Stripe Atlas is a service which facilitates the steps of incorporation in the US. It is a peripheral service offered by Stripe, an online payment processing service for internet businesses by itself. It is such an unknown service that even the employees of Stripe can say that they do not offer such a service when you call them. In this post, I’d like for you to see how real the dream of “having a company for 500 dollars” is.

Good news is that you can indeed incorporate in the US online; bad news is that the services offered by Stripe do not provide you with everything that your company needs. It allows you to get through the tip of the iceberg, but the rest remains unresolved, leaving you with problems that could become a real issue down the line. Lest we forget, having a company in the US is a two-step process called incorporation and post-incorporation. How does it work?

Under normal circumstances this service wasn’t accessible by everyone, you had to request a code from a contracted partner. But as of now you can apply directly through Atlas. You answer some questions regarding your startup just like you would as if you were applying to an incubator. Tech startups are allowed but there are some words that they might have blacklisted so that your application gets denied immediately. After this process is completed, you’ll have a C-Corp (similar to joint stock company or A.Ş. in Turkish law) incorporated in the state of Delaware, the hub for startups.

You’ll also have a bank account thanks to Stripe Atlas in Silicon Valley Bank which seems by far to be the easiest way to have one in the US. To have the account remain open you’ll need to part with 25$ per month. To be honest, after the Patriot Act it became especially cumbersome to have a bank account in the US as a non-resident as most bank requested that you physically be there. This is an easy way to skip this step, but I still have no idea how this is carried out by Stripe.

 By default, Stripe will have you use its payment processing and getting an EIN (so-called Employer Identification Number) is included in your payment. You also need a “registered agent” since the US Government doesn’t really consider you as a contact person, so this agent will become the contact person for the government. The first-year payment for the registered agent is included in the initial fee but for the next year and so forth you’ll have to pay 100$. For instance, we’re paying 50$ for the US branch of Startup Hukuku.

Atlas also includes a session with an accountant and a lawyer, but it is incredibly dubious. They also offer more detailed sessions through their spin-off, Up-Counsel. But we’ve had lots of people coming to us with their problems after their run-in with Up-Counsel. We’ve read the transcripts and emails exchanged and it just seems like a waste of your money. Frankly I think that they are using call center services as I find it hard to believe (actually don’t even want to believe) that such prestigious firms will answer as such.

In the US there aren’t huge capitals for companies like we do, but you’ll need to purchase the stocks of your company afterwards. So, it is helpful to have a rather small capital and it is also of utmost importance to have the correct number for the number of shares that the company has. Recently, we’ve had an investment delayed by 3 weeks because of a mistake by an entrepreneur during incorporation. Having called Delaware Division of Corporations so many times I was hailed as Mr. Hacıpaşaoğlu each time their phones rang.

On paper your application takes up about a day but lately they’ve been slacking, there have been times where they haven’t gotten back to us for 2-3 weeks. They’ll send you a few documents for you to sign and it is really enjoyable to sign them using DocuSign, if only our laws stopped needing wet signatures. At least we have an alternative with signing using a USB.

They check whether your name matches with the documents and application then complete the incorporation in 3-4 days. Still not sure why they take it so slow when we can do the same thing in a day manually, there must be a reason behind it that I can’t figure out. Having your EIN from IRS (Internal Revenue Service) takes at least 10 days. If I remember correctly, they officially have a 15-day period.

Some countries and areas of business are restricted by Stripe, Turkey is not one those countries. Investment, law, credit, virtual currency, gambling, monetization websites, follower-buying services, drug trade, Ponzi schemes and similar areas are not allowed.

You’re done with Stripe Atlas at this point, but you need to follow the steps of post-incorporation after incorporation. You’ll be given a few example documents, but these are inadequate since it’s is a paid service and too important to be left to examples. You can be taxed up to 70,000$ or have your corporation subjected to various fines, in total 17 documents have to be filled out. Whether you’ll have stock option, issuing more shares, appointing other directors etc. are all carried out in this process. If you do not follow along with these, there really isn’t a good chance of receiving an investment. In the investment networks that we’re managing we check the said documents during Due Diligence (DD). Even if they are faulty it takes precious time to correct them, Clemta offers an efficient service for this step.

If you’re not physically selling a product, it makes more sense to incorporate in the US. Especially Saas (Software as a Service) are more advantageous due to ease of accounting and billing, similarly if you’re selling software the same principle applies.

All in all, Atlas is a serviceable program, but it is a huge mistake to think that it is all that it takes. One of the biggest upsides is getting a bank account open in the US one way or another. If that wasn’t the case it’d probably be an expensive service. However, you can do it yourself for about 100$ or use other services for 200-250$.

I would like to thank our trainee Ekin Öner for his contribution to the article.

Posted by Erdem Mümtaz Hacıpaşaoğlu

E. Mümtaz Hacıpaşaoğlu, Hukuk, İşletme ve Dış Ticaret eğitimleri aldı. Pekin&Pekin, Pelister Atayılmaz Enkür ve Hergüner Bilgen Özeke Avukatlık Ortaklığı'nda deneyim kazandı. Startup Hukuku'nun kurucu ortağı olması yanısıra, Startup Law Consultancy Inc.'te danışmanlık vermektedir. Vircon Group Technologies ortağı olan Mümtaz, Avrupa Hukuk Teknolojileri Derneği (ELTA) Türkiye temsilcisidir.

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