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S-Corp’s vs. LLC’s (feld.com)
24 points by jasonlbaptiste on June 6, 2009 | hide | past | favorite | 6 comments



I incorporated as an S-Corp when I started. Two weeks ago I got into the fbFund incubator program, and the first thing they asked me to do is to convert to a C-Corp. I'm glad I started with an S-Corp because converting to C is a simple form I can do myself. It's also doable with LLC, but it's a lot more paperwork.


The article doesn't really explain the differences in the two- he just says why he likes S-Corps better for early stage startups. I formed an LLC because I have no plans on taking any venture capitol.


LLCs may have corporate investors and S-Corps cannot. My first startup was an LLC with a Fortune-500 investor. I don't recall the LLC being a big issue with them.


I don't know anything about corporate investors, but the frequently cited problem with LLCs is their ad-hoc structure. For example, there is no requirement to have shares, but such a construct can be defined in the operating agreement and would be needed to have investors.


Premature optimization?


More like good design practices avoid massive refactoring. The way the article puts it, choosing the wrong legal structure is like writing your webapp in hackish Perl, realizing it's becoming popular, and then scrapping your code and redoing the whole thing using a decent framework.




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