Stripe Atlas for a California LLC?
I'm considering signing up for Stripe Atlas for my side project, CrashTested.co which is currently a sole proprietorship. I'm based in California but it seems like Stripe Atlas forces you to have a Delaware LLC. If that's correct, won't that complicate taxes to some extent, since
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It shouldn't complicate taxes much and it is probably not a bad deal for you. LLCs' income is considered "pass-through" for tax purposes, so the IRS and your state's tax office will not tax your LLC, instead they will tax you personally for it as though your LLC's profits are your own personal income. Instead of taxing an LLC's profits, states simply require the payment of a flat annual LLC fee.
California's LLC filing fee plus its annual fee is much more expensive than those of Delaware. CA has an $800 annual fee while DE has an annual fee of $300. It's even cheaper to file in Delaware and pay California's annual foreign LLC fee of $90. I don't really know Stipe Atlas' fees since I've never used it, but your tax situation won't be complex if you go forward with it.
What's the benefit of a Delaware LLC or Corp? Delaware laws and court decisions have long been recognized as being friendly to business entities, and that's why companies love filing in that state. Stripe Atlas is presumably following this pattern since it wants the simplicity of only filing papers in one state for all its customers, and it has decided to do so in the jurisdiction that will probably be most friendly to your business venture.
https://www.llcuniversity.com/llc-annual-fees-by-state/
Hmm. I'm seeing some conflicting information here: https://www.upcounsel.com/delaware-llc-doing-business-in-california
It appears that I would have to pay the Delaware franchise tax in addition to the CA franchise tax since "...doing business in California, no matter whether they are incorporated, organized, qualified, or registered in the state."
Oh wow, that's expensive. I was not under the impression that CA had such an expensive franchise tax. I also did not know that apparently Stripe Atlas doesn't do LLCs. Maybe just file an LLC yourself in CA? It's relatively simple, and you just have to set up an account with your bank after you file. Will you have employees?
Yeah that’s what I’m leaning towards. I will have one employee within the next few months.
It's not bad (I've created some LLCs before, but not in CA). After filing get an Employee Identification Number (EIN) from the IRS website and then take that number to your bank to set up your LLC checking account. Using the EIN to file your tax income and expenses as well as hire employees and contractors is very easy and quite straightforward.
Hey the $800 franchise fee in CA recently changed so it's not due in the first year!
But a delayed effective date filing can still be effective (no pun intended 😄), check this out!
https://www.startpack.io/blog/what-is-an-llc-delayed-effective-date
Why are you considering incorporating as a C-corp if you already have an LLC?
To clarify, I'm considering going from a Sole Proprietorship to a LLC. I'm not considering a C Corp.
At this time, Stripe Atlas only supports C-corp incorporation
Interesting, you're right - a few months ago they were offering LLC as well - something must have changed
Correct, at this time Stripe Atlas doesn't support LLCs for non-US residents :(
If you're looking for a long-term partner to form your LLC with (and you're a non-US resident, check out StartPack!
StartPack helps you set up a US based bank account and access US payments from anywhere in the world :)