Questions

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!

6answers

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 6 years ago

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

http://www.entrepreneur.com/article/219425

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


Answered 6 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 http://www.sos.ca.gov/business/be/

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!
Michael
michaelirvin.net


Answered 6 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 6 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 6 years ago

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