Understanding America – Part II – How To Incorporate (or how easy it is to get things done)
Whether it’s Americans going to Europe (or anywhere for that matter) or Europeans (or anyone) coming to America; the prospect of incorporating their new business is perplexing at best. But what makes America’s way so different from other nations?
The process in many European countries takes from seven to ten days – not counting time spent talking to your attorney and accountant – but you’ve got to do that in any country, even in the US. So, let’s just focus on how much time it takes to do the actual paperwork.
In the US it’s an easy 1-2-3 step process:
- You call a free telephone number for a company like LegalZoom.com at (888) 381-8758 or just do it all online. It should take you no more than 30 minutes. And, it costs as little as $99 dollars – yes that’s right – $99!
They’ll ask you things like where you want to incorporate. I’ve always chosen to incorporate in the State of Delaware because that’s where most Venture Capitalists like it to be – plus it’s recognized by most investors as a place that has lots of commercial law to protect investors and shareholders. And that is a good thing.
If you’re an individual it’s probably a good idea to ask for Sub-Chapter S status. Your attorney and accountant can explain this in greater detail. This blog is just about the actual paperwork.
- After you’re done, call the Internal Revenue Service (IRS) – the US tax revenue authority – and ask them for an EIN number (Employer Identification Number). The EIN is like a social security number for companies and you’ll need one to open a bank account and most things official. Yep, you can do this by telephone and it’s free. You can reach the IRS EIN number hotline at 1-800-829-4933. This should take no more than 15 minutes.
- Now, go to your refrigerator and get something cold to drink. You’ve worked really hard – one hour at most – and you need to catch your breath. Oh, you’re breathless because you can’t believe it was that easy.
So, if it takes seven days to get started in Europe that’s 56 hours (7 days times 8 hours per day). Alright, so it isn’t 100% of your time but still 56 hours just thinking about this versus less than one hour actually doing it is a HUGE difference. In the US you can incorporate during your lunch hour and go back to work. You can’t do that in Europe – you’ll need to take some time off to get this done.
So there you have it, now you know why America is such an easy place to do business in. It’s easy just to start your business here – you can even do it during your lunch hour.
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