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I'm a U.S. lawyer admitted in 2 states, 5 different federal courts, the U.S. Supreme Court. Delaware is a jurisdiction which many companies form their headquarters not only because it keeps transaction costs down and formation of companies there is very quick and straightforward as well as their courts being extremely well suited and quite experienced with complex business transactions and they even have a specialized Court to deal with these matters.
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Delaware's business-friendly laws, quick formation process, experienced courts, and specialized business court make it a popular jurisdiction for companies to form their headquarters and conduct complex business transactions.
So you’re saying it’s an extensive and highly involved racket. Which many ill intended companies and questionable organizations are taking full advantage of 🤔 I wonder what the paychecks of those local officials looks like?
13:40 Wrong! This is actually really useful info, especially about shareholders agreement. I would love to hear more of this finance and legal side of running a business also, even in more detail!
Delaware's favorable business climate, efficient legal system, and specialized courts make it a popular choice for companies to form their headquarters and conduct complex business transactions.
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Delaware's favorable business climate, efficient legal system, and specialized courts attract companies looking for a stable and supportive environment to establish their headquarters and engage in intricate business deals.
Delaware's favorable business climate, efficient legal system, and specialized courts attract companies to form their headquarters and conduct complex business transactions, making it a popular choice for many businesses.
Thank you! Transparency is key in building a successful company, and I believe it's important to be open and honest with stakeholders throughout the process. I'm glad you find it interesting!
Thank you for your feedback! I will definitely consider covering more topics related to finance and legal aspects of running a business in future articles. Stay tuned for more detailed information on shareholders agreements and other key business agreements.
Delaware is not a tax haven. Delaware is a privacy haven. There are, at least 6 states in the us that are better, tax wise, better than Delaware (with south dakota being the best one… ask the creditor card company). Also going to court is better in Delaware: they judge there know more about business procedures than many other places. Last but not least: lately a couple of rulings from Delaware judges, starting with the one on Musk’s compensation package, created some concern but nothing major happened so far. Personally I incorporated 5 companies in the last 8 years in Texas (and managed 3 of them) in name of Italian enterpreneur (i am an Italian consultant)
@@gaiustacitus4242 if you don't have logistics need, al the north-western state are amazing: as of now Montana has more Supercoputing power than any other state: many big tech opened up daatacente rover there (cooling cost way less)... so basicaly if you need to set up a service company and or software related entities, Idaho, Montana, Wyoming are very good choice, Salt Lake City (Utah) is a tech incubator... last but not least: there is, in the US, a tax heaven that it is iven better than any of the caraibean paradise: South Dakota... but Texas and Florida wins hands down in general
Delaware's favorable business climate, efficient legal system, and specialized courts provide companies with a stable and supportive environment, making it a top choice for establishing headquarters and conducting complex business transactions.
Delaware's favorable business climate, efficient legal system, and specialized courts provide a competitive advantage for companies seeking to establish their headquarters and engage in intricate business dealings, making it a top choice for a wide range of businesses.
@@NataliaNovak-me5ph I can readily have courts move almost any lawsuit involving a Delaware corporate entity to a different jurisdiction and render Delaware's chancery court system moot. Why? Because most businesses organized in Delaware never do business within Delaware, thus nexus can only be established in another State (whether foreign or domestic). While it is a bit more difficult to overcome the choice of laws provision in contracts which may specify that Delaware's laws shall apply, this is also possible - especially when neither company involved in the suit ever conducts business in Delaware.
This was really interesting to listen to, having founded a (tech) company in Switzerland and having gone through a similar process. The Shareholder Agreement was definitely the document we spent the absolute majority of our time on. Figuring out things like founder stock vesting is really important!
Delaware's advantageous business environment, streamlined legal processes, and tailored courts make it an ideal location for companies looking to set up headquarters or engage in intricate business dealings. Its secure and conducive setting fosters growth and success for organizations.
One of the bigger reasons than taxes for Delaware is the ease of incorporating plus the Delaware chancery court which is setup specifically to deal with business related cases.
Delaware's advantageous business environment, streamlined legal processes, and tailored courts make it an ideal location for companies looking to set up headquarters or engage in intricate business dealings, offering a secure and conducive setting for growth and success.
Even though none of these things are even near the ballpark of my interests, it's still nice to see the step by step of how things get done. Thanks for the documentary series! :)
Found this specifically while looking around for a 10g router. Really fascinating video, both from the transparency standpoint and explanation of the actual behind the scenes process of the average Delaware incorporated company formation.
I watched a short yesterday about how to price your product. That form in description is exactly what i've seen as "do it like this". Good luck, Tomaž.
Mr. Zaman, my first in your channel, when I just stumbled upon this video. Your history is very, very inspiring and I'm really sure this endeavour could result in nothing but an amazing success for you and all the investors. If I may opine, you took the best decision regarding the company and investors interests. This is exactly what everybody should do. Why not look for the best alternative for your business? If there is a place where you comply with the legislation and also can pay less taxes, why not? Those people are a very concerned about the other's success, instead of doing their own job. Go ahead, keep up the good work. Congrats.
Delaware will now disclose all documents related to organization, officers, and directors after the first year when the business files its Annual Report, so it isn't that great for privacy. If you want anonymity, then file the articles of organization in Nevada.
@@akorenkov It doesn't matter how favorable the chancery court system is when there is no nexus in the business dealings except in other States. In that case, the courts will permit the lawsuit to be heard by the courts of the State in which nexus can be established.
Super excited to see how this goes, and find it interesting how someone starts a corporation. Not sure I'll afford the final product, but only time will tell.
You mentioned US or UK then spoke about the EU without mentioning the UK. UK registrations cost about £15, happen same day, and most things can be done online. Seems to match all your requirements except it's cheaper and the company legal system is a bit less weaponised. The benefit of registering in Delaware is privacy rather than tax benefits. You may find that getting dividends out of the US is more hassle than in the UK. In UK a document-to-email service and a chartered accountant it's less than £1k/yr, but can be cheaper than £500/yr. Registering for taxes is easy (including EU VAT) and presumably a cheaper flight to the UK if you do need to visit (not that anyone would ever want to visit Delaware) Having said that, I appreciate you going through the process for registering in Delaware.
I have had several UK companies and still have a couple and it's very cheap and very easy. I was wondering the same thing - why not the UK? If US VC are not interested in investing in UK companies, that would be a conclusive reason because UK VC seem mostly brain dead. Impossible for me to judge (no pun intended) but at first glance I'd assume that legally the UK would be far better than the US because although the laws (common not civil) are very similar, UK company law has the image of being less expensive - I could be totally wrong there. If it's the tax situation, especially avoidance like big tech do, then I'm "all ears" - please do tell.
I'm not a specialist and I've only recently started looking into starting a business in the US because I read that the legal entities Ltd and LLC are quite different and the LLC has some advantages over the Ltd.
@@vivian5361 LLC is tax transparent, a bit like a limited liability partnership in the UK. The Isle of Man has an LLC structure available. The Isle of Man is in a customs union with the UK so access to UK banking is easy and potentially 0% corporation tax. Tax transparency means you still have to account for your taxes somewhere and the USA will definitely want their slice so accounting could end up being more complicated. In the case of this video he didn't set up an LLC.
I agree the Uk isn’t known for been the laundromat of Europe for nothing 😂 then there’s the Netherlands and others were European companies “hide their money besides getting vc money I don’t see big difference in the usa but I never opened a company so 🤷♂️, I know that you can open a company in “1 hour” is my country again idk if applicable to his type of company but still, in Europe theres a lot of tax evasion you just need a good lawyer 😂 but to get money I agree in the usa is easier
Isn't the main reason why EU startups usually have a Delaware company in the background that they do fundraising in the US, because there's very little venture capital in the EU?
Well, that depends on whether the officers and directors of the corporate entity adhere to all corporate formalities. If they fail to do so, then it is easy to pierce the corporate veil and then attach their personal assets to satisfy the debts of the corporation. Given that few people know what corporate formalities are or how to comply with the requirements, any truly competent attorney can tear through the corporate veil like it is wet tissue paper.
Great video. Awesome to get an insight into this necessary paperwork aspect of the project. Good for transparency & building trust by sharing all of this with us.
hopeful for more unicorns in EU regardless where registered, but evidently EU can do more to attract investors and establish habit to open business fully digitally here
Although the topic is miles away from my interests, I watched carefully the whole video. Inventing "custom high-end router" is not your only talent🙂. Lep pozdrav iz Hrvaške.
To be fair, incorporating in the UK is not that bad either. In some EU countries you as a founder legally have to pay yourself minimum wage and (of course) pay income tax!
A Router Company with HQ in US is aplicable to US Law. This meams that US Agencys an Presidentian Gag Orders have easiers access. This lowers my trust in your potential product
Congratulations Tomaz! I am super excited for you and I look forward to seeing the final product. I was curious, do you think you will look into designing a mesh network system? Most of my homes that I have had require a mesh network because of how old some of the homes are.
Taxes are a cost like anything else, of course the need to be taken into account. It is so easy to have opinions about what other people do, don't let it affect you more than is necessary.
I have a JD, I'm also incredibly experienced and have a background in science electronic engineering coding and embedded devices, as well as finance banking and the requirements for individuals investing in companies that require that the person be a qualified investor meaning they have to have enough income and net worth to buy stock in an unlisted company is there assumed to have the requisite experience not to get scammed.
I don't know if it's been raised already, but go get a DUNS number (an international company number), it's free and with you being based in Europe it's what a lot of businesses will use if you want to create accounts locally to you using the business entity (at least in the place I work)
Hi, I had no idea about all of it. Anyway good luck with the project. You taught me a lot in this video. By the way I am from Poland and I agree that Slovenia is beautiful. Cheers and take care. All the best.
In the UK, you could have done all by yourself. I am from Europe, and I have established a company in the UK 9 years ago, with £15. But it is not a tax heaven like Delaware. Indeed the process is well documented and straightforward, and you can do all online.
Me too. I ran a uk company and it’s cheap and easy. I did a company in Germany. Horrendous, complex and expensive. Like eating glsss. My next one will be Delaware or Texas.
Congratulations! This is how Dežela overtakes Lijepa Naša... Pretty please with sugar on top, do us all a favor and use illumos instead of Linux for the firmware. Post scriptum: we want to start our own company once we're done with our software, so this was super interesting to me. Exactly what I wanted to know.
its nice to hear you got more then you initially needed as someone who is looking at this from quite a while and for all the wrong reasons remember my old comments (gorenc k ni iz gorenske :) ) knowing enought about the processes yea i agree US makes it much easier then slovenia. and why do i know complete nerd curiosity and whole video was very interesting
You can also set up different classes of shares and choose your business organization type whether it be a corporation and there's two types as well as a limited liability corporation which is like a corporation from a litigation standpoint it protects your personal assets what is a tax flow through Corporation meaning you're still liable for your profits in your tat jurisdiction.
I would in almost all cases use Delaware or a number of other jurisdictions which have low costs and specialized court systems as well as business-friendly corporate legislation in addition with any contract involving parties in multiple jurisdictions I would always add an international chamber of commerce finding arbitration clause to be held in the city of the place of manufacture or the founders of the company and each side gets to pick an arbiter and if those two arbiters can't decide on a third neutral then the president of the ICC of that particular jurisdiction will pick a third neutral arbiter it's much more quick the decisions are very to the point and protect your business processes and are valid in all members who have taken part in the agreement which make them completely legally binding unenforceable upon their issuance unless there has been some major violation of your legal rights which in many cases is rare.
4:41 you could have done the same in Estonia, you don’t have to fly there, everything is done digitally. And incorporating cost you like €200, and you don’t even pay taxes as long as profits stay in the company.
Doing it anywhere else than where the work is effectively done would be fraudulent. There's just a few years delay between the moment he pays fees to these companies and the moment he'll start having issues about it.
Up until May you could open UK company for £13 ( now £50). I takes up to 24h to receive all docs. I didn't need lawyars. Articles of assosiation in the UK is always ready made, for free. And the UK in not in the EU😅.
Will you also do the "Delaware C-Flip". It starts with the non-US company beeing the parent one, than flip, and it becomes a subsidiary of the US one..
excellent video, thanks! Many best wishes for your company. I would like to ask a couple of questions: how much is going to cost annually your tax advisor and accountancy services? What type of corporation did you opened, I got that it is not an LLC? How are you managing your US visa or you do not plan to apply for an US visa, if this is possible? Thanks in advance and I hope thta if you have time to answer my questions!
Your Slovenian lawyers have told you, that you need to register Mono Technologies Inc. in Slovenia as a branch and declare taxes in Slovenia, since you as sole director direct the business from there?
This is why there is no tax benefit to this, it also limits EU banking choices. But VCs won't invest in a regional european company and you get the possibility of a SAFE etc. so it's still a net positive
EIN takes only 4 days or so. But yes, you do need to call. Your lawyer should've told you that in advance. (Actually, most lawyers will do this on your behalf).
Taxes are not the reason. Deleware has well developed business courts which are quick and fair for adjudicating business disputes, which happen a lot. This has more value than any tax discount.
man i am from polan d, i love your story - i hope that all of buisness would go to USA . that the regulators would never have any more problems with us here in europe.
Another question i would have. Now that this is an US company, do you need to pay any employment taxes in the EU? Are you paying yourself/co-founders or others based on the investments or do you pay yourself from savings?
His country of residence will tax his income/dividends then say "but wait? You have no real presence in Delaware? So your company should have been Slovenian?" and he can enjoy some consequences. If this was true, everyone would incorporate in tax shelters and live in the comfort of high tax countries. This is likely an ad for the companies mentioned.
It's a business-friendly jurisdiction tending to side on the side of the business rather than any potential that against who often try to sue companies with abusive process more or less and they utilize juries and adrenal vacation to obtain awards against the company and this drives up costs and can kill a startup. Wild Delaware has a special Court dedicated to business conflicts and a judge rather than a jury is going to hear your case and it reduces the potential for jury nullification of frivolous and abusive lawsuits.
A competent attorney will include a provision in the license agreement that makes arbitration the only possible means of recourse for the consumer. This removes the court, and therefore the jurisdiction, from the decision of which jurisdiction to incorporate a business in. Significant lawsuits involving other corporations are most likely going to be filed in a U.S. District Court.
Most of my contracts were in the 100s mil+ and between businesses or wealthy individuals. I was a "private international lawyer", something that's a specialty in the law here but in the U.S. It's what they tell you never to do (practice across the spectrum of other specialties and using multiple jurisdictions) but since very few American lawyers ever do it, they only give you one course in U.S. law schools called "Conflicts of Law" so I learned on the job as a "stagaire" your first year of practice in Switzerland. There is an unwritten rule that everyone gets paid the same and after your first year, you become a free agent. If they want to keep you they will make you a new offer. My salary was tripled during my second year. I guess I was doing a good job. If I had only known what that would have cost me later, I would have gone into Bon-Profit. I was an actually really good at my work and implicitly honest, which in a more or less generally a Machiavellian world was both part of my hyper success and also my Achilles heal. I've had my butt handed to me many times and not in any case but in retribution by a very bad man. But, at least I lived, the decision about the "living" part is still a question I'm deciding if this is really living or not. You would never want to know.
So I was admitted in Geneva but you leave the bar when you're not privately practicing and then go back when you join another Law firm there and I've been admitted in Singapore as well as working with the Malaysian Bar Counsel, and have 25 years and Global business private international law with work across the spectrum of legal specialties across multiple jurisdictions and that was my specialty. It is still my specialty but I'm currently on medical leave but that's temporary and I'll be back in the market and working 6 to 12 months. I also have a few marketable ideas and I'm looking for an electronic engineer to consult about their marketability.
Do you foresee issues running the business from Slovenia or do you plan on spending significant time in the US going forward? I’d expect that this requires at least a Slovenian subsidiary for day-to-day operations and could even lead to tax liabilities for the entire structure in Slovenia - were you able to rule this out?
How did you manage to open a bank account without going to Delaware? That's pretty much impossible... unless you gave someone else power of attorney to handle YOUR money...? What am I missing?
Maybe I am wrong or I misunderstood but this is all illegal in the EU and all OECD countries, there basically if you create a company in a country and you run it from your OECD country you are committing a crime and tax evasion. All board and HQ operations(day to day) must be done in the country where the company is registered. There is a way to open up abroad, the company you own in your country is the owner of the company in Delaware/Us/US, etc.
@@tomazzaman so I was right, you don't know what OECD countries compliance means. It's not about paying taxes but about management and running a US company when you an EU resident and you work for the company, and you are in fact the CEO. You are actually running a Slovenian or Slovenian/Dutch company, unless you just invest money and a CEO and some workers in the US do the job. It means you have not asked Slovenian or Dutch lawyer how it works, and you got scammed. I am sorry, you have to go and check before something bad happens to you.
I mean, the EU is great for all the laws and protections and standards and privacy laws and principles and stuff. But if you just want to make money without having to explain yourself to anyone, starting a company in the USA makes total sense.
I'm Incorporated at least 100 different companies in Delaware as well as the BVI, and Grand Cayman as well as Panama.. the companies are Incorporated in Panama were for legal purposes all taxes were declared and paid as we had US citizen participants and therefore it was deemed a US foreign-controlled Corporation but the point was that it's fast and reduces the costs of your transactions. In addition there's fewer regulations which again reduces your costs however because they've all now joined a group which oversees potential jurisdictions that are abusive putting them on a blacklist they've now joined that group and have instituted anti-money laundering procedures and so it's really kind of old school and outdated to think of these jurisdictions as tax Havens or money laundering jurisdictions as people who own them still are responsible for paying taxes in their home countries as an LLC which I assume he set up is a flow through Corporation or business organization meaning he's taxed in his home country on his profits.
Do I have to live in the USA to register a company in Delaware? Or can I live in the Eu and have a company in Delaware? What is better for someone in living in the Eu. USA vs EAU?
Very interesting but I'm wondering why is this possible? Most countries want you physically there as a resident in order to open a business on their sole. Does Slovenia or eu in general is fine with this? Should you declare your US company to Slovenia tax office? Also where do you pay taxes ? Any risk of paying additional taxes or being accused of tax evasion? How to minimize these risks as eu citizens?
Estonia allows to establish a company completely online. Usually EU countries require local businesses (no matter what legal form) to be registered locally and to pay local taxes, at least for the part of the business that is done from the local site. If a (foreign or local) company has directors in more than one country, double tax treatments may come into effect.
@@jayfraxtea that is what I wrote in the comments too, if your CEO, director and board members are in Slovenia or Spain or any EU country or any OECD country you have to create a company in the country of residence of the CEO, director and majority of board, it is not about taxes you pay, but about laws. If you don't comply you are making a criminal offence in all these OECD countries. Foolish to be saying publicly that you be CEO and director of company in country A and live in country B.
@@cantacann, you're not completely correct: you don't have to create a company in the country of your residence. Instead you can establish a company in every country you want, but the moment you start acting as a director for a company, no matter in which country this company was established, it becomes a local tax subject and needs to be registered at the local tax office, in Germany that is called a "Verwaltungssitz", other OECD-countries have other terms. If a company has a permanent installation in a country (and the office of a director of course is such), it usually needs to register that in the company register. In Germany this is called a "Betriebsstätte", other OECD-countries have other terms. If a company has an employee in a country, it may have to pay social taxes for this employee in this country. This is where countries are very different: in Germany a director can be free of social taxation while in Romania a director is subject to health and pensions ... and the director of an Estonian Osaühing is usually subject to 33% social tax even if he doesn't have a residence in Estonia(!).
@@jayfraxtea man, you are repeating what I just said, that if you are a director/CEO and have a board majority/management in a country you must create a company there. And that is the opposite of what this video says.
@@cantacann, no, I'm not repeating but correcting you. You don't have to create a company, as you say. Instead you have to register the company locally. That registration doesn't change anything about the initial creation in the foreign country. When I lived in Germany, I established a English Limited that I then led as director. Therefore I had to register the Limited at the local company register and the local tax office. The local tax office then issued a document ("Ansässigkeitsbescheinigung") that I could send to the English tax office, so they knew taxation of the company is done in Germany and no English taxes apply (according to the DTA). Additionally I had to file an annual return and a balance sheet according to English law at the English company register and then had to file this same document as well in Germany. Fortunately in this case Germany allows English balance sheets.
