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.

Incorporationcorporation, Incorporation, LLC

33 thoughts on “The 5-Second Guide to Choosing Your Startup’s Legal Entity

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

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

  11. 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.

    1. What is the rest of the 9/10th of the incorporation about. I’m kind of discouraged now :(

  12. 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. 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. 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. North,

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

  16. North,

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

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

  22. 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. What corporation is best to operate to operate under solo?

    What about P.C?

  28. 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. 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.

  32. Why not an LLC at the start-up stage? Isn’t that a much easier structure?… limited liability of a corporation, flow-through taxation like a partnership. What benefit does a Corporation have over the LLC? Is it related to the later funding stages?

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