legal, llc, equity, corporationJust ran across a mention of Vermont’s VCorp (Virtual Corporation) and wonder what the pros & cons of them are, especially related to raising funds and legal matters; aka how do they compare to Delaware’s LLCs?
In general, if you’re a US resident - you should be incorporating in the State where you’re resident and/or where you operate. That’s for the simple reason that you’re required to register there anyway regardless of where you incorporated - so why not incorporate there?
There are very few reasons to incorporate in a foreign State for a US resident, and you should have a lawyer explain to you which of these reasons apply to you before you do that. You need to be able to justify that extra spending for yourself and your business.
Specifically to Vermont V-Corp, it is a Corp. There’s nothing special there, and nothing worth the extra dime spending to fund the Vermont government. They legally allow conducting meetings virtually/online, but to the best of my understanding - this is not the main issue that causes problem to any business owner. In any case, for most parts I do not believe other States actually require physical meetings. Conference calls have been an acceptable way of communications since the early last century. Nothing new there. In any case, for most startups the people involved meet with each other regularly regardless.
Virtual Corporations still pretty much still C or S Corps. that only major difference is that you are not require to have the annual “board meeting’ in the state of incorporation which if you do live or do business in that state would necessitate either waiving the meeting, taking a little trip out there or assigning a proxies.
In Vermont’s V Corp. such meeting can be conducted via email or virtual meeting without ever having to actually set foot in the state. The only real disadvantage is that because its so new, there is the possibility that some states may reject it and no recognize/allow Virtual Corporations to do business in their state which sucks if that is your home state or state where you do most of your actual business.
Also because of the freedom this allows businesses especially foreign-owned and controlled businesses the demand will be high and consequentially the price to incorporate will sky-rocket as will the amount of time it takes to file and incorporate in Vermont unless other states also begin to adopt it.
Personally, I love the V. Corp concept as I work in a primarily virtual field as it.
But If you are planning to have a holding and operating company or companies as well to personal liability and also want to avoid Corp. double taxation because you’re a smaller business, a Series LLC like the ones in Delaware might be a better way to do that.
But It depends on your specific situation.
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