Re:Inc. or LLC?
by tuukkah on Friday August 10, 2007 @03:53PM
(#41326)
According to this, it should be possible to convert an LLC into a Delaware corporation later: http://www.feld.com/blog/archives/2006/03/entity_conversa.ht...
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Yes, but what's the point? Not that much difference in cost or maintenance time. And it is just one more hurdle to deal at a time when you don't need hurdles, e.g. when you are trying to close a funding deal.
I don't want to say that everybody should choose an LLC at first. Rather, if you're not 100% sure you'll get funded by Y Combinator or other investors soon, you can keep the LLC and its possible benefits under consideration even if you hope for the best. YMMV.
Based on what I've read, LLC in your legislation may have tax benefits, cheaper and easier setup process, and less yearly bureaucracy.
Just a note for potentially cash-strapped California startups:
CA collects at least $800 a year for all corporations operating in the state, however, S and C corporations are exempt in the first year while LLCs are not. That $800 is due about 120 days after incorporation and it's an annual minimum franchise tax, so you'd have to make like $9,000 profit your first year to recoup it.