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3. Start your company as an LLC No matter what anyone tells you, don't start as a C-Corp, unless you are sure that VC is investing in your company right away.

3. Start your company as an LLC No matter what anyone tells you, don't start as a C-Corp, unless you are sure that VC is investing in your company right away. Even the cost of winding down a C-Corp is substantial.

justingreet 7y ago
Could not agree more!
zarro 7y ago
What about forming an LLC using stripe atlas? Is it better to do it in Delaware or your own state?
nakodari 7y ago
How much does it cost to switch from C-Corp to LLC? What are the Pros and Cons of moving to LLC?
ganeshkrishnan 7y ago
Second biggest mistake I did for my startup; creating a c-corp and the major headaches that came with it. First mistake was reading startup glories and successes and pitching to investors and killing my time. I heard the term "toxic positivity" to describe this. And also the blog that was posted here about not focusing on revenue but making software "bigger" and "better". No offense but it's wrong: focus on the revenue. If people are not paying, your software is worthless.
dumbfoundded 7y ago
Unless you're in the Cannabis industry and you don't want to worry about 280e
- deleted 7y ago
  [deleted]
- cannaceo 7y ago
  How does being a C Corp protect you against 280e?
  - dumbfoundded 7y ago
    Pass through tax liability. Let's say you did your accounting wrong and your company owes a bunch of money. These accounting mistakes usually account for double digit percentages of revenue. If you own an LLC, you get the benefit of only paying taxes once unlike a double taxed C-Corp. The cost is pass through tax liability. If your company owes taxes, the owners personally owe taxes. Let's take a real world example that happened to someone I personally know. They owned a dispensary, made some money not too much, everything going ok. IRS comes and says 4 years ago you did your taxes wrong. On revenues of ~$2.5M, she owed $400K that she deducted incorrectly due to 280e. In a day, she almost had her life ruined. She's back and opened a couple more dispensaries. She managed to survive others didn't. If you had created a C-Corp, the business goes bankrupt. IRS collects what it can. You go on your way. https://investinganswers.com/dictionary/p/pass-through-entity https://investinganswers.com/dictionary/p/pass-through-entit...
abuehrle 7y ago
One other reason to choose a C-corp over LLC is QSBS if plan to sell your company. https://news.ycombinator.com/item?id=20429286 https://news.ycombinator.com/item?id=20429286

justingreet 7y ago

Could not agree more!

zarro 7y ago

What about forming an LLC using stripe atlas? Is it better to do it in Delaware or your own state?

nakodari 7y ago

How much does it cost to switch from C-Corp to LLC? What are the Pros and Cons of moving to LLC?

ganeshkrishnan 7y ago

Second biggest mistake I did for my startup; creating a c-corp and the major headaches that came with it. First mistake was reading startup glories and successes and pitching to investors and killing my time. I heard the term "toxic positivity" to describe this. And also the blog that was posted here about not focusing on revenue but making software "bigger" and "better". No offense but it's wrong: focus on the revenue. If people are not paying, your software is worthless.

dumbfoundded 7y ago

Unless you're in the Cannabis industry and you don't want to worry about 280e

deleted 7y ago
[deleted]
cannaceo 7y ago
How does being a C Corp protect you against 280e?
- dumbfoundded 7y ago
  Pass through tax liability. Let's say you did your accounting wrong and your company owes a bunch of money. These accounting mistakes usually account for double digit percentages of revenue. If you own an LLC, you get the benefit of only paying taxes once unlike a double taxed C-Corp. The cost is pass through tax liability. If your company owes taxes, the owners personally owe taxes. Let's take a real world example that happened to someone I personally know. They owned a dispensary, made some money not too much, everything going ok. IRS comes and says 4 years ago you did your taxes wrong. On revenues of ~$2.5M, she owed $400K that she deducted incorrectly due to 280e. In a day, she almost had her life ruined. She's back and opened a couple more dispensaries. She managed to survive others didn't. If you had created a C-Corp, the business goes bankrupt. IRS collects what it can. You go on your way. https://investinganswers.com/dictionary/p/pass-through-entity https://investinganswers.com/dictionary/p/pass-through-entit...

abuehrle 7y ago

One other reason to choose a C-corp over LLC is QSBS if plan to sell your company. https://news.ycombinator.com/item?id=20429286 https://news.ycombinator.com/item?id=20429286