4 ms·
> Incorporating as a C-Corporation in Delaware is the gold standard for high growth startups Not every business is designed to be a "high growth startup". Cons
by joeax 10y ago
> Incorporating as a C-Corporation in Delaware is the gold standard for high growth startups
Not every business is designed to be a "high growth startup". Consulting firms, bootstrapped startups, small micro-ventures, self-published presses, all of these benefit from the ease and simplicity of an LLC. Unless an investor is cutting you a check for $1mil+ I would lean toward an LLC.
- andrew_gust 10y agoAbsolutely! For many kinds of businesses, LLCs make sense, but this post is specifically about startups.
- meesterdude 10y agoLLCs make perfect sense for startups, too.
- andrew_gust 10y agoIf they don't want to grant equity or take investment, sure. But doing one of those two things means the legal costs of starting with an LLC (which aren't standardized) substantially outweigh any tax savings, and almost no startups prior to that point have positive cash-flow anyway so taxed profits aren't much of an issue.
- meesterdude 10y agoi agree, but it's not just a tax matter - there are also significant organizational and operational implications to be had.
- brianwawok 10y agoLLCs can grant equity just fine. Please don't spread FUD.
- andrew_gust 10y agoSure, but there isn't an out-of-the-box mechanism to do that. You have to create a way to grant equity, which means you'll need to pay a lawyer—and hourly rates add up quick.
- staticautomatic 10y agoStill FUD. Plus, making equity deals without consulting a lawyer is a bad idea regardless of your corporate structure.
- brianwawok 10y agoExactly. Too many people trying to push all starts into a Delaware X corp for their own gain. Not great blanket advice for everyone, do your own research.