Where and why it is worth registering a company for a new startup

Many young startups are inspired by their ideas. All they think about is running a project and making a billion to change the world. They have a brilliant idea, incredible motivation and even a team of like-minded people. They know in detail their future project, but they do not think about the business component of this idea. The issues of legal registrations of their startup, the majority do post factum, and in fact many problems can be avoided simply by thinking in advance.

If you decide to create a new project with someone, you need to arrange a company or partnership. The first and most important thing that should be considered at the initial stage is where you will register your assets. After all, your startup is not you and not employees, it is the code and intellectual property that belongs to the company. When you talk to an investor, this is the first thing he will pay attention to, since they do not want to buy air. Consider several options.

Option one: register a company in the country where you are located ; LLC will suit Russia, for Ukraine TOV. When registering, we immediately determine to whom and in what volume the shares will be distributed. I advise you to immediately envisage a share of the investor so that in the future you don’t have to “blur” your parts. For example, you have three partners and you decide that you will own the company equally each. Based on this, make the distribution of shares not by 33.33% per cent, but by 25% each - and provide the investor with the remaining part. Or in any other proportions, depending on your agreements. BUT leave yourself a field for scaling and acceptance into the ownership of the investor . Of the minuses of the local company, I would single out the submission of reports, accounting, taxation (even if you still do not earn) and difficulties with the withdrawal of capital. Western investors have a dual attitude towards investing in a local company and most often insist on transferring assets to another country.
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Option two: registration of a company in an offshore zone . In this case, there are both pluses and minuses. Let's start by tradition not with the most pleasant, the first is the price. To register a company in the classic offshore zone is several times more than local. The cost of registration, for example, in BVI 750 - 1500 US dollars. This is noticeable for a company that has not yet begun to work, to lay out such a sum. The next significant disadvantage is that far from all investors and funds are willing to invest or work with the classic offshore, it is also worth recalling that Google does not pay for offshore companies with either Google Play or Google AdSense, and also, according to their policy, a bank account be opened in the country of incorporation. Apple and Microsoft are more loyal in this matter.
Of the benefits, the distribution of shares in the form of shares, closed registers of owners, the withdrawal of money immediately to an offshore account, the absence of taxes, both corporate and income, there is no need to audit and report, the possibility of processing all assets for one company, a simplified procedure for further alienation (read - sales) of assets and shares of the company.

And the third, the best option. Opening a company in a respectable country with a simplified tax system. These include partner companies in England and Scotland (LLP), Asian countries such as Hong Kong and Singapore, the United States - DeLever. Of the minuses: to avoid taxation, it is impossible to conduct activities in the territory of a country of registration, the high cost of opening a company, even in comparison with offshore companies, an open register of owners, the supply of edema. But all these minuses fade away with possible "buns" that bring such a choice. After all, you get a company in reliable, and most importantly stable jurisdictions. Protection of assets and property. Investors are willing to work with such companies, and banks are less likely to send such companies to financial monitoring.

And so, we have decided on jurisdiction, so why is it necessary?

Everything is simple - this is correct, however banal it may sound.

If your project is successful, you still have to open a company, and so you will be free from this problem in the future and, moreover, it will make it easier for you to search for an investor.
An example from personal experience: a month ago, my friends and I discussed a startup startup that would make a billion change the world. And one of the first questions was the registration of ownership of the brand, code and algorithm. And even though we are all friends, but this approach helps to avoid problems in the future. When someone does not like the process of translating an idea into reality, and someone wants to leave, or when we present our product to an angel or an investor, then we will not have to register a company in a hurry and re-issue assets to it. The most banal example - we will not "fight" for the domain - it will already belong to all of us (read - companies). And this is not a shame to show the investor, because besides the prototype and the idea, we are already showing the finished business model of the operating company, which already has assets, such as: domain, prototype, design sketches, which means it is already worth something.

And finally, draw up your partnership agreements in the form of a contract or agreement, and not on a “napkin in a bar”, whatever your relationship, the business should always be clearly written on paper.

Form from the very beginning assets on the company, such as domain, code, design and algorithms. In the event that someone leaves, the company will have a chance to survive. Believe partners, especially if it is fixed in the contract.