Ask HN: I'm building a startup, should I do LLC or C-corp? Why? I am building a startup and want to incorporate it, I was gonna do LLC but someone suggested C-corp. What's the benefit(s) of one over the other for startups specifically and why? |
Ask HN: I'm building a startup, should I do LLC or C-corp? Why? I am building a startup and want to incorporate it, I was gonna do LLC but someone suggested C-corp. What's the benefit(s) of one over the other for startups specifically and why? |
"If you ever want to take outside investment, you'll want to be a Delaware C corp. It's just standard and investors know how to deal with it. Even Facebook started as something else, but had to reincorporate.
It's not too difficult to fix, but might as well the avoid the problem in the first place." [1]
[1] http://www.quora.com/Y-Combinator/Why-does-Y-Combinator-reco...
You can change your LLC into a C-Corp any time, or you can form an LLC and have it acquire the LLC for tracking purposes if your VC wants a c-corp.
LLC's pay taxes as an S-Corp, which means all the income and expenses pass through to you, the owner, and taxes get paid on the profit based on your personal tax rate.
Edit: I'm not too familiar with the S-corp election for C corps, so most likely most of the pass-through benefits apply there as well.