Monday, July 18, 2005

Comparing Incorporating Costs Charts - My shortlist Finalists Detailed Comparison

Basic Package$118.95$229$299$199
DE State Feesincluded$89included$89
Registered Agent 1st yr$90 every year6 months inc then $1291st yr included then $991st yr included then $199
Fed Tax Payer ID Help basic$35includedincluded$49
My Total$294$318 $299$337

One more item we need is Certified Copy of State Filed Documents (for open bank acct etc) for which charges $65, I am waiting to find out if others in my list include it in their basic package.

Another item to consider is the number of shares issued on startup.

Amerilaywers gives a default of 20,000 shares at $.001 par value while gives 1500 shares at $0 par value. This will affect your Franchise taxes as the min in $35 upto 3000 shares unless you have no assets and use the Assumed Gross Assets method when you pay the franchise fees.

Comparing Incorporating Costs Charts - My shortlist Finalists

What is the best eCommerce Credit Card Processing System

Understanding the Basics:

First you need to understand how it works

Option1: A merchant account
It comes with several fees. Lot of people don't list all the fees involved so we had to search a lot to compare apples to apples.

Here is a good FAQ about the various merchant fees involved.

(i) Setup Fees and Monthly Fees: My goal was to stay away from upfront setup fees and fixed monthly fees as we didn't know what our volume will be so we didn't want to pay $100+ for setup and $20/month without knowing what we'll make per month.

(ii)The second fee is transaction % fee and transaction fee in $/cents. Even 20cents per transaction becomes big if your average customer sale is small. Otherwise this doesn't matter much.

This site is a good search toot to find a merchant acount that works for your business

Option 2: Paypal account

I was under the impression that a paypal merchant account will offer only paypal method of payment. They have several options that offers paypal plus standard credit card processing for ecommerce sites.

I like the paypal standard account
Here is a good comparision of all the options at paypal

Software Integration Time and Costs
One factor you should consider apart from the fees is the effort (tech resources, time) involved in integrating any of these credit card processing options to your site. is the most famous merchant gateway software and integrated with Mambo, the coolest Content Management System ever. You'll find many of the options on the net are dealers.

A good referal I've got from a friend was for: - However, I haven't been able to get any response back from them to find out about the prices. They just don't want to email or call me back.

Sunday, July 17, 2005

Coola Closing - Lessons Learnt Summary

The lessons I learnt from my first startup Coola are lots.

I am surprised that I learn even today from some advices that I did not follow then, but they come back to me with their full meaning now as I am working on my next startup. My advisor Paul English helped me focus on team building from a startup perspective and pushed me towards being aggressive to find any all players evolvng in the Palm space to hire smart individuals or co-opt with other startups closer to Coola. I understand the value of that more today as I advice some startups more though I followed the advice and built the smart Palm technology team possible at that times.

I'll tell you more on this with specifics as they apply to you, the emerging enterprenuer later.

I learned a lot from just the closing experience. Here's an article sumamrizing my Coola lessons learnt.

Wednesday, July 13, 2005

Accounting basics

Accounting - Yeah, its important.

Its important to keep your books clean right from the start, so you don't spend too much time during year end tax periods.

Here is a good siteto learn the basic terminologies.

My personal preference is to get a reliable accountant to maintian your books monthly. We had a good accountant who came in few hours every month at $30/hour in Boston. She saves us all the money we paid us by getting us the best tax savings during the year end.

We'll visit taxes separately again.

Team is ready, now get a Shareholder Agreement

We had an amazingly good law firm, Bingham and Dana from Boston with my previous firm Coola. That has set a basic standard for me as to what all a company should have when we get started.

I am also a believer of keeping our books clean and maintaining all neccessary documents and complaince. It will make a big difference for a potential buyer if your exit option is to sell your firm.

I find this article by Mike Volker giving the basics about shreholder agreements, so beautifully that it doesn't make sense me repeating it all over again. I also like the fact that he gives a basic shareholder agreement to use as a basis.

Another resource I like is Busines power law site , though they sell legal documents (I am not affiliated with them nor have I used their services) offer three set of shareholder agreements simple, moderate and complex.

You can use this to get an idea and decide what your team needs and then approach a lawyer instead of gettin educated (and scared) by paying an hourly rate to a lawyer. An estimate I have got for a shareholder agreement is basic one for $250 from amerilawyer and 15 hours at whatever rate from a lawyer.

Hope this helps.

Sunday, July 10, 2005

Starting an Ecommerce Business

I shall cover several aspects of an ecommerce business here.

First comes cost estimates.

There are so many options for Merchant Accounts and Credit Card Processing companies.
I like Andy Quick's article about Choosing and Internet Merchant Account. for understanding all the hidden costs involved. I'd recommend using this to project the costs to evaluate whether the big idea that you see is really as big you think. Finally, cash flow will decide if you continue in business or make compromises to exit or take VC terms that you don't like later on.

Another article that gives all the hidden costs is here

You have to find the best option based on your projected sales volumes because what makes sense for you may be different from what works best for another site with different business peaks.

Another note from my personal experience is about being able to retreive the monies out.
In Coola, we setup credit card processing right when a customer was ready to pay. It worked out fine as customers charged and paid online. The difficulty came when we wanted to take the money out to manage our own cash flow. Different companies have different rules for taking the monies(that you have rightfully earned) out based on their own payment cycles which may be once a month.

Friday, July 01, 2005

Comparing Incorporating Costs

I am talking about a C Corp DE options and pricing here, though the same companies do incorporation for all states or S Corp etc.

Going to a law firm costs around $1500 from my recent estimates.

You can find a lot of cheap options on the Internet. I decided to ask for reference from fellow enterprenuers and short-listed to 4 ptions. What was amazing that everyone thought that theirs was the cheapest and it appeared so as soon as I looked at it. Then I found that each company buried 1 item's cost in their price.

So, here I list the key items I think you need to get on a C Corp DE incorporation and who offers it in their basic package vs charges separately, so you can compare and decide whats best for you.

Items Required and Best Price I found by references

Basic Package
Articles of Incorporation
Corporate Charter
Corporate minutes
Corporate by-laws
Corporate kit
Stock certificate
Corporate seal
Preliminary name search.

Additional items you need unless you are located in Delaware:
You need a registered agent at Deleware if you are a business located outside Delaware. We used CSC Corporation from my previous company Coola and they were very responsive and good. I started comparing options as I wanted one offered by the same company who did my incorporation.

Registered Agent (fees are different for first year vs. subsequent years), so ask for costs involved.

Registered Agent Address on Incorporation docs. This is an add-on to get your company incorporated with the DE Agent address instead of your home address if you are starting small. Doesn't mean anything if all goes well. I found that people wake me up at my home asking questions about why I closed Coola and whether I can help them start the same idea as they thought there was still a market for it. All because Coola was incorporated with my home address and contact and we forgot to move it our offices once we setup offices.

Registered Agent as a corporate office address and forwards mail

Add-Ons needed:
Federal Tax Payer ID Form Filling Help:
(I've listed the basic form price here, most sites offer a service to get the actual Fed Tax payer ID itself for an additional $35 to $50)

General Counsel: I found this nice add-on at for $89.00 if you select it during incorporation or its available at $139 per annum after that. I spoke to the lawyers there and believe they are very responsive and this might be a worthy add-on when u need a lawyer consult dring your first few years before you retain a law firm.

Once you scale and have employees you need the following. You don't need it if you are couple shareholdes working off your homes andhave no payroll or hires yet. (Check with a lawyer on specifics of DE Labor laws)

Department of Labor Registration $35
Delaware New Hire Reporting $35