Before you start reading, I want you to know…

This is my own startup notebook,
recording the problems and challenges I’ve run into along the way.
What’s written here, and the advice in it,
won’t necessarily suit every founding team.

My current venture is a B2C product,
so the discussion below is framed around B2C

If this article helps you,
I’d be glad.

And if there are other topics you’d like to discuss together,
I’d very much welcome that too~

There are plenty of articles online teaching you how to incorporate.
Incorporating isn’t hard at all, especially in Taiwan.

Once you’ve incorporated,
if you want e-invoicing,
or want customers to be able to pay by card,
neither of those is especially difficult either.
As long as you’re patient,
there’s no shortage of articles and resources out there,
to help you skip the agency’s commission.

But does a startup need to incorporate right at the very beginning?

From the time I started preparing to set up the company before leaving my job,
through the half year since I left,
the question of [whether the company should even be set up],
has only gradually surfaced.

Setting up a company is something that gives you an easy sense of accomplishment,
because all it takes is money and time.
It’s like a scavenger hunt, step by step,
gather all the required documents,
and you get clear responses and results.
But once the company exists,
the recurring monthly costs that come with it,
become a heavy financial burden for a startup team with no revenue,
under those circumstances.

Here’s a list of the basic costs (fixed costs) of holding a company:

Rent
If you rent an office,
rent is absolutely a major, sizable expense.
Even if you don’t rent an office,
many people choose to rent a registered address
(since registering the company at your own home isn’t always workable),
and that alone runs three to four thousand NT dollars a month.
Average cost: 20k (renting a small office) / 3.5k (renting a registered address)
Accounting
From a bookkeeper to a CPA,
you’re looking at 2,500–4,000 NT dollars a month,
plus two extra months’ worth of fees once a year (year-end closing / tax filing), for 14 months total.
Just like rent,
whether you’re making money or not,
your accountant’s fee doesn’t go down because of it.
Average cost: 3.5k
E-invoicing and card readers
If you’re building a B2C startup,
you might want to make things convenient for customers,
so you apply for a card reader / online card payment.
Some online payment platforms take a cut,
others charge a fixed monthly fee (LINE Pay and JKoPay integrations both have fixed monthly fees).
If you apply for one but almost nobody ends up using it,
then regardless of the amount,
it becomes a heavy burden once cash gets tight.
Average cost: 1k
Online storefront platform (Shopify / Wix / WordPress or others)
To get your product any exposure at all,
you always need to list it somewhere.
Free spaces only let you customize so much,
and a space you can actually shape the way you want,
always costs money (unless you’re already able to build your own site — but that’s another topic)
Average cost: 1k
Cost summary

When setting up a company,
the fixed costs can vary enormously
at the low end it can be around 4k a month
(just accounting, address registered at home, nothing else)
but it can just as easily creep up to 25k or more
(renting an office / card payment and e-invoicing / a company website)
and none of this even includes product development or other expenses!

4k a month may look small,
but when the company isn’t making money and you have no income of your own,
watching the company’s bank balance slowly shrink month after month,
that stops being a question of “how big is the number.”

In summary

So, is it actually necessary to incorporate?
Or to put it another way, what’s the ideal moment to incorporate?

I think this question should be looked at from two angles

How long does it take to set up a company?
Under what circumstances is it necessary to have a company?

For the first question,
incorporating can take as little as three weeks (if all the paperwork checks out)
or as long as about two months (with back-and-forth corrections with the authorities).
So if you average it out to about a month,
just file your application one month before the point where [you absolutely must have a company]!

For the second question,
what exactly is that point where [you absolutely must have a company]?
This actually breaks down into two layers:

Company registration as a necessary condition for continuing to scale
(without a company, you can’t keep growing)
for example, a card reader isn’t actually necessary in the early stage,
there are plenty of alternatives.
Many online businesses don’t issue invoices either (even at fairly large scale),
issuing invoices isn’t necessary in the early stage
this isn’t meant to encourage anyone to skip issuing invoices,
it’s just that you need to weigh whether your company / team / product is mature enough to be generating consistent revenue,
with a real need for formalization and compliance.
If the product is still at the experimental stage,
and the business model hasn’t yet been validated by the market,
an experimental product (especially a company’s very first product) can skip these steps for now.
Only once the company has its first product that’s actually succeeding,
selling consistently and growing,
does it make sense to incorporate and formalize everything.
Legal requirements
Generally speaking, legal requirements
only force the issue if you’re dealing with import/export goods under specific regulations,
or if your business has grown so large that the tax authorities have taken notice.
But if you’ve reached that scale,
it’s really just the result of having satisfied the previous condition for a very long time without formalizing.
And if that’s the case,
funding and operations probably aren’t a problem anymore,
so just go ahead and get it done!