Creating a LLC – Getting your EIN
Jun0
What is an EIN?
EIN stands for “Employer Identification Number”, but in reality it’s deals with a lot more than just employees.
It’s basically your companies identification number with the IRS.
Why do I need one?
You’ll need one to do almost anything with your company. Banks will require one, as will Merchant/Gateway accounts.
How to get an EIN if I’m a US Citizen
Although your incorporation company might offer to get you one (for a fee), you don’t need to go down that route.
Instead, you can apply free online at the IRS website.
How to get an EIN if I’m not a US Citizen
This is a bit more tricky as the online service only accepts US citizens.
You’ll need an ITIN (Individual Taxpayer Identification Number) which is a tax processing number for people without Social Security numbers. You should be able to get one in your countries US Embassy (check their website first). Take two forms of photo id (passport & driving license) and your incorporation documents. Once you’ve got an ITIN you can apply online for your EIN.
If you’re in a hurry, you can pay your incorporation company to get one for you. However, you’ll need to apply for an ITIN at some point, as you’ll need it when you file your personal tax return.
Creating a LLC – Operating Agreement
Jun1
In my last two posts, I explained corporation types and the initial incorporation.
However, once your company is incorporated, you need to get the members to sign the Operating Agreement.
I’ve “open sourced” our Operating Agreement (links at the end of the article).
The Operating Agreement is a legally binding contract between the members of the LLC. Although many states do not require LLCs to have an Operating Agreement, you should see it as a legal requirement (even if there’s only one member).
An Operating Agreement will give you credibility in court, and it’ll be harder to pierce the corporate veil (i.e. sue you personally) if you’ve got one in place. So essentially you need a Operating Agreement to protect your Limited Liability. It’s also for this reason that if you’re a single member LLC, it’s even more imperative that have a Operating Agreement as it may be that much harder to protect your Limited Liability.
Practically, an Operating Agreement is designed to get all the Members on the same page, and try to prevent disagreements later on down the line. If there are any problems, you and the courts will look to the Operating Agreement for guidance.
Moderating vinspired’s Question Time
Jun0
I thought I”d post this as a good example of using Socialmod to moderate Twitter Feeds.
On Thursday, vinspired had a conference called Generation Digital. Participants could tweet about the event, including the hash tag #gendig. These tweets were then moderated, and re-published on vinspired’s site.
Twitter is a great tool for conferences, allowing you to get feedback, even live during a session.
Socialmod lets you specify Twitter search terms, and will then automatically receive new Tweets:
These items can then be moderated like any other:
We then republish a ‘clean’ feed of moderated content, which you can put on your website:
Incorporating a LLC
Jun2
So, following on from my last post on startups, here I explain the process of incorporating a LLC.
Which state?
First, you need to decide where to incorporate. Each state has different laws – and some are more suitable for incorporation than others.
Delaware is a popular choice because its a favorable and business friendly environment. Some 571,000 businesses have been setup there, including 58% of the Fortune 500.
Delaware imposes no state income tax on a business that does not operate within the state. That usually means if you don’t have a physical presence within the state, you’re exempt from that tax and will only have to pay the LLC franchise tax.
Delaware is also famous for it’s established body of laws and Chancery Court, which are unique to the state.
Anyone can set up a business in Delaware, without ever visiting the state. In addition one person can hold all the positions and be the sole owner of the business – perfect for Micro ISVs.
There are other popular states for incorporation, such as Nevada. It’s worth doing a bit of research to find out which one’s best for you.
Choosing a name
You’ll also need to decide upon a company name. This will be need to be unique inside the state – most incorporation services will do a free name check. This is also the time to think about a domain name too.
DIY or incorporation service?
You can file the incorporation forms yourself, paying a minimal filing fee. However I recommend getting a firm to do it for you, especially if it’s your first time, or you’re outside the US. There’s a good blog post here on the tradeoffs to both approaches.
Most firms will also offer to be your registered agent – though only if you incorporate through them. A registered agent is someone who is in charge of receiving court documents and forwarding them to you. Delaware law requires you to have one, but it’ll only set you back $50 a year.
I really recommend Harvard Business Services Inc for incorporation. Their cost was reasonable, and customer service was great.
Harvard’s basic international package is currently $450. Personally I don’t think it’s worth paying for the standard or premium packages – you can purchase a ‘corporate kit’ separately for much less.
When you incorporate with them, you’ll need the names of the Managing Members. These names aren’t registered with the Delaware state, but are for the documents showing the incorporating office has signed over control to you. Basically the system is designed to protect your anonymity. If you assign yourself as a Managing Member of the LLC, you can assign others later without having to inform the state.
The other cost you’ll have is the annual Delaware LLC franchise tax. This is a flat fee of $250, due on June 1st. If your incorporating towards the end of the year, it might be worth waiting till January so you don’t need to pay that year’s franchise tax.
Next steps
Once you’ve incorporated, the next step is for all the members to sign the Operating Agreement – I’ll tackle this in the next post.
Creating a Startup – Choosing a Company Type
Jun7
This is the first in a series of articles I’m writing on company formation. The series will be from the perspective of a non-resident alien to the US and will encompass:
- Choosing a Company Type
- Incorporating a LLC
- Obtaining an LLC EIN
- Obtaining an LLC Bank Account
- Obtaining a Merchant Account
When you go through the company incorporation process, you need to decide what type of company you need.
All have their pros and cons, and what type is best for you really depends on your short to medium term objectives.
I’ve outlined the types below, and the general scenarios in which they’d be applicable.
AWS Elastic Load Balancer Tutorial
Jun10
We’ve been using the new Amazon Load Balancers (ELB) for Socialmod, and since there’s not much information out there on the subject, I thought a blog post would be in order.
The load balancers are charged at $0.025 per hour, plus $0.008 per GB of data transferred through them. Personally I think this is very reasonable.
They’re hardware based, and can balance both HTTP and TCP traffic. This means you can balance both the traffic to the web server, and the database traffic (although there are issues with the latter that I’ll talk about later).
Some of the following instructions are specific to OSX/Linux, check the docs for information about Windows.
Setting up the tools.
Download the tools from Amazon, unzip them and place them somewhere logical (in your home directory for example).
Edit your .bash_profile file (or .profile), adding the following line:
export ELB_HOME=~/path/to/elastic_load_balancing export PATH=$PATH:$ELB_HOME/bin
If you’re not using EC2, you’ll have to go through the extra step of creating/downloading a private key, and adding EC2_CERT/EC2_PRIVATE_KEY to your bash file.
I’ll assume you are, since you can’t use ELB with any other server setup.
Create the load balancer.
Execute the following command. Only include the zones you actually have instances in – I made the mistake of including extra which meant the balancer kept on droppingn requests.
elb-create-lb default --zones us-east-1a --listener "protocol=http, lb-port=80, instance-port=80"
You’ll be given the URL of your new load balancer in return which you’ll need for configuring the DNS.
Register instances.
Now to actually register any EC2 instances with the load balancer.
elb-register-instances-with-lb default --instances i-12345678
If you navigate to the load balancer’s URL you’ll probably see an Apache “It Works!” sign.
You could add the Load Balancer’s URL to your virtual host’s domain alias in order to actually see the web page.
Configure DNS.
Ok, so here comes the kicker – you can’t use ELB for the root of your domain. This is because the load balancers can only be referenced by a domain name, not an IP address. You can’t have a CNAME on the root of a domain – it has to be on a subdomain.
Amazon are busy adding this ‘feature’, but in the meantime you should forward everybody to a subdomain, such as ‘www’.
Here’s an example of an Apache rewrite condition that forwards everybody to www:
RewriteCond %{HTTP_HOST} ^socialmod.com$ [NC]
RewriteRule ^(.*)$ http://www.socialmod.com$1 [R=301,L]
Advanced Load Balancing
You can load balance your Mysql cluster – however ELB is outside Amazon’s firewall and isn’t integrated with it. This means that to load balance Mysql you need to open it up to the world and rely on strong credentials to keep your data secure, rather than firewall rules.
ELB can handle SSL traffic, just set the protocol to TCP and the port to 443 when you create the balancer. Currently, Elastic Load Balancing does not have SSL termination capability.
ELB is certainly in it’s infancy, but has been beta tested and is ready for production. I just hope that Amazon add ELB management to their AWS console.