Stripe Atlas for LLCs

> Is organized in Delaware, the jurisdiction of choice for many new LLCs.

Be aware that if you are "doing business" in California which means you live there you also have to file as a California foreign entity and pay the absurd anti-small business flat tax of $800 a year.

This also does not include your state income tax liabilities in California. Just because the LLC is formed in Delaware does not mean you don't have to pay income taxes in the state you reside. Delaware is just the legal residence, has nothing to do with income taxes.

I moved to Tennessee in January and switched my single-member disregarded entity LLC from California to Tennessee. The annual fee in Tennessee is $400 vs $800 and there is NO STATE INCOME tax in beautiful TN.

Without a written vesting schedule for ownership of shares of a company, a founder could leave (or die or become disabled/incompetent due to sickness/accident) and keep their (or their estate's) share of the company. Those events can completely destroy the value of a company. For example in a 50/50 partnership, the remaining partner would be responsible for 100% of the work, but only receive 50% of the dividends or liquidation value. Those type of events are hard enough to deal with anyway - not having a vesting schedule makes it almost impossible to recover from. For instance if there _was_ a vesting schedule for a partner that left after a very short period of time, the unvested equity could be used to attract another partner.

The vesting schedule should reflect their contribution to the company over time, and can be whatever the founders negotiate as reasonable. If someone helps found a company and brings a ton of immediate value (ie IP or cash or contracts, etc) then their vesting schedule can reflect that. Issues such as assignment to estate or beneficiaries are important legal issues that need to be considered at startup time as 'insurance' against things no one wants to see happen, but might.

> Is designed to make conversion to a C Corporation as simple as possible. (We can connect Stripe Atlas users to a lawyer to manage the conversion process with discounted, flat-rate packages).

This is the most important part. LLCs tend to be cheaper and more flexible before you raise money, but a C-Corp is basically necessary to raise money. Converting an LLC to C-Corp conversion is often quoted at about $10K from a law firm. With Stripe Atlas, you are set up to make the conversion easily.

>if any member leaves.

This brings up a very interesting issue under the Delaware Limited Liability Company Act, that is without an Operating Agreement in place that allows a Member to resign their ownership, the Delaware Law is controlling and does not allow a member of a multi-member LLC to withdraw (resign their interest) prior to dissolution and winding up of the company. One may be able to get the other member(s) to consent in writing but at the point someone wants to leave, good luck getting the other(s) to sign anything.

Edit: it doesn’t appear the Stripe Atlas LLC comes with an operating agreement; therefore, the Delaware Limited Liability Company Act is controlling and a Member would not have the right to resign their interest prior to dissolution.

You can be an LLC that is taxed as an S-corp as well, but only make sense if you have significant profits which you wish to reduce your liability by paying dividends instead of payroll taxes. -- I am not an accountant or lawyer --