Getting ready to set up the LLC for my software startup. Any recommendations? I live in CA but looking at basing it out of Arizona or Delaware. Thx!


For software startups it's more common to use a Delaware corporation. It gives you more flexibility when adding cofounders or giving out stock to early employees ( something you'll have to do to attract the best ).

If you are seeking outside investment, you'll end up doing a DE C-corp prior to getting any money, so why not just do it from the get go?

You'll need a foreign corporation in the state you're located and possibly pay franchise tax to both DE ( $450 / year ) and your state ( CA is $800 / year ). Then maintain a register agent in DE ( $100 / year ).

So you save some money with an LLC but I think that structure is not suited for a modern software company.

Answered 9 years ago

I was going to suggest Nevada, but then I read this

I'm incorporated right where I am, North Carolina, and have no regrets about it.

Answered 9 years ago

Legal advice is important. However, this is very common and you should be able to get answers very quickly through the CA State website

The real question is are you on a tight budget or do you have some money to spend. If you have some extra money let an attorney handle it all. If you are on a really tight budget you may be able to start as an LLC then change as needed and when you have more $. Good Luck!

Answered 9 years ago

Start ups need fewer things to worry about. Follow the KISS principal and file in the state where you reside unless you have a rock solid reason not to. If nothing else, you will easily find a layer licensed in your state. You can always do an acquisition later to grow into a larger entity.

Answered 9 years ago

If you are ever planning to raise outside capital from investors, I'd strongly recommend a Delaware C corp. If you are planning to own/operate it yourself, stick with an LLC in your home state.

Answered 9 years ago

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