101–110 of 176 posts
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Why bother? It's right in his username.
"Andrew Gust" is a real name, there's zero reason not to disclose the affiliation, and the fact he himself has disclosed it before points to him understanding it's potientally not obvious.
> Incorporating as a C-Corporation in Delaware is the gold standard for high growth startups 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 formed a Delaware C-Corp when I had a different vision for my company. 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…
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Hmm, I'm not sure that's accurate. What would you be converting to if your company was already a C-Corp?
A C-Corp with the structure your venture capital firms expect.
Operational and structural details like this have always fascinated me.
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It's pretty quick to set up a C-Corp too—it's much, much more annoying to change the LLC into a C-Corp when you do want to fundraise.
When it is time for fundraising, is it possible to just create a new C-Corp, then sell the assets of the LLC to the C-Corp? Are there major tax implications? Is it possible to sell the assets for a $1? Or would that be in violation of some tax rule?
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.
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The list of VCs that insist on a C-Corp is essentially the list of VCs. So sure, you don't need to convert, but you won't ever be able to raise VC money without converting.
Your statement is a complete lie mikeyouse, but thank you for playing.
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This is exactly the part of the process that the first iteration of Gust Launch solved. All the paperwork for incorporation and company formation are streamlined and pretty easy to fill out, and included in the monthly cost. So conversion is much, much more expensive.
So it's "a few thousand" when/if the need arises vs, at a minimum, $2.4k/yr definitely. That doesn't sound clear-cut at all.
> Incorporating as a C-Corporation in Delaware is the gold standard for high growth startups 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.
Absolutely! For many kinds of businesses, LLCs make sense, but this post is specifically about startups.
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.
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Absolutely! For many kinds of businesses, LLCs make sense, but this post is specifically about startups.
LLCs make perfect sense for startups, too.