Re:Cambridge YC Alums: How'd you spend your funding?
by cwilbur on Monday April 16, 2007 @11:16AM
(#13308)
$500 for incorporation is a very low figure for some states. If I remember right, the cost of incorporation as an LLC in Massachusetts (which is what I was researching at the time, because that's where I am) runs about $1000 between what you end up owing the state and what you end up owing the lawyer; incorporating as an LLC in any other state means you need to register as a foreign corporation with the state if you intend to do business in that state (in MA: lease property as a corporation, pay salaries as a corporation, own property as a corporation), which in Massachusetts runs about $1000 between what you end up owing the state and what you end up owing the lawyer.
Other states may be more lenient on when you need to register as a foreign corporation or cost less to incorporate or register as a foreign corporation. Also, for some startup models, it can make sense to incorporate in Delaware when you start development and then worry about the whole foreign-corporation thing when it's time to start hiring employees rather than adding partners.
I realize it must vary by startup to startup but I'm hoping to get some general sense of the standard expenses most all startups would have.
I did a startup in another college town, and this is how it worked out:
- Rent - $1,000 / mo
- Food(3 guys) - $400 / mo
- Electricty (12 PCs/servers) - $150 / month
- Business internet access (hosted our own servers) - $150 / mo
Another big expense will be the incorporation costs, which can run as much as $500 (varies per state).
In the end, it ended up being $1,800 / person for the entire summer. We already had all the equipment, so none of that was included in the expenses.
Other states may be more lenient on when you need to register as a foreign corporation or cost less to incorporate or register as a foreign corporation. Also, for some startup models, it can make sense to incorporate in Delaware when you start development and then worry about the whole foreign-corporation thing when it's time to start hiring employees rather than adding partners.