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Why does any of this matter? If you need a particular corporate structure for an equity investment or other purposes, you form a new corporation that buys the assets of the old business, and life goes on.

A C Corp is absolutely nuts for anyone starting out, unless you just want to pay your taxes twice.




Can you expand on this?


Not really, it just seems pretty obvious to me. A lot of founders seem to get hung up on whether to use an LLC, an S corp, a C corp, or some other structure. In my experience the question can be answered pretty trivially: create an LLC unless there's a reason not to create an LLC, in which case you probably want a subchapter-S corporation.

The issue of where to incorporate seems to be more important for C corps where the taxes aren't reported directly on the owners' returns. IMHO it's a waste of time and energy to try to anticipate the exact corporate structure that a future VC round, IPO, etc. will require. Start out by considering only what makes sense from your own tax perspective, then re-elect/recreate the business later on if you need to, registering it in another state if necessary.




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