This matters. $10M paid to the company for an asset, turns into $6.5M after 35% corp taxes (using general numbers) and then $6.5M than distributed to shareholders, assume 30%+ (20% + state taxes + AMT (for now)) so $6.5M is now $4.55 after taxes aka 55% paid in taxes.
Given that info just do a stock sale right? Not so easy - not all acquirers want to buy an entire company, that comes with all the liability when sometimes it's just an asset they want with no liability. Often times purchase price is lower for a stock purchase with implied liability, also amortization for the acquisition works differently and an asset purchase again can be more favorable for an acquirer (and sometimes a higher purchase price).
I can only reiterate what you've said:
- Selling your company in an asset sale as a C-Corp increases your taxes 20-30% or more
- Unless you're a BFD and have tons of inbound acquisition interest, the acquirer is going to dictate whether it's a stock sale or an asset sale, and they will almost always want an asset sale (less liability for them)
- You should only be a C-Corp in the first place if you're a venture backed startup. Start with an LLC and just do a conversion to a C-Corp when you raise money; this maximizes your optionality.
However, all of Gust's points are valid if you successfully negotiate a stock sale.
The % deduction you can take is entirely dependent on the year and sometimes month of when your stock is issued. For example we had C Corp stock issued in February 2010 so our FEDERAL deduction was 75% NOT 100% which it would have been if it was issued in November of the same year (Blah), also California no longer has the QSBS deduction so you still pay the 8%+ here.
I live in New Jersey. My startup is e-commerce business which will deliver goods to anywhere in US. And initially I will not need any physical office - I will run my business from my home. It will require for me to ship goods from my garage, but I will not have employees or office until at least a year, if the business succeeds.
1) Do I need to establish my startup in Delaware or is it enough to just register it as LLC in New Jersey?
2) If some of you say I should register in Delaware, then my question becomes do I need to register NJ as foreign qualification as well? Or is that ok to just have Delaware only until I need an office space and have employees in NJ - only at that time establish foreign qualification in NJ.
I have made some research but not clear to me if it is safer to establish the NJ LLC as foreign qualification (in case I am recommended to establish the business in Delaware) even if I run the business initially from home but provide my service to customers across US.
I appreciate any advise.
I think you missed my point, which was that if I own a corporation and it buys an asset, then I sell that corporation, are these things tied together?
If the corporation simply found a deal, then the owners of the corporation chose to sell, why would the corporation (or owners) get hit with a gain on asset (purchased by corporation) tax? The shareholders should be taxed as normal gain on assets (shares) and it should not be reflected in the taxes paid by the corporation, unless I am missing something.
Edit: I mean from inception/company formation. Wouldn't that save you all the aforementioned headaches? Especially when the time comes for an exit to happen.
For many (if not most) other types of businesses, particularly companies that are going to remain as small- to mid-size, cash generating, businesses that will not require a lot of capital investment, incorporating as an LLC in their home state makes a lot of sense. But for the high-growth startup seeking investor funding, incorporating as a Delaware C corporation is without any question whatsoever the most appropriate, least expensive and most standard way to incorporate.
There certainly are tax differences in the treatment of an asset sale compared to a stock sale. But for the kinds of startups that should be using Gust Launch, that is invariably not an issue, because for those businesses an asset sale generally means a bad exit. In fact, in my entire investing and entrepreneurial career, spanning literally hundreds of companies over two decades, I have never once seen a positive M&A scenario in which the acquirer demanded an asset sale. Instead, most target companies forced into asset sales are being sold for less than their basis and less than the liquidation preference or convertible note balance, so the question of tax on asset gains or liquidation distribution simply does not apply.
@GoRudy is correct that in the subset of acquisitions where there is a gain for the target company, it is highly disadvantageous for the target company's shareholders to structure the transaction as an asset purchase. Realistically, they would be getting a lousy deal, but that would have been caused either by the company not being worth much, not negotiating well, or because it has incurred some troublesome contingent liabilities.
The few times I've seen asset purchases with unfavorable tax treatment, the CEO had signed the highest dollar term sheet offer (or the only available one), and they were either oblivious to the tax implications or else the acquirer did not even mention the form of transaction until starting to negotiate the definitive documents. Companies in that position should absolutely negotiate hard for a stock acquisition, a higher price, or carefully work out some other more advantageous tax structure.
But ultimately there's a more general point to be made here. Startups—and the investors who fund them—optimize for growth and financial upside, not to limit downside or engage in complex tax planning that would limit opportunities.
If you create an LLC structure that generates 20% higher after-tax proceeds in the case of an early exit, but substantially lower proceeds in a successful exit because of (1) the Qualified Small Business tax deduction being unavailable, (2) the requirement to make tax distributions and pay income tax along the way, and (3) making the company generally unfundable, you're setting your company up for failure, not success. Put another way, if you knew at the start that your company were heading for an asset sale, you probably shouldn't be doing it in the first place, and for sure no one else should be investing in it.
We—and the majority of people who work with successful startups—have a similar attitude towards starting a business as an LLC and then reincorporating as a C corporation—at a cost of many thousands of dollars—only if and when the company shows promise. That's like refusing to quit your day job until you know your company will succeed. It's understandable, and might even make sense in some cases, but it limits your odds of success and is telegraphing that you are accepting defeat before even getting started.
[BTW, for those founders concerned about double taxation during the early days of a startup, there’s a way to have your cake and eat it too: incorporate as a Delaware corporation and file a “Sub-chapter S” election with the IRS. That will give you all the benefits of the corporate structure (other than QSB eligibility) but also provide the one level of taxation/pass-through treatment that you would get with an LLC. Note that the requirements for sub-S election are: one class of stock (ie, no investors with Convertible Preferred), only individuals as stockholders (no LLCs, corporates or investment SPVs), and only US-based stockholders.]
You'll need a C Corp when you raise funds. But if you're not doing that right now, it takes less than an hour to get a Delaware LLC on the Internet, and you might as well just do that.
I have multiple LLCs, one of which I hope to grow into a potentially venture-back-able startup one day. If we get to that point we can create a C corp then. The amount of hassle and money you save now is well worth the headache of fixing things later.
Please update your HN profile to disclose any affiliations you have with Gust.
It was very clear to me and I assume many other people that this user was associated with the article.
Beyond that, while it's clearly at your option, as far as I'm able to recall anytime you've had a submission related to you pop-up on HN you've disclosed your affiliation.
Setting LLC's up is easy (even setting up a C-Corp is considerably easy) but for me the problem is always to maintain it and file taxes and other stuff on time etc. Is there any startup/service that helps me solve that problem?
It's best not to rely on a third party to do the work for you, though, since their errors could end up costing you a lot of money in fines.
That doesn't sound clear-cut at all.
Going to a C-Corp too early can be costly, moving up from a proven model LLC is easy, limits cost and risk
That doesn't sound like a good deal to me, but that's just, like, my opinion, man.
Last time incorporated a Delaware C corp it cost me a couple of stamps and filing fees. I don't remember exactly but it definitely wasn't an obscene number. The annual upkeep, including franchise tax and registered agents, is around $600.
If you're not going to have a nexus in another state (i.e. No physical location or storefront) then that's peanuts for having a corporate vehicle in the the state for corporate vehicles.
If the cost difference of a couple hundred bucks is enough to break your bank, I'd suggest finding a 9-5 job rather than incorporating.
Operational and structural details like this have always fascinated me.
I believe the original trigger for converting to a C-Corp was the Peter Thiel investment.
Most likely, you would sell the assets of the LLC to the C Corp in exchange for some number of shares (valued at the pre-money valuation of the company) and then issue additional shares equal to the VC money such that the total value of the new C Corp is the post-money valuation.
Afterwards, the founders can distribute the shares and wind up the LLC.
The alternative is for the founders to sell the LLC to the C Corp for shares and then the C Corp can wind up the LLC.
Not every business is designed to be a "high growth startup". Consulting firms, bootstrapped startups, small micro-ventures, self-published presses, all of these benefit from the ease and simplicity of an LLC. Unless an investor is cutting you a check for $1mil+ I would lean toward an LLC.
I read that Delaware C corps/LLCs are the way to go because they're inexpensive. I'm in Texas. It looks like Texas would consider a Delaware entity as foreign, and require me to pay additional fees to do business in Texas. So that would appear to nullify any cost savings, since (IIRC) that fee was larger than registering the entity here when I last checked (I.e. I could just register a Texas LLC for $300 vs. registering somewhere else and paying a larger fee to transact business here.)
Is that just another in Texas' long and growing list of stupid things? Or, if your business is internet-based, are you not considered to be doing business in Texas in the sense that a more traditional corporation would? Not sure how that'd make sense, but...
It looks like, according to BOC 9.251, transacting interstate commerce doesn't automatically qualify as doing business, so if you might argue that a majority of your transactions are interstate by virtue of you being internet-based, I wonder if that makes a difference? So I'm wondering if this is a way that Texas is strict that other states aren't because, as I understand it, other states charge significantly more for LLC filing?
Delaware is NOT the cheapest, but it is extremely flexible (both legally speaking and administratively speaking - there are very few states where you can pay a premium and find someone to come in on a holiday/weekend to file your restated charter to close a big deal), and it has a very well-established body of law. That means everyone knows what to expect. Think of it like a really great WYSIWYG editor, whereas other states' laws can be like coding a site in a brand new alpha release programming language.
Delawarean here! Having spent some time as a writer/reporter learning about the Delaware incorporation process, I've found that this is one of the biggest reasons why companies/investors continue to prefer Delaware.
Wyoming and Nevada are also known as business-friendly states in which to incorporate, but no other state has the wealth of case law that Delaware has.
Here's one example of the difference between CA and DE: California, as a baseline, generally requires class votes on amendments to charters. Delaware, as a baseline, generally requires only a majority of all capital stock to vote in favor of an amendment to the charter. This means that in California, the holders of common stock (or the holders of a prior venture round stock) could potentially block a future round of financing, which most VCs would say is not a great result.
When we started getting term sheets, the big law firms for general counsel were willing to take us on under the expectation we pay them back until we closed our Seed Round. They helped to structure the DE C-Corp, transfer everything to the LLC, and directed me on all the paperwork that needed to be filed.
Winding down the LLC was easy, but you just need a controller/accountant to help you close the books properly and file the paperwork.
If you intend to go this route, my only major recommendation is to pick a name that is different/slightly different than what you ultimately want the company to be called. We ran into naming conflicts, which was an unnecessary PITA.
Second side-piece of advice: ask the general counsel to give you a fixed-cap cost for closing the round. We got stuck in some licensing negotiations as part of the close, which made things way more expensive than they should have been.
This Central Texas' startup attorney's blog is worth flipping through - and this article speaks to your specific concern:
If it is, you can always incorporate at home and re-domicile concurrent with the closing of a funding round on the investor's dime.
Yes on your second point as well -- you can delay this while developing the business. Although if you have revenue or Texas payroll (or outside investment), you definitely need to file as a foreign entity.
The reason behind the popularity of Delaware Corporations is the Chancery Court system, which is unique in the US: https://www.youtube.com/watch?v=0qIEvUYzwrc
You can have an LLC taxed as an S-Corp, an LLC taxed as a C-Corp, or an LLC taxed a pass through. Anyone who says an LLC is taxed in a particular way is way over simplifying to the point of confusion.
But, to over simplify on my own, Delaware is popular because it has a history of protecting shareholders over management. The movie Wall Street exists because in the 80s, companies tried to protect themselves from investors -- and Delaware stuck with shareholders firing management (not entirely, but significantly). In theory, investors may pay a bit less if you're in a state without that track record.
But, there are plenty of exchange-traded LLC securities, so it's not a bar or ban to fundraising.
So for example if you're in California you might do a California LLC until/unless you have a VC ready to back you. Or if you're in Germany you might do a UG (aka "mini-GmbH").
The point being to get yourself a legal structure and liability protection at the lowest possible cost in both money and distraction, and if it turns into something you want to sell some or all of to Silicon Valley you make a new company to own the old company's assets.
IA(obviously)NAL but it seems like you should keep things simple until you need them to be a certain way.
As for Delaware, there's the most legal precedent on corporate law in the state making its rules the most predictable. Uncertainty increases risk and, therefore, decreases investors' interest.
There are lots of things you should be innovative on when starting a company, corporate structure is almost never one of them. If you're starting a business and think you may raise money from professional investors, incorporate as a C Corp in Delaware.
I agree that you should either do a domestic LLC or a Delaware C Corp depending on whether you want a lifestyle business or a high growth venture capital-backed startup.
a) Legal liability? "Limited Liability" is what the LL in LLC stands for.
b) Dividing ownership? If you keep things simple, like a 50-50 split, not a problem at all.
c) IP ownership? What?
Yes, if you're raising money you probably need a C-Corp, but if you keep things relatively simple, the transition doesn't need to be expensive or time-consuming.
I agree that a C-corp is the right way to go if you're planning on raising venture rounds, but the three reasons presented (can grant stock, can grant options, and required by investors) are misleading at best. LLCs can grant membership units/shares and profits interests, which can act functionally very similar to stock and options.
C-corps have double taxation and LLCs do not. For every dollar you pay yourself from your cooperation you'll have to pay on the order of 15% more.
If you plan to never make money or just make money by raising money then a C-corps is for you. Other good argument is if you plan on going public. Otherwise strongly consider the tax implications before starting a C-Corp.
Unfortunately we don't know how they rule so we can't run statistics on it. But if anyone would like to leak a data set, feel free to leave me a message in this thread
I'm not sure what you mean by secret. Here are some of its recent opinions: http://courts.delaware.gov/opinions/index.aspx?ag=court%20of...
Thanks for pointing that out
It seems to have been a way for standing court judges to decide arbitration cases. Without knowing anything about the circumstances, that seems better than having other people who are not judges decide arbitration cases, no? What was the problem with it?
This page seems to have more detail: http://apps.americanbar.org/litigation/committees/commercial... - since it was a government-sponsored program, the public has the right of access because courts have a tradition of accessibility.
Specifically, this makes it easier if we want to sell ”My Company’s App“ to a Facebook- or Google-class buyer entity. The LLC can also incorporate a bank, if ”My Company’s App“ needs to start conducting transactions that necessitate the use of (say) a Federal Reserve client (á la Venmo or Stripe).
But now I have no plans to raise capital, get co-founders, issue stock, etc. I just want to run the company as as a solo-founder cash cow.
I never issued a single share (even to myself), never assigned any IP, and the company has no tangible assets. I just ran expenses and payroll through the company. I suspect that would make closing the C-Corp easy. I'll then create a new CA LLC with completely separate books.
I realize HN isn't a free legal advice forum, but any comments regarding the challenges of closing a DE C-Corp would be appreciated.
You can certainly issue incentive equity, divide up ownership, AND take money from outside investors with an LLC. We did it frequently at the private equity fund I worked for a few years back.
Little known fact -- if you structure your employee's incentive equity as LLC profit interests, the ultimate payout is treated as capital gains as opposed to ordinary income (which is the case for vanilla options) for tax purposes. It does take a little more structuring but definitely worth the hefty payoff in my opinion.
Can someone price the cost of converting a Delaware LLC to the C structure that VCs will expect? I think (again, I don't know) that we're talking about a couple of grand of post-money lawyer time.
Early stage startup founders have a lot on their plates. Getting this nuance right to save a few bucks will cost some upfront neurons and some time for something which is ultimately procedural. The OP suggests that we mentally work through this ahead of time and I see the point. But it's like priced equity vs SAFE. It requires a lot of upfront neuron work.
The LLC vs C tax issue seems to be a bit of a canard. You most likely won't have any profits to tax this early and you won't exit funding as an LLC.
Anyways, as the Zuckerberg Florida LLC example shows, you can get these things slightly wrong and still move forward. Getting something infinitely right will guarantee that you will never move forward.
There's never any hard-and-fast rule in the startup world, but pretty much any VC will want you to be a C-corp instead of an LLC.
(You're unlikely to get refused funding just because your company is an LLC, but they'll likely want you to restructure before the deal finalizes).
1. Division of ownership in an LLC can be made very similar to a C-Corp. In all rights and restrictions. In an LLC it is typically called a Unit instead of a Share. You can sell a PPM (Private Placement Memorandum) for Units, at some par value, to raise money. You can dilute Units. Units can have voting rights or not. His statement on division is clearly incorrect from my own company where we had many initial investors. Some were institutional, some were individual, some were via investment vehicles.
2. He states LLCs don't have Options. This is also not entirely true. The similar vehicle in an LLC is called a Warrant. Warrants can have the same rights and restrictions as Options. Warrants are used to incentivize employees with ownership rather than cash. Again, in our company we used Warrants to attract talent and compensate early employees to great effect.
3. Protection is another point he brings up. Yes the Corp (C and S) is battle tested in the courts. Yes LLCs have not been tested to quite that extent. However, to flatly state that a C Corp will protect you is a little overselling what the reality is. The Corporate Veil is not impermeable. As a matter of fact, it is most often pierced (outside of blatant misconduct) by attacking under or low initially capitalized companies and closely held businesses. Companies like startups who start small and become successful quickly.
I see this particular article as not having researched LLCs, their use case, and the benefits they possess in some cases over Corporations. I understand no SV VCs will talk to you unless you have a C-Corp. I get it many Lawyers in the startup ecosystem want you to create a C-Corp. But this is truly a small percentage of businesses and even a small percentage of startup businesses.
Why blanket write off any particular solution (or all others for that matter) without first checking to see if it can meet your specific needs?
Most angel investors and VCs will also insist that your company be a Delaware C-Corporation for legal reasons
Investors typically have dozens of investments. Filing K1s for all of your investments is a huge amount of work.
The original reasons may have been tax based or precedent based, but at this point it is also because that's the default that VC is used to
If they do "insist" on this regardless of circumstances, it would not be ideal to partner with them since they clearly don't know what they are doing. And if you are partnering with someone, don't you want them to know what they are doing?
If you have a substantive point to make, make it thoughtfully; otherwise please don't post until you do.
They will help you determine the best solution for incorporation.
There is no cookie-cutter answer to incorporation and anyone that pushes one is probably selling you something and most likely not an attorney or accountant.
I understand the reasons for not having a direct LLC in Cali (Delaware, Nevada and Wyoming are the gold standard I realize)
Just wanted to know in practice if you just bite the bullet on the stupid minimum tax or not
Nevada for example also has no corporate income tax. Montana, South Carolina, and New Mexico don't specifically regulate money transmitters.
Delaware is great for share holder rights, but if you don't have a lot of growth or external investors yet, incorporating in Delaware may be overkill as you can always do so later.
Mostly, startups should be focused on product, not things like incorporating until you need to. And by then, spend the lousy 2k on an attorney to advise you and do it properly.
Corporate structures are significantly more complex than:
> if you plan to raise outside capital and have an exit, then you should be a Delaware C Corp.
This is not that simple. As a rule, I apply a discount (for legal cost and risk on all sides) to any American company raising funds out of a non-Delaware entity.
I look at it as Vaudeville acts vs Hollywood films. Or local hack community college professor vs Youtube Stanford Machine Learning Course.
The legal and tax situation is written into the law. The VC outlook on this topic is common knowledge.
So why do we have to pay expensive consultants (attorneys, accountants) for what are in reality just FAQ's.
Incorporating an LLC is one of the easiest government interactions I have ever had. It is literally a one page form, the hardest part is picking the name of the company (definitely check the US trademark office database and get the .com)
It was the same for the Delaware C Corp I created. A one page document that needed to be faxed.
All the rest of the paperwork was very elegantly handled by Clerky.
I think there is a big risk in going for advice from an attorney and getting bad advice. I feel much more comfortable in broad research on a topic and crowd-vouched and vetted knowledge rather than trusting one sole practitioner.
How can issuing options be worth the cost of taxation?
I mean, eventually, you get taxed 35% extra! How can the ability to issue options possibly offset that massive value transfer out of the company?
"you want ownership of these intellectual property assets to be the property of the startup, not the individual founders" ... "means that nobody can hold the company’s future hostage purely on the basis of their past contributions"
This ain't so easy nowadays.
Is my statement accurate ? 7.8% of net profits is such a huge expense I can't understand how any company justifies it.
Otherwise the author is wrong to try and say that all startups should take this path and not LLC.
Especially if you're bootstrapping, LLC is the way to go.
But he is talking about startups, and there, from all I can see and without his many assumptions, a Delaware C-Corp is a lot more time, lawyer money, other overhead, and botheration than just an LLC.
Sure if I have co-founders, which YC seems to want but I don't, or Sequoia wants to write me an equity check for $20 million, which, by the time they would, I wouldn't need, want, or accept it, I'd want a Delaware C-Corp.
But, IIRC, with a C-Corp, I have to have a BoD that I have to keep happy, or they can and very well may fire me -- take my company. So, a Delaware C-Corp has me take a lot of the power I have as CEO and 100% owner of my startup and hand a lot of that power, control, and financial value to a BoD for no good, and many really bad, reasons. "Financial value"? Sure, the BoD could fire my ass, put in one of their buddies as CEO, and the BoD and their buddy could issue nice stock options to the members of the board. Due to vesting, etc., I could leave with nothing, not even $0.00. They could flatly just steal my company from me including all the value, cash, intellectual property, promise, everything -- 100%.
There's nothing seriously wrong with, and a lot of important advantages to, being CEO and 100% owner of a successful LLC startup. Or, all across the US there are pizza shops, flower shops, auto body shops, dentists, etc. that don't have a BoD. My startup has a lot more financial promise than an auto body shop, but I don't want a BoD either.
E.g., with a BoD, have to have board meetings. Then the members of the board have to travel to the meeting. So, guess where the money comes from for their travel (first class air, limo service?), lodging (four star hotel?), fancy dinners? No thanks.
I learned early on that I'm not always good at pleasing people, even if I do really good work. E.g., my Ph.D. is in applied math, and I did the research independently with no faculty direction or input, picked the problem before I went to grad school, and did the core research in six weeks alone in the library in my first summer. I gave a graduate seminar on my work, designed and wrote the illustrative software, wrote and typed the dissertation, stood for my oral exam (majority of the faculty from outside my department, Chair, Member, US National Academy of Engineering, from outside my department, majority people I'd never met), passed, first time, without revision, from a world famous, world class research university, and got my Ph.D.
BUT: In the eighth grade, the arithmetic teacher gave me a D (as is common for boys of that age, my handwriting was awful and so was my clerical accuracy) and fervently advised and urged me never again to take anymore math. Right, honey: I didn't take freshman calculus, taught it to myself, started on sophomore calculus in a course using the same text Harvard did, found the course easy, and made an A. In my high school, all the female teachers (gossips?) were all conviced I was a poor student and a poor math student, but the only male math teacher I had sent me to a state math tournament, my aptitude and achievement tests showed that I was one of the best math students in the school, an especially good high school, I got sent to an NSF summer math program, and on the school's SAT math scores, of 1-2-3, I was #2. #1 went to Purdue. #3 went to MIT. In college I wrote on group representations and got Honors in math. My math GRE score was 800. Then I was sent to another NSF program, in axiomatic set theory and modern analysis. But my high school female math teachers thought I was a poor math student. I was a very good math student, but there was no way I could please those females.
Being good is not enough. Instead, people can get totally pissed at you for no good reason, even if you walk on water in warm weather.
A BoD might just hate my guts. E.g., if I presented some original math derivations, with advanced prerequisites, for a step forward for part of the business, say, as part of getting the budget approved, the BoD might soil their clothes, the board room furniture, and the carpet on the way to the rest rooms and come to deeply, profoundly, bitterly hate and despise me, all for no good reason.
If have something rare and good, don't dilute it with a lot of mediocre nonsense. If are lucky enough to have Michelangelo painting the ceiling, don't send in a lot of house painters to give him advice. Or, when Stravinsky wrote Right of Spring, some Tin Pan Alley guy wanted to recommend a good arranger for Stravinsky's music. For such nonsense, just say not only "no" but, if they insist, "hell no".
Reporting to a BoD has a big downside, a huge risk for no good reason, and nearly no significant upside. E.g., there is a good chance that not one BoD member of an information technology startup anywhere in the world has even the math prerequisites to understand the crucial, core math I derived for my startup; not understanding the math, they will not be able to do their jobs and will hate me. So, no way do I want to put my career and startup in the hands of a BoD that hates me.
1. An LLC is easy and you can form a C-Corp whenever it is needed. If your investors are equity/debt firms, they can form the C-Corp for you at that time.
> but most startups usually stick with Delaware and file a foreign qualification form to operate in their own home state.
2. There are at least 55 states and territories in the United States which ALL HAVE THEIR OWN SEPARATE incorporation laws. Their legislature hasn't been asleep for the last 30 years, there is real competition in fees, regulations, anonymity, taxes and incorporation structures in many jurisdictions outside of Delaware.
If their courts encountered an unforeseen problem, they can all lean on Delaware's entire body of case law. So the benefits of Delaware's court of chancery are overstated, and the circumstances where you want that or its arbitration are slim.
3. Delaware's oh-so-progressive corporate laws also include parallel securities transparency laws that can introduce compliance burdens above and beyond what the Federal Government stipulates.
Conclusion: You don't need a C-Corp and you don't need to incorporate in Delaware. Being spoonfed the perks of Delaware is easy and barely anybody is publicly talking about what other states offer, and you will have to do your own research.
KPMG and Deloitte and PWC produce annual documents on incorporation perks in jurisdictions all around the globe. Including individual United States.
We haven't seen things like the first acquisition, the first bankruptcy, mergers, etc . . . and don't even know if those things are exactly possible as we conceive of them today.
Your individual and/or corporate actions happen in a legal jurisdiction - technology does not change that.
The solution tends to be to either assign whatever applicable fines or other punishments applies, or to put someone in jail for contempt until the come up with a solution.
If you have structured your company in a way that makes it impossible for you to comply with a courts decision, then that is your problem - it does not absolve you of the responsibility to comply with the courts decision.
There's simply nothing new there. Blaming technology will rank up there with "the dog ate my capitalization table" on the list of arguments the court will not care about.
As far as I can see there is today both a massive technological and social gap to what is needed to force a crisis that might result in such a world, but it's interesting to think about.
Anyway, I bet Trump could do it!