I'm a professional tax accountant and I deal with corporate reorganizations and giant pain-in-the ass org charts on a daily basis. First understand what an LLC

I'm a professional tax accountant and I deal with corporate reorganizations and giant pain-in-the ass org charts on a daily basis. First understand what an LLC, S-Corp, and C-Corp are... VCs prefer C-Corps because they provide the "best investment vehicle," there is no limit or rules to the ability of how you can split the shares. For example, a C-Corp allows you a variety of different classes of shares. Generally the only time this option is realistic is if you will be guaranteed a large source of income at least 200k plus or a huge influx of funding. Lastly, C-Corps are the most stable entities with the most case-law. LLCs are agile, quick and lean. But, as an investment vehicle there are variety of problems that are related to tax and legal issues. Its great for a company that's starting out small, but you'll have to pay the self-employment tax on all earnings (15.3%). S-Corps are awesome for small business as well because you avoid paying self-employment tax (15.3%). Theres a bit more paper work but if your bootstrapping then its definitely an awesome option. I'm not going to get into all that much detail about the LLC and S-Corp but I did write a blog post of them with more detail at: <a href="http://www.thekenggroup.com/2010/04/26/incorporation-%E2%80%93-part-deux>s-corp http://www.thekenggroup.com/2010/04/26/incorporation-%E2%80%... and llcs</a> Please note that if you incorporate in NYS, there a few quirks you should realize. First, you have to pay a fee here no matter what every year, used to be 300 dollars for city and state but they recently changed it to 100 dollars total. Also, NYC does NOT recognize the S-Corp status and they also consider an LLC an "unincorporated business" for taxes. Setting up shop in NY can be pricey in general, but if you're located here your going to have to pay these costs either way. Lastly, Delaware is often cited because they have assloads of caselaw or guidance for how a legal issue is going to play out. Corps like certainty and Delaware provides that, more importantly, Delaware is majority ownership friendly. Delaware will generally side with the majority stockholder for any reasonable business decision. Hope this helped.