Five-minute general counsel: Can you incorporate me?
Here’s another common question I get:
I’m onto a new startup idea. How much would you charge to incorporate? Do you have any advice as to where to incorporate?
Here’s my usual answer:
I’ve done this sort of work for companies under firm quotes of $2000 + state filing fees for a full incorporation package, including a lot of form documents necessary to engage new employees, issue stock to founders, etc. That includes my time advising on everything from the number of directors to how to divide up stock to what provisions founders need to protect themselves from each other.
In general, companies should incorporate in Delaware if they’re going to be venture-funded and have the extra money to lay out for administrative costs. That said, many, many companies in the Bay Area simply incorporate in California to reduce those expenses, particularly if they’re going to bootstrap for a while. VCs and other investors in the area are plenty familiar with California companies and don’t get bothered by it at all. What I would recommend against, in general, is incorporating anywhere else besides those two states. The costs will go up for regular compliance and administration, and you’ll only have to reincorporate later if you get funding.