10,947 easy steps to setting up a company

Starting up across timezones, legal codes, and languages

After working together for nearly a decade, my colleague Sean and I decided to start a company. We’d been working for other people for so long that we thought: “now is the perfect time for us to start a company that enables us to work harder than ever for other people!” So that’s what we did. We started a company. Cool right?

Well here’s the thing: Sean lives in New Jersey, surrounded by lush gardens of course, while I live in Amsterdam, where I’m not sure what surrounds me because it’s always raining too hard so I never go outside. But whatever, he lives there and I live here. The time difference is 6 hours, which means his day starts right around the time I’m getting sleepy in the afternoon. We have a few hours of overlap, plus whatever time I carve out in the evening because The Daily Show/Colbert Report are both on vacation AGAIN and the Boardwalk Empire season just ended.

Great, so we’re starting it. First steps: Install Skype? Check. Make a teaser website? Check. Setup a business-doing-entity? Che… I mean, let’s just get the easy stuff out of the way and then move on to more important things, agreed? Yeah right.

Google all you want, you’ll never discover the pain involved in setting up a company with home bases in two countries, or at least these two countries (US + Netherlands). I mean, why would a STARTUP do that? Well it turns out we have a really great team based here in Amsterdam, but our best business leads were in the states initially. It’s a long and probably boring story (as this post is likely to be), but suffice it to say we needed companies in both places, and a formal relationship between the two.

A word to the wise: setting up a company in two continents is not only double the trouble, it’s also double the cost. Or maybe even 2.5x — you’ve got your US attorney and accountant, and you’ve got your NL attorney and accountant. And then you have the added cost of ensuring they are both on the same page.

Go ahead, setup a call between both sets of counsel. That buzz you hear in the background of the teleconference is not signal degradation resulting from transferring the voice packets back and forth across the floor of the Atlantic Ocean. It is the sound created by your subconscious of the Dyson-brand Cyclone vacuum (yes, everything passes perilously close to England) that is sucking up all YOUR MONEY.

But why, you ask, would such a call even be necessary? This is a startup, you’ve got to roll up your sleeves and get your hands a little dirty right? We tried. Look at this tax treaty. Just LOOK AT IT.

Now let’s talk about banks, beloved bastions of capitalism. I always get that warm, fuzzy feeling when their websites volunteer a live chat representative to help me with any questions I might have (names changed to reflect the innocent):

You are now chatting with ‘Bill’ from Citibank, N.A.

• Bill: Hello! I am a Citibank Client Resolution Specialist. How can I help you today?
• ANDREW: Hi Bill. Can you tell me the most cost effective way to transfer money internationally on a regular basis?
• ANDREW: I have a bank account in the Netherlands that I need to send money to, but I don’t want to get hit with poor exchange rates or excessive wire transfer fees.
• Bill: I will be glad to help you with the information, Andrew.
• Bill: May I know if the receiving bank a Citibank?
• ANDREW: The account in the Netherlands is ABN AMRO — there are no Citibanks here, as far as I know.
• Bill: I see. We offer two methods of transfer to international accounts. One is the Citibank Global Transfers (CGT) and the other one is the International Wire Transfer.
• Bill: CGT wouldn’t be applicable for your transfer type.
• Bill: The other option left would be the wire transfer.
• ANDREW: Can you tell me the costs of an International Wire Transfer? And, does Citibank provide competitive exchange rates?
• Bill: Sure, Andrew.
• Bill: Let me check the exchange rate.

[10 minutes later]

• Bill: The Buy Rate is 1.27095 and the Sell Rate is 1.44775.

[Holy SPREAD, we just pivoted from a tech startup to one that does FX! In other words, NOT competitive.]

And who would have thunk that if you have money you want to put into a business bank account, that you can’t just go to the bank and open an account. Seriously? It’s not like we are asking for money. We just want them to hold onto it for us for a (probably very short) moment. [see Cyclone reference above]

In the states, it seems they basically want you to pay your dues to the legal/accounting industrial complex. In the Netherlands, you have to go (by bike, of course) to the notary a thousand times so they can charge you 50 euros to watch you sign a piece of paper (at least you get a free envelope out of it), and after all that you have to give the bank a business plan to prove you are legitimate. So that you can give them your money.

Fortunately, once you’re done jumping through all the hoops, you don’t have any money left so you don’t really have to worry about it anymore. We had a first paying customer and had nearly completed our entire first project term before we had a bank account.

And let me just say that when you are bootstrapping a startup, it’s really fun to have a check sitting on your desk for a month while the lawyers, the IRS, the Belastingdienst, the Chamber of Commerce, the Kamer van Koophandel, the accountants, and all their intermediaries pass documents back and forth in accordance with some Rube Goldbergian process seemingly designed to stop you in your tracks. The whole process felt a little like this.

Isn’t the hard part supposed to be getting customers?

Stay tuned for more boring minutiae about setting up Proto venture technology, a transnational company. And kittens.

PS Kids, don’t forget to file your foreign entity registration!