The following post is a summary of a chapter of Incorporation Essentials for Aspiring Entrepreneurs, available for pre-order here https://gumroad.com/l/incorp
Your home country or your home state may not be the perfect place to incorporate. In this globalized world, it is wise to have a look around and check out if there are company structure that would fit your business better.
Various jurisdictions offer various advantages and disadvantages to businesses. You need to choose yours carefully based on the specifics of your business, such as whether you sell software or physical products, whether you have employees or not, and so on.
Whatever your business is, you need to consider the following criteria in choosing where to incorporate:
Easiness of doing business. Some countries make doing business easy, while others would bury you in bureaucracy. You want to avoid the latter, hence you need to evaluate whether the way of doing business a jurisdiction offers you suits you well.
Simply put, you should ask yourself if by incorporating in a certain state or country, you could run your business completely online.
Online incorporation and public services. If you can get public services online, then you could do the paperwork by yourself and submit it electronically. If that is not possible, then you need to either travel and do it yourself or pay a lawyer or accountant to do it for you. If you earn enough to pay someone else to do these things for you - great, you can consider these countries. But if not, you better avoid them.
In addition, bootstrapper may want to consider the incorporation fees.
Access to online banking/fintech. Stripe is available only in selected countries worldwide. Paypal is available in most countries, but not everywhere. If you live in a country that doesn’t support the most widely used payment options, you need to go somewhere where you’ll be treated better, i.e. incorporate in a country which business accounts are supported by these payment processors.
Licenses and registrations. Some businesses require licenses to operate. Most SAAS businesses do not require one, but e-commerce stores, crypto businesses, gambling businesses, and some others may be subject to certain licenses that need to be obtained by the government before beginning with operations. Make sure you check out if the licenses that your business requires are easy to obtain, and whether they can be obtained online.
Taxes. The jurisdiction (and the structure) you’ll choose for your company will decide how much you’ll pay each year in taxes. The more you pay in taxes, the less you have left to reinvest in growth.
When it comes to tax rates, there are three types:
Running fees. This is where many aspiring entrepreneurs make mistakes. Companies cost money to run. Some of the costs include:
Funding. If you are a startup team, you'll want to go where venture capital is. In most cases, that would the US or another well-developed country where investors seek opportunities.
If you are a solo entrepreneur, though, you have more flexibility around choosing a jurisdiction.
If you read this far, you may want to check out the ebook as well here https://gumroad.com/l/incorp