{ February 2nd, 2010 }

The 5-Second Guide to Choosing Your Startup’s Legal Entity

Corporation.

Because if you can log on to the Internet, you can handle the complexity of a corporation. Don’t be scurred.

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Ryan RobertsRyan Roberts is a startup lawyer and represents technology companies through all phases of the startup process, including incorporation, seed & venture financings, and exit transactions. Click here to learn more about his practice.
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32 Responses
  1. David says:

    Could you have made it the 6 second guide and removed the ambiguity about which corp you prefer? Has to be the C Corp – the rest are pretenders!

  2. David says:

    Could you have made it the 6 second guide and removed the ambiguity about which corp you prefer? Has to be the C Corp – the rest are pretenders!

  3. That was more like a 2 second guide.

  4. That was more like a 2 second guide.

  5. Sandro says:

    Haha, brilliant. I agree with @David though, C all the way. S seems like a muddled tax hell…

    From now on when asked about which type of Corp to choose, I will be pointing anyone and everyone to this post.

  6. Sandro says:

    Haha, brilliant. I agree with @David though, C all the way. S seems like a muddled tax hell…

    From now on when asked about which type of Corp to choose, I will be pointing anyone and everyone to this post.

  7. North says:

    And who needs legalzoom or any other middleman? It was easy. 89 bucks and Fiddy for a registered agent, why pay more? Well ok, an embossing seal would be neat.

    However I was surprised that DE isn't open on weekends or non-east-coast-business-hours, not even their online "check corporate status" service… weird.

  8. North says:

    And who needs legalzoom or any other middleman? It was easy. 89 bucks and Fiddy for a registered agent, why pay more? Well ok, an embossing seal would be neat.

    However I was surprised that DE isn't open on weekends or non-east-coast-business-hours, not even their online "check corporate status" service… weird.

  9. Ryan Roberts says:

    Weird. I just noticed the apostrophe(s) is a no-show on post titles.

  10. Ryan Roberts says:

    Weird. I just noticed the apostrophe(s) is a no-show on post titles.

  11. Ryan Roberts says:

    North-

    You would pay more to make sure your IP is properly placed in the corporation and issue stock to your founders on a vesting schedule. State templates or legalzoom just get the certificate of formation/articles/charter filed. That's about 1/10th of a proper startup incorporation if you have IP and/or more than 1 founder.

  12. Ryan Roberts says:

    North-

    You would pay more to make sure your IP is properly placed in the corporation and issue stock to your founders on a vesting schedule. State templates or legalzoom just get the certificate of formation/articles/charter filed. That's about 1/10th of a proper startup incorporation if you have IP and/or more than 1 founder.

  13. Rathan Haran says:

    If you have an S-corp right now, would you advise to convert to a C-corp, and what are the pros and cons to doing so aside from 'double taxation' and more paperwork?

  14. Rathan Haran says:

    If you have an S-corp right now, would you advise to convert to a C-corp, and what are the pros and cons to doing so aside from 'double taxation' and more paperwork?

  15. Rio G says:

    North,

    Where did you find a registered agent for fiddy? Anybody else on R.A's?

  16. Rio G says:

    North,

    Where did you find a registered agent for fiddy? Anybody else on R.A's?

  17. Ryan Roberts says:

    @ Rathan – I'd seek a tax advisor if you are revoking your s-corporation status for tax reasons. I typically see startups revoke their s-corporation status when they issue a 2nd class of stock.

  18. Ryan Roberts says:

    @ Rathan – I'd seek a tax advisor if you are revoking your s-corporation status for tax reasons. I typically see startups revoke their s-corporation status when they issue a 2nd class of stock.

  19. Rio G says:

    Ok, I'll try this again with Ryan.

    Say Ryan,

    Do you know the cheapest route to go for a Registered Agent?I've been told that there are remote/online ones that are pretty good, do you trust that?

  20. Rio G says:

    Ok, I'll try this again with Ryan.

    Say Ryan,

    Do you know the cheapest route to go for a Registered Agent?I've been told that there are remote/online ones that are pretty good, do you trust that?

  21. Ryan Roberts says:

    Rio – Not sure, I use either CT Corp or BlumbergExcelsior.

  22. Ryan Roberts says:

    Rio – Not sure, I use either CT Corp or BlumbergExcelsior.

  23. [...] Entity Choice: Corporation or Corporation (2) State of Incorporation: Delaware (3) Authorized Shares in Charter: 10,000,000 [...]

  24. [...] $("#startbox").html(" Here’s what I’d do in the beginning:Incorporation(1) Entity Choice: Corporation or Corporation(2) State of Incorporation: Delaware(3) Authorized Shares in Charter: 10,000,000 [...]

  25. [...] lot of confusion on which entity is best.  Some experienced West Coast start-up lawyers provide a five second answer that a corporation is recommended.  Some law firms in the Upper Midwest consistently [...]

  26. Okay so what are the benefits of double taxation again?

  27. Zee says:

    What corporation is best to operate to operate under solo?

    What about P.C?

  28. Dino Dogan says:

    Incorporated in Delaware I presume?

  29. [...] Entity Choice: Corporation or Corporation (2) State of Incorporation: Delaware (3) Authorized Shares in Charter: 10,000,000 [...]

  30. [...] A Startup…Tweet Here’s what I’d do in the beginning: Incorporation 1. Entity Choice: Corporation or Corporation 2. State of Incorporation: Delaware 3. Authorized Shares in Charter: 10,000,000 [...]

  31. John Eremic says:

    Mr. Roberts – if you were incorporating in New York City, would the answer be the same? Consider that NYC does not recognize subchapter S and takes a nice 8.85% bite. New York State also taxes S-Corps, although less.

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