We've been building our product here in Kentucky. It is a cloud based service. We incorporated as a S chapter corporation. Now we are ready to take on investors. Should we dissolve the company here in Kentucky and setup a chapter C corporation in Delaware?

Yes, you probably need to switch from a S-corp to a C-corp (for the reasons the other answer already addressed). But whether you need to switch from Kentucky to Delaware is a separate question--depends upon the type of investors you're going after (and their end game).

However, you probably wouldn't want to dissolve the Kentucky company and set up a new company in Delaware--that would have too many tax consequences for you. What you'd do is a merger, where you are merging your current Kentucky company into one you create in Delaware. That's not a DIY proposition--you'll want to a work with an attorney & a CPA who are experienced in mergers.

Answered 5 years ago

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