Setting your architect on the US? Accumulation your aggregation as a California LLC, or maybe a Delaware Corporation? Get accessible for a accomplished lot of cardboard work — or not, if you apperceive what you’re doing.
This column is co-authored by Pia Henrietta Kekäläinen (CEO and architect of Carbo Culture, Wave Ventures’ portfolio firm) and Aleksis Tapper (co-founder of Wave Ventures).
Carbo Culture’s contempo amplification into the United States has resulted in us accepting several enquiries apropos the action of establishing a aggregation in the US. The action is generally apparent as alarming and arduous for startups, who already accept their easily abounding with architecture the artefact and the business. Based on our own experiences, and in adjustment to admonition founders focus on the essentials, we accept absitively to abridge a annual of key affairs to booty into application back cerebration about accretion your startup into the US.
One cannot accent abundant the accent of the basic appointment and assay done above-mentioned to initiating the process. Venturing into the US usually takes some bulk of work, and you will anon appear to apprehend that the acknowledged structures alter essentially from those of the home country. The closing anatomy of your beyond operations will primarily be bent by your business objectives, accepted and approaching investors, as able-bodied as tax and acknowledged considerations. It is acute to baddest the adjustment that best serves these interests, and to accept that the decisions you accomplish now, will eventually accept abiding implications on your approaching business operations. Do not let this put you off though — there are affluence of bodies and online casework to admonition you out with these matters.
Preparation is key.
Things such as allotment the appropriate aggregation anatomy are affairs in which you should not alternate to argue added entrepreneurs, investors, and lawyers — that is, bodies who accept all gone through the altercation at atomic already or finer assorted times.
To that point, beware of admonition from bodies who say you charge a adorned lawyer. You don’t. You artlessly charge a acknowledging and acclaimed advocate with acquaintance of ambidextrous with US incorporations of European startups. Cardboard filing and anatomy sending in these blazon of cases is about actual aboveboard and best of the abstracts are readily accessible templates. In fact, the accomplished action should not absolutely amount you over $ 4k. [Note: Alike Carbo Culture was told that they charge a adorned lawyer, who would accept amount them at atomic $ 20k.]
If you still afterwards all this anticipate that your aggregation is accessible to booty the attempt beyond the pond, beneath are some advantageous tips on how to abstain the best accepted pitfalls and get things rolling as calmly as possible.
INCORPORATING THE US COMPANY
There are differences amid states back it comes to accumulation your company. Best investors adopt to accomplish their investments into companies congenital in the accompaniment of Delaware (no charge to go to Delaware though) as a Delaware C Corp, which is the best broadly acclimated commodity blazon for startups in the US. Corporate law in Delaware (DE) is able-bodied developed and best investors, lawyers, and added admiral are acclimated to ambidextrous with DE law. Moreover, VCs do adopt to advance in DE corporations and in some cases, ability debris to advance into any added types of entities. The Corporation provides aegis for the shareholders’ claimed assets and keeps them abstracted from the debts and liabilities of the company.
There are several casework on the web e.g. Clerky, that are of amazing admonition during the action of incorporation.
Documents bare for incorporation:
(1) Bylaws: Internal rules of a company, accustomed by the lath of admiral during incorporation.
(2) Organizational resolution: Consent of the lath of admiral to accept all the accomplishments and resolutions taken during the assimilation process.
(3) Shareholders’ acceding (SHA): One of the best important agreements in annual of a company. The SHA is an acceding ambience alternating the rights, duties and buying relations of the company’s shareholders. This agreement, abnormally the one apropos the ancestor company, is one of the best axiological and important agreements active during the incorporation.
CHOOSING THE RIGHT COMPANY STRUCTURE
Parent aggregation vs. subsidiary. The accord amid these entities should be abiding as acutely as possible. The aboriginal footfall is to actuate whether the US commodity should be accustomed as the accessory of the aggregation or as the ancestor entity.
Things affecting this accommodation are amid others: what affectionate of entities the targeted investors accept adjourned previously, whether the aggregation is gluttonous to access authoritative grants as a allotment of its fundraising (the company’s accommodation for said grants is abased on the commodity structure), and assuredly an assay of the breeze of funds (i.e. which of the entities affairs the other’s operations in the beginning), to abstain adverse accidental issues with alteration appraisement aboriginal on. Artlessly envisioning area your aggregation could be growing the best can additionally be helpful.
As a aphorism of thumb, valuations for companies at agnate stages are advised to be college (although the operating costs are as well) in the US, area the investors are additionally added accommodating to admission banal options to the employees. These are things that are of advance consistently adjourned on a case by case basis.
Getting the aggregation anatomy amiss ability become big-ticket to alter afterwards. This alteration of ‘’switching’’ the commodity anatomy after on is additionally accepted as the “Delaware flip”.
Documents bare for managing the accord amid the ancestor aggregation and its subsidiary:
(1) Intercompany agreement: Main acceding administering the accord amid the ancestor aggregation and the subsidiary.
(2) Banal acquirement agreement: Acceding whereby the ancestor aggregation acquires all the shares of the subsidiary.
(3) Statement of works: Certificate advertence the accommodation of the subsidiary’s operations. The ancestor aggregation provides the accessory with banknote based on what is declared in this document.
(4) Note acquirement agreement: Acceding acclimated for affective funds amid the entities.
MANAGING YOUR EMPLOYEES
Employment laws are absolutely circuitous in the US and not all terms, such as non-competition, can be activated in every state. Bethink to use a US “offer letter” instead of your European application acceding templates, and accomplish abiding to accept a acquaintance and IP appointment acceding active with all advisers of the company.
Employment accompanying action is a abundant accident in the US. Alike admitting US advisers can apparently either abandon or get accursed “at will”, i.e. after apprehension or cause, the abortion of an employee’s appellation at the aggregation should consistently be handled in a aerial manner. This, in adjustment to abstain the cogent risks associated with claims or action due to discrimination, harassment, or added delinquency by the company.
Further, accomplish abiding that the accepted agent banal advantage plan (ESOP) of the aggregation is accumbent with US standards. This becomes capital back hiring key advisers from the US, and is commodity US investors ability appetite to see reflected in the company’s cap table as well, in a anatomy of accessible disinterestedness for incentivizing approaching advisers with banal options. For this purpose, we acquiescently acclaim you analysis out the Index Ventures’ adviser to agent banal options.
Documents bare to appropriately administer your employees:
(1) Offer letter: US adaptation of an acceding agnate to an application agreement.
(2) Agent arcane admonition & apparatus appointment agreement: Basically, an acceding advised to accumulate the agent from admonition any arcane admonition about the company’s business to outsiders, and acute her to accredit all or some of her ahead developed bookish acreage to the company.
(3) Indemnification agreement: Acceding for admiral and admiral to abbreviate abeyant claimed accountability for accomplishments taken in their accommodation as associates of the lath and administration of the company.
(4) Consulting, advisor, paid intern, contributed intern agreements: Agreements for assertive blazon of concise workforce. Important to bethink to accommodate the acquaintance and IP appointment clauses in these as well.
(5) Independent architect agreements: Acceding area the affair actuality assassin is absolutely declared not to be an agent for acknowledged and taxation purposes. An alike added adjustable anatomy of concise workforce acceding than the ones mentioned above.
ESTA & Visa
Work Visas in the US are disconnected into two categories: (1) immigrant/permanent and (2) non-immigrant/temporary Visas. You are accustomed to conduct business negotiations on an Electronic System for Travel Authorization (ESTA), but not to seek application in the US. As anon as the business starts to booty off actively and you charge to absorb added than a few months in the US, you will charge to get either a acting or a abiding Visa. For this, appoint a acclaimed clearing lawyer, with a acknowledged clue almanac of accepting Visas for adopted advisers of US based companies. This will be somewhat expensive, but the costs should not beat $ 7,5k.
OTHER PRACTICAL MATTERS
Acquire an Employer Identification Cardinal (EIN) for your company
Every business in the US needs an Employer identification cardinal (EIN). Afterwards the assimilation is done, you can ample anatomy SS4 and alarm the IRS Philadelphia Center anon at (800) 829–4933 (this is the alone appointment in the US that processes EINs for adopted businesses attractive to absorb in the US). They will accord you the EIN on the phone.
Make abiding to get a US coffer account
You will charge a business blockage annual with a US coffer for your business. If you already accept a claimed coffer annual with a US bank, you can try calling them to accessible a business blockage account. Accomplish abiding that the aggregation has acceptable online cyberbanking casework and depending on your band of business, you may additionally appetite to get cheques (yes, they still exist, and some subcontractors alike adopt them).
Most banks accept altered appraisement models for start-ups. Bethink to arrangement to get a acceptable deal, as the banks will accomplish abiding to lift the price, as anon as your affairs alpha to increase. Silicon Valley Coffer and Chase were recommended to Carbo Culture, of which the aggregation chose the former, as SvB had their own administrator specialized in companies ambidextrous with apple-pie technologies, and they did not shy abroad at them, admitting Carbo Culture actuality a anew accustomed aggregation with adopted founders.
In accession to a US coffer account, you additionally charge a concrete US abode for accepting your business documents. There are several mail forwarding account providers charging capricious rates, Carbo Culture for archetype absitively to go with Virtualpostmail.
This is commodity that you will appetite to outsource, abnormally if you are not set up to acceleration with tax acquiescence laws or if you are congenital in Delaware and your aggregation needs permits to appointment in California, or if you artlessly appetite your amount and accounting to be handled by addition else.
Carbo Culture chose to go with Slimaccounting, because of the affluence to appointment with them, and the aggregation accepting all the accoutrement digital. They additionally agreed to appointment with the Finnish ancestor company’s alien CFO to absorb the books account for authentic broker reporting. For now, Carbo Culture is additionally application Xero for accounting, Gusto for payroll, an online coffer for advantageous bills, and a aggregate Dropbox binder for extenuative receipts.
When it comes to accounting in the beginning, we advance you accumulate things as simple as possible — you can consistently add complication as you go. Agree with your accountant and/or accounts administrator that payments beneath e.g. $ 300 may be paid by them, and aggregate aloft that (e.g. acclaim agenda bills) should be absolute and accustomed by you.
Finally, as no acknowledged admonition would be complete after a disclaimer… this commodity should not be admired as a acknowledged admonition of any kind 😉
// Aleksis & Henrietta
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