There was a good discussion around Icelandic Startups planning to establish a company structure in the US and which company
structure is most appropriate. I believe that it depends on the investor group. I found a very interesting blog post that basically went into all the details that I wanted to go in this post… then I thought why am I trying to re-invent the wheel. Here is the link to the post. The biggest items while forming legal entities is related to ownership structure, how much effort you want to put into maintaing books and accounts and tax planning. LLC is the simplest, is best suited for a small ownership group, C-Corp is the preferred route if you want to build a company have stock option pool, many capital raises i.e Series A,B,C etc. C-Corp and S-Corp have statutory legal and accounting book keeping requirements and have more complicated (read more taxes) tax structure. My own personal suggestion is to setup a LLC while you are building the business and when you are ready to issue stock options, raise capital and or bring new investors on-board convert the LLC to a C-Corp.
- Get Your Business Structure Fit For 2012 (smallbiztrends.com)
- LLC vs. S Corp: Which Is Right for Your Startup? (mashable.com)