It's no secret that student entrepreneurs are on the rise. Whether you launched a valuable new service between classes or operate a tech startup from your dorm room, student entrepreneurship comes with a host of added responsibilities.
Picture a scenario where you're working on something: a product, a service, the next killer app, or a screenplay. Your friends or a professor know about your idea and maybe they've even helped you with it. Everything is casual and friendly until someone gets an inkling that maybe your idea is about to take off.
If you haven't protected yourself before that point, it may be too late. You can't claim something is your property—your intellectual property—until you own it. And the way to make sure you own and control it is to form a business entity and put your intellectual property in that business entity. The business entity issues stock and you ensure you own more than 50 percent of that stock. Then you can issue stock to people who have helped and may deserve to be included. But it's you who control the idea and the company.
Forming a Delaware LLC or corporation is a common way to legally separate and protect your personal assets from your business. While we can help you form and file your corporation or LLC, please be advised that we are not a law firm and cannot give legal advice. Please consult an attorney if you need legal advice on this matter.
We have more than three decades of experience forming Delaware companies for people who want to protect their assets, including student entrepreneurs. In fact, we helped incorporate Napster! Napster's founding chairman & CEO John Fanning had this to say about our service:
"When I looked around to incorporate Napster, Harvard Business Services was the clear choice. They did an excellent job at a lower cost. I would highly recommend them."
Here's how incorporating can help protect your company, so you can focus on growing your business:
It Establishes Ownership
You know the idea for your business was yours alone, but if someone else helped you along the way, they may try to claim a stake in the company when it starts to take off. Among other benefits, incorporating your business will establish you as the owner of the company and allow you to issue stock in the company or share a portion of ownership if you so desire.
It Helps Attract Investors
At some point, you may need to raise money for your company. Typically, that means attracting investors. Many investors don't want to invest in ideas—they want to invest in stock, which provides tangible proof that they own a portion of the company (and therefore stand to make a profit from their investment down the road).
It Offers Tax Advantages
It's not unusual for a business to generate more expenses than revenue at first. As the business's owner, you'll want the capability to deduct these operating losses from your income taxes. If you form a subchapter S corporation, losses at this stage can be positive for your investors. Generally they can get a tax write-off from your losses, effectively recouping from the government some of the money that they invested in your business.
Please note that this information is not to be misconstrued as accounting advice. For more information on any tax advantages please consult an accountant or tax professional.
Now that you understand the benefits of incorporating, you're probably wondering how Delaware factors in. The state of Delaware has established a reputation around the world as one of the best and most business-friendly states in which to incorporate. More than 60 percent of all Fortune 500 companies and over half of U.S. publicly-traded companies are incorporated in Delaware. The cost to form a Delaware corporation or LLC is one of the lowest in the world, and there is no state income tax for Delaware companies that operate out of state. (Please see our Why Delaware? page for more details.)
The process to incorporate your company is easy! First, decide which business entity type is right for your company. Then click the button below and fill out our easy-to-use order form. You'll be done in minutes!Form a Delaware Company Now
Since 1981, Harvard Business Services, Inc. has helped form 130,078 Delaware corporations and LLCs for people all over the world.
Harvard can provide assistance throughout the life of your company. These custom services are the most popular with our clients: