. The LLC is much cheaper to set up and still confers reduced liability. The VC may or may not require a C-Corp now - our experience went back about ten years when LLC were less prevalent.
Richard Giraud
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Richard Giraud Entrepreneur
Lead Developer at BubbleUP
Recommend incorporating ASAP. You don't want to sink a bunch of effort into developing a brand (e.g., website, logos, etc.) then lose it all because someone else is using the name or the domain.
Richard Alcott
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Richard Alcott Entrepreneur
Marketing and Communications
You are at the point of forming a legal entity. You can pitch without the entity in place (though there are risks), but you can't raise capital without a viable legal entity. Your Country/State/Provence will dictate available company legal entities and minimum annual fees, and may allow you to file for yourself vs a third party service.
In Dakar, you may have an equivalent to Doing Business As (DBA). In the USA a DBA is the least expensive entity to establish that allows you to operate as a sole proprietor, but a DBA leaves you personally exposed to business liabilities. Limited Liability Company (LLC) is a higher but considered low cost structure preferred by startups which insulate outside liabilities but allows internal exposure to shareholders. As LLCs grow many convert to Corporations for structure, operations and tax considerations. Hope that helps. - R
Steven Atneosen
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Steven Atneosen Advisor
Technology Company Growth Operator
I don't believe in reinventing the wheel, so provided that it is appropriate under FounderDating's T&Cs, here's a good discussion in Quora: https://www.quora.com/When-should-I-incorporate-my-startup
If you're working alone, Eric's advice above is good to follow. But for everything else, it isn't just about limiting your liability, but being able to obtain the commitment of cohorts. Most major law firms have a startup program that defers any billing collections for a year for your startup, so there's no excuse not to seek what will ultimately be advice vital to your success and scal. I personally like WSGR's program (no affiliation), but that's Valley specific. Accelerators can also be a good source of finding a trusted lawyer affiliation. Make no mistake. Not every lawyer is good, let alone great, so get references. It's an important relationship.
Annick Fuchs
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Annick Fuchs Advisor
Startup lawyer in the Silicon Valley and Europe, ex Director Legal PayPal
Agree with what people have said: if you are at the point where you incur liabilities and costs (enter into agreements, hire employees/contractors, rent a room etc), incorporating is best as it shields liability. Also you will get tax advantages. And be able to partially give equity to your employees instead of salary. Brand protection is also definitely recommended if you intend to keep running the business under this name. Happy to help, I have a really good deal for startups. My email is [removed to protect privacy] (not sure it shows but it is essentially my first name at my first and last name together dot com). I am also an entrepreneur. So I know what you are going through and have done it thousand times. So happy to help if you like help.
Martin Omansky
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
To limit liability and have a record of corporate expenses. I strongly recommend you incorporate now. Sent from my iPhone
Sidney Sclar
0
1
Sidney Sclar Entrepreneur
SID the SECURITY PRO at sidthesecuritypro.com
Register the business when it is not in your best interest to have someone else register your idea ahead of you.
Anders Sandell
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Anders Sandell Entrepreneur
CEO & FOUNDER at TANK & BEAR INC
Create you business structure when you have an investor ready to invest, this will also dictate which business structure you need to create. In most cases this will be an Delaware C-Corp for the simple reason that's what everyone understands and it's a structure that that allows you to issue shares. When you have an investor ready to invest you will also have the capital to engage a reputable law firm to create the structure for you. If you're not raising venture capital and instead is creating a small business entity then an LLC is probably the way go. In that case I would still recommend using a reputable lawyer to help you out.
Oscar Eduardo Mary
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0
Oscar Eduardo Mary Entrepreneur
Managing Partner & CEO at RCBM GROUP, LLC
Read this article before deciding where to incorporate: https://www.entrepreneur.com/article/226549

If you may assist you in setting up your company and afterwards, please let me know. Wish you great success in your venture.
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