I developed a web application prototype (with 70% functionality) and validated it with some potential customers. I've around 2-3 investors who are willing to invest to take the application to the next level (complete the remaining 30%, go to market, etc). So should I register a C-Corp and issues shares to them OR should I make them part of the company as co-founders? FYI, they will invest money and I've to take care of the execution.
Definitely a C-Corp in Delaware. You can use the SAFE (Simple Agreement for Future Equity). That's a better version of the convertible note, made by Paul Graham from Y Combinator. You can find it on his personal website.
You should buy the best seller book THE ART OF STARTUP FUNDRAISING by Alejandro Cremades. You can find it on Amazon.