When to register as a company?

Hi,

here where I live, you can open an individual company. It has good tax rates. The problem is that you can't deduct any tax from any purchase as it already has a good rate.
This is unfortunate as I have many expenses (servers, CDNs, APIs, etc...) and being able to give assets and liabilities to a company and not an individual company (which corresponds to me as a physical person) would be much better.

Therefore, my question is this: when would you consider opening a company? What's that thing you'd want to achieve before opening a company, to avoid wasting money and resources on something uncertain?

(+ extra, when would you consider moving elsewhere to avoid high taxation and where?)

I've had an umbrella corporation from day one, and I open up subsidiary LLCs for each project when they have enough monthly income to cover the filing fees and accounting overhead.

In my situation (Delaware C-Corp/LLC) the pass-through nature of the LLC means the "losses" of one project offset the profits of the others for tax purposes. And the umbrella C-Corp lets me have one central source for raising funds or getting contracts, plus I can later sell each project as a self-contained LLC without getting into the technicalities of what parts are included/excluded.

Stavro said:

I've had an umbrella corporation from day one, and I open up subsidiary LLCs for each project when they have enough monthly income to cover the filing fees and accounting overhead.

In my situation (Delaware C-Corp/LLC) the pass-through nature of the LLC means the "losses" of one project offset the profits of the others for tax purposes. And the umbrella C-Corp lets me have one central source for raising funds or getting contracts, plus I can later sell each project as a self-contained LLC without getting into the technicalities of what parts are included/excluded.

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That sounds really convenient. Where did you get your consultancy to do so?
And in my case, what would you recommend then?

Consider that yes, I do have a budget, but not an high one. I can spend 1k, but not 10k.

Johngok said:

That sounds really convenient. Where did you get your consultancy to do so?
And in my case, what would you recommend then?

Consider that yes, I do have a budget, but not an high one. I can spend 1k, but not 10k.

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In your case I'd recommend getting a company when the company itself can cover the filing fees.

The company registration isn't going to affect your marketing or client trust at all (with some exceptions for fortune-100 clients, governments, large nonprofits, and banking), it's largely just a way to compartmentalize your taxes and gain liability protection.

Open it when monthly profit consistently covers the admin and accounting overhead.

Stavro said:

I've had an umbrella corporation from day one, and I open up subsidiary LLCs for each project when they have enough monthly income to cover the filing fees and accounting overhead.

In my situation (Delaware C-Corp/LLC) the pass-through nature of the LLC means the "losses" of one project offset the profits of the others for tax purposes. And the umbrella C-Corp lets me have one central source for raising funds or getting contracts, plus I can later sell each project as a self-contained LLC without getting into the technicalities of what parts are included/excluded.

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That’s actually a really smart structure, especially if you’re managing multiple projects or brands at the same time.

Having an umbrella corporation with separate LLCs for each profitable project gives you a lot more flexibility and protection. I also like the fact that each business stays isolated legally and financially, while the parent company becomes the central hub for funding, contracts, and operations.

The ability to offset losses from one project against profits from another is a huge advantage too. And from an exit standpoint, being able to sell a project as a standalone LLC without untangling everything later makes the structure even more valuable long term.

Definitely more complex to manage, but for people running several online businesses, it makes a lot of
sense.