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Online exclusive business with no physical address — Where should I incorporate?

Asked over 2 years ago - New York, NY

I have an online-exclusive business with no physical address. It is a social networking website targeting US audiences. "Miniature Facebook" would best describe the website. The business model is ad & freemium model. The site is basically free to use but to use premium features like privilege to upload larger photos than other members will cost a small fee. Revenue mostly is generated by advertising. Servers are in LA (rented dedicated servers of a US web-hosting company).

I would like to incorporate this web business and I have a few question:
I am relocating to Hong Kong permanently. Should I incorporate the service in HK or in the US? If US, what state? For this business, I'll be working from home — can I rent an apartment as the company and expense the rent?

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Attorney answers (1)

Freya A Shoffner

Reputation Level 11

Answered over 2 years ago. Estate Planning Attorney in Boston, MA.

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You certainly have raised a number of good questions. Whenever a business is considering choosing an entity, a number of factors are considered. You have quite a bit of flexibility regarding your choice of state or country for establishing your entity. And, you may find that using a Limited Liability Company meets your needs better than establishing a corporation. Your final decision will be based on a number of factors that include (but are not limited to):

1) Your country of citizenship;
2) The other individuals involved in the venture;
3) The amount of money each individual has invested:
4) The amount and type of expertise or work that each individual will contribute:
5) Your financing needs - both short and long term; and,
6) Tax considerations.

Your best bet is to retain an attorney who has considerable expertise in business law, and who has extensive experience in entity selection and start-up issues.

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Other answers (1)

tahn07

Answered by a user, over 2 years ago.

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Thank you for your kind response Ms. Shoffner.

I'd like to add additional information to my question:

1) Your country of citizenship: US
2) The other individuals involved in the venture: None
3) The amount of money each individual has invested: None
4) The amount and type of expertise or work that each individual will contribute: It is a one-person company.
5) Your financing needs - Short term: none, Long term: will need to raise capital to expand. I heard venture capitalists prefer corporations to LLCs.
6) Tax considerations. Hong Kong is a tax haven (no corporate tax on foreign income) but I am not comfortable with that since the website targets US audience and servers are in the US.

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