andrew_gust

the overall trends we saw in the data reflected how investors really think about startups, which is based on risk. the more progress you can show with the funds you've used so far, the less risky your startup will look to investors.

Hah, definitely true. Even without the Uber approach, though, many people just use 1099s at inappropriate times because it seems like a way to avoid paperwork.

Gust Launch, which is the product attached to this blog post, makes it extremely easy and quick to file as a Delaware C-Corp and set up the company, then follows it up with bookkeeping/accounting, equity management, and, yes, tax support. Among other things.

Sure, but there isn't an out-of-the-box mechanism to do that. You have to create a way to grant equity, which means you'll need to pay a lawyer—and hourly rates add up quick.

If they don't want to grant equity or take investment, sure. But doing one of those two things means the legal costs of starting with an LLC (which aren't standardized) substantially outweigh any tax savings, and almost no startups prior to that point have positive cash-flow anyway so taxed profits aren't much of an issue.

The subscription cost isn't for the incorporation and formation. Being a Delaware C-Corp is just a prerequisite for users, so we include it as the first step.

Absolutely! For many kinds of businesses, LLCs make sense, but this post is specifically about startups.

Figured it was obvious from the username, but I'll put it in my profile as well. Sorry if that was confusing!

This is exactly the part of the process that the first iteration of Gust Launch solved. All the paperwork for incorporation and company formation are streamlined and pretty easy to fill out, and included in the monthly cost. So conversion is much, much more expensive.

It's actually pretty easy and the difference in cost between LLC and C-Corp isn't substantial (if you use Gust Launch it's all included in the $199-$239 monthly) but either way, since the double-taxation mostly doesn’t apply to high-growth businesses that reinvest capital instead of paying it out, there isn’t actually much difference in tax burden, and what there is is significantly outweighed by cost of converting to a C-Corp later.

The post addresses this, but double-taxation doesn't usually apply very much to early-stage high-growth startups—most high-growth startups spend their positive cashflows for growth and thus don’t have any positive net income to pay taxes on.