Replying to a deleted comment:

> They're wrong about the Delaware franchise tax.

"The minimum tax is $175.00 for corporations using the Authorized Shares method and a minimum tax of $400.00 for corporations using the Assumed Par Value Capital Method." [0]

That is the "save a few hundred dollars" I was talking about. I did get the # of shares threshold wrong, it needs to be <= 5,000.

> They're wrong about the foreign registration -- in California (and I believe most other states), you also need to register foreign LLCs.

Yes, but I was referencing that it often costs more to register a C-Corp than an LLC (depending on the state).

> They're wrong about investments -- SAFEs are very easy for corporations (no lawyers required), but they can't even be used by LLCs. You'll need to convert to a C-Corp.

Yes. Totally agree on all points. This conversion will cost roughly the same as first year taxes, but leaves the option of not doing it if you never get enough revenue to hire employees and don't get funded. And if you do get enough revenue for that, or you get funded by SAFE's, you'll have no issue affording the lawyer+CPA who can do it for you.

As for it being a bad time to deal with that headache, I generally agree. You'd probably want to do that when you reach the point that you feel ready to start fundraising.

> They're wrong about investments -- SAFEs are very easy for corporations (no lawyers required), but they can't even be used by LLCs. LLCs don't have stock, and most boilerplate documents will not work for LLCs.

I miscommunicated on this point: I meant to say if you're not getting funded by SAFE's, you'll need a lawyer, and therefore the "saving money" thing probably isn't particularly relevant and there's no issue filing as a C-Corp.

Boilerplate documents work fine for LLC, and Stripe Atlas helps with this.

> Something about passing losses from an LLC to your personal taxes being a good way to get you audited.

I'm not sure you can do that? Haven't had to deal with it personally (my LLC's were profitable in their first year) but AFAIK capitalization is usually done with post-tax money so I don't see how first-year LLC losses can reduce your personal AGI.

> Something about tax paperwork burden being roughly equal for LLC vs. C-Corp.

I was mainly trying to say that CPA's charge more for C-Corps than for LLCs.

0: https://corp.delaware.gov/frtaxcalc/

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