Looking at incorporating my startup and Stripe Atlas keeps coming up. $500 seems steep for what looks like basically filling out some forms.
What do you actually get with Atlas? Is it worth it vs just filing directly or using something cheaper like Clerky or even LegalZoom?
I used Atlas last year. Here's what you get:
The $20k in Stripe credits alone pays for it if you're processing payments. Plus you get a Stripe account activated immediately instead of waiting weeks for underwriting.
The value prop of Atlas depends heavily on your situation:
Atlas makes sense if:
Skip Atlas if:
The actual legal documents from Atlas are solid - they're built by Orrick which is a top startup law firm. But you can get similar quality from Clerky for $200 less.
What about Clerky? I've seen that mentioned as the middle ground. $400 vs Atlas $500.
From an investor perspective: we don't care if you used Atlas, Clerky, or did it yourself. We care that your formation docs are clean and standard.
I've seen companies use all three approaches. The only time it matters is if something is screwed up - like you forgot to file your 83(b) election within 30 days of stock issuance. That's a huge tax problem.
If you're doing it yourself, at minimum get a lawyer to review your stock purchase agreements and make sure your 83(b) is filed correctly and on time.
Can someone explain the 83(b) thing? I keep seeing it mentioned and don't fully get why it's such a big deal.
83(b) election is critical for founders. Here's why:
When you get founder stock, it usually vests over 4 years (even though you "buy" it upfront). Without an 83(b) election, the IRS treats each vesting chunk as taxable income at its fair market value.
Example: You get 1M shares at $0.001/share ($1,000 total). Four years later when your last shares vest, your company is worth $10M and each share is worth $1. Without 83(b), you owe taxes on $250,000 of "income" each year as shares vest - even though you received no cash.
With 83(b): You pay tax on $1,000 (the purchase price) immediately when granted. All future appreciation is capital gains when you eventually sell.
The catch: you MUST file within 30 days of receiving the stock. Miss that window and you're stuck with the bad tax treatment. There are no extensions or do-overs.
Counterpoint: filing an 83(b) yourself is literally sending a one-page form to the IRS via certified mail and keeping the receipt. It's not rocket science.
If you're capable of building a startup, you're capable of mailing a form. Don't let people scare you into spending money you don't need to spend.
That said - yes, DO NOT FORGET to file it. Set like 5 calendar reminders.
One thing nobody mentioned: if youre considering accelerators (YC, Techstars, etc), both Atlas and Clerky produce documents that are already in the format these accelerators expect. I've heard horror stories about founders who used LegalZoom or did it themselves having to redo everything before Demo Day.
So factor that into the cost comparison if an accelerator is in your plans.