The factors to consider are endless, but I’ll mention the big ones:
- The goals of your business. The most important one. Trying to be the next Google? Start a c-corp. Trying to make a modest living with personal liability protection? An LLC would probably suit you well.
- Taxes. Do you not want to file taxes on behalf of your entity? With an LLC and s-corp, taxes “pass-through” to the owner; on the other hand, c-corps are separate entities which leads to an owner being taxed twice.
- If you’re going to be seeking funding or becoming an IPO. If so, a C-Corp is your best bet.
- The size of your business. If on the smaller size, an LLC is an attractive option.
- If you’re planning on issue stock option plans, convertible notes etc. If so, you should probably stay away from an LLC.
- The number of corporate formalities you’re willing to deal with. Corporations require many more administrative tasks to be completed.
- If you plan on having any foreign shareholders. If so, stay away from S-Corps.
Choosing the right business entity for your company is a crucial decision. It probably goes without saying, but your decision will be better made with the assistance of a startup attorney.offers competitively priced incorporation packages that come with an initial attorney consultation. Check us out!