

Ask HN: Incorporate or LLC? - bahador

I&#x27;m developing a web application and will soon need to incur AWS and GitHub fees. Before I do this, I want to create a business so that I can go get a dedicated bank account. I don&#x27;t care about having a board, investors, or equity. And I plan on being the only employee. What&#x27;s the best way to go about this? Should I incorporate via Clerky, or should I create a local LLC? Or is there some other better option?<p>Thanks in advance.
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hwstar
The last time I did this, it was the LLC. I worked directly with the Secretary
of State, and did not use a service to do it for me.

If you are a 100% owner with no partners, you can file your paperwork as a
"Disregarded Entity" which means that you have less tax returns to prepare at
tax time. If you have partners, maybe a "C" corp. would be better, but this is
where I'd talk to an attorney.

You will need a Taxpayer Identification number to create an LLC in the State
of California. These are easy to get from the IRS.

In California, you will still need to file some paperwork with the Secretary
of State on bi-annual basis, and pay the $800 franchise fee annually. Also,
you will pay a separate franchise tax on any sales over $250,000 per annum.
You have to file form 586 with the Franchise Tax Board annually.

One last thing: Although a corporation can protect your personal assets from
being taken, you should also have business E&O and liability insurance. The
courts may look unfavorably at any corporate entity which does not have
insurance, especially if it is obvious that the corporation was set up in a
risky area of business, and was only incorporated to protect the owner's
personal assets.

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coreyp_1
IANAL

I have _heard_ that, if you are looking to sell some time in the future, then
a corporation is greatly preferred to an LLC, by investors and the larger
companies who would be interested in purchasing your company.

A corporation, though, has strict rules (including annual meetings for which
you must maintain accurate records, sign contracts as a representative of the
corp, etc). If you do not comply with the rules, then it is possible for
someone to "pierce the corporate veil" and come after you personally.

IANAL. I repeat, IANAL.

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sjs382
If you're okay with being treated as a Sole Proprietor, then you can get a
"Does Business As" name, and get a bank account in that name.

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jamesdharper3
I recommend an LLC. I've had great success with them too. Also, I've had
people purchase my LLC. Just my recommendation.

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tjr
I've done LLCs [edit: for the kind of business arrangement you described].
I've been happy.

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bahador
tyvm

