ASK IH: Incorporate business separately or under umbrella?
Hey all, we received our first paying customers this month and are in the process of incorporating.
Should we incorporate the business as a whole, or make it a DBA under an umbrella/portfolio company? There may be different side projects and businesses we spin up on the side.
Stripe Atlas seems to be the best route, especially since we might be raising some seed money. Currently in CA. Thanks!
In the past I would register a new entity for everything but these days I do them under an umbrella corp until they are making enough to pay all the fees associated with registration and filing from their own profits before spinning them off.
If you want to raise for a side project you'll need it to be its own entity from the get go.
Great question. Depends on what state your in. California is expensive but we did it anyways because once we found our groove and shipped one app, we found it easier to ship others and so for Bookkeeping it’s much easier to have separate checking accounts to receive payments from Stripe. Plus, you never know when you might want to spin off an app and sell it and it makes it easier if it has its own entity
Good point regarding selling the company.
Why incorporate at all at such an early stage? I personally tend to hold off incorporating as long as possible.
I had the same question. I am setting up all of my projects under umbrella LLC until they reach maturity of some sort. I don't see value of registering each company before you have any income. Anyone get bit by this?