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 7 years ago

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