Questions

Best way to incorporate a software company in the USA?

I'm cofounder of a software company in Australia. We are gaining traction internationally, particularly North America. We sell our software in US$ with approx half our sales via credit card and half invoiced. Looking to put on a US based sales manager. Sending money back and forth from US to Australia is a pain and costing us in exchange fees.

6answers

The best way to incorporate a software company in the US is to request a consultation with a US-based attorney. Start by seeking an attorney in the state where you plan to hire your US-based sales manager.

Answering this question in full without knowing a lot of business details will lead to an inaccurate answer for your company's specific needs. Therefore, a consultation is best to obtain a full response. During the consultation you will be asked about the existing business, the targeted states for transacting business, any proposed location for your sales manager(s) and other business activities in the US. Other variables involved in answering your question include tax implications, existing and estimated revenue and gross profits, estimated employees over the next year in the US, and a slew of other details.

Once an incorporation state is elected, an attorney can assist you elect a business entity type and ownership structure most beneficial to your business needs.


Answered 6 years ago

Hello!

You'll want to look a little closer at the state you choose to incorporate in. That's going to go hand in hand with where your physical US office will be. Most states will let you file for incorporation online, your attorney can do it, or Legalzoom and many other vendors offer help with the paperwork.

Once your EIN is issued (this is your corporations number for tax purposes), you can tackle the bank account and merchant services and payroll moving parts.

There will be lots of paper shuffled. If you have any questions I'm happy to do a short call.


Answered 6 years ago

Actual incorporation part...state of Delaware. cash grab part is that you pay a Delaware company abt 125 bucks to 'host' your corp for which they do nothing but worth it. Then operate from whatever state makes sense. We use co called inc serv but google it. Then of course consult us lawyer etc but the setup, ein etc a breeze


Answered 6 years ago

Hello, we have had multiple businesses, and been incorporated and in LLC's There is probably a fundamental question that needs to be answered first. Is a corporation really required to do what you are seeking to do. A limited liability company, LLC offers much of the protection someone would need on the liability front. If you are incorporating in the US there is a significant difference between S and C corporations, which among other things significantly impact the way owners/investors can take distributions and how those distributions are taxed. Another important element is what is your exit strategy, as different structures are often more attractive to outsiders, and easier if you are trying to raise funds. Having been involved in all three structures, I can tell you the LLC is the easiest and most inexpensive way to go based on my experience and the input of numerous accountants and attorneys in the past.

The advice of seek out a good attorney who can guide you based on the specifics of your situation is a good one. Sometimes people rush to incorporate, and spend more than they need to if they had talked to someone about what they are really looking to accomplish.


Answered 6 years ago

I'm going to take a very tax centric view on this. You're at risk of double taxation here and with US corporate taxes being even higher than Australian corporate taxes and then the risk of needing to distribute dividends from a US based corp and suffer withholding taxes then pay taxes again in Australia you could end up in a very unpleasant position.

If at all possible you're probably much better off keeping your sales manager separate and attempting to book all sales as much as possible to Australia directly and only paying a cost plus basis to the US employee.

You should be able to achieve this if structured properly so that you can have a US based bank account (a bit of a pain to set up but possible) and avoid both transfer and foreign currency conversion fees.

Feel free to contact me if you'd like to discuss further.


Answered 4 years ago

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