
Why forming an LLC might be a useful setup for many startups - danielha
http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/03/14/BUG4UOKGR91.DTL&type=business
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jamiequint
It's pretty easy to do S corp election in the case that investors come along,
so an LLC is not a bad way to start.

For my consulting biz I did an LLC because it was cheap and easy and I can
handle doing the taxes myself (All you have to do is file a Schedule C in
addition to your 1040) If you do any significant amount freelance work at all
(Think over $1000/yr) you are probably getting screwed on taxes and should
incorporate so you can deduct stuff, or just reduce your taxable income by
purchasing biz stuff on your biz account. It saved me money, and will probably
save you a lot too.

Most of the single member LLC operating agreements you can find online and
hack to your liking, then just have a lawyer look over it. Minus the legal
fees you will probably pay less than $100 depending on the state to file ($55
in Oregon)

If anyone wants more info on this just let me know, I'd love to help.

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zach
This is not really good information for California, but then this is a
syndicated article, not locally written.

If you're not going full-on Delaware C-Corp like YC does and you're going to
incorporate in California, I really think most startups would prefer an S-Corp
over an LLC.

Feld's VC perspective on structure:
<http://www.feld.com/blog/archives/001539.html>

The California tax perspective:
<http://www.taxabletalk.com/posts/1138032374.shtml>

Furthermore, CA C-Corps don't have to pay the $800 minimum franchise tax in
the company's first year: <http://www.taxes.ca.gov/CorpC.html>

I don't think LLCs get the same privilege.

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goodgoblin
Another downside to incorporating as an LLC is that it makes it harder to try
someone out when you are considering trading equity for services. If you want
to see if a lawyer is going to be a good fit, or if a SEO person is going to
really help you out, there is no immediate corrolary to vesting in an LLC. So
it makes hiring fast/firing fast difficult to do. You don't want a large chunk
of your company held up by someone if it turns out the designer you gave 2% in
leui of cash to design your UI is actually a complete flake.

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danielha
From what I understand, it's actually ideal to incorporate your startup rather
than forming an LLC. One reason would be that many VCs won't fund your LLC
given that you cannot go public.

The SFGate article offers the other view. It might be a beneficial read for
someone unfamiliar with the differences.

