What if you made startups exempt from ALL corporate regulation?
Health & safety rules? Hiring & firing legislation? Tax?
I worry that this might tempt some established businesses to seriously consider breaking themselves up into startups.
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To prevent such a stampede (and to prevent tax revenue evaporating) you could make it such that the kinds of startups that were exempt from corporate regulation were those which were not registered (incorporated) as limited liability companies.
As far as I know, there is no law which requires an organisation to register as a limited company.
Startups are often partnerships, which have no liability protection.
What would qualify a startup for exemption?
- age of the business?
- number of employees?
- amount of revenue, profit, assets?
As a result of the legislative change, I think the startup world could perhaps just go a little crazy.
Or alternatively, nothing might happen.
After all, since when did a pre-profitability startup ever have to pay tax anyway?
But not all startups stay unprofitable forever, or even for very long.
And if they get to become scalably, sustainably profitable before they stop ‘legally qualifying as tax exempt startups’, investors are going to get very interested.
Protecting the public from safety risks?
You could make the case that startups are typically keener than anyone else to keep their customers from having anything to complain about.
And recruitment rules? Are you kidding?
Startup pay is often ‘once we make it’ pay, and startup working conditions are often ‘one room, one mess, one hangover’.
Startups often behave as if they are already exempt from every rule. Ever.
So some things may not change, and some probably don’t need to change, and yet somehow the words ‘officially exempt’ may be just enough of a spark to set the innovation investment world on fire.