guideLegal & Formation
Entity Formation Guide (LLC vs C-Corp)
A plain-English guide to choosing the right legal structure for your startup. Covers the key differences between LLCs and C-Corps, why most VC-backed founders choose Delaware C-Corps, and the steps to incorporate.
LLC vs C-Corp: Which Is Right for You?
If you plan to raise venture capital, form a Delaware C-Corp. VCs cannot invest in LLCs (due to fund structure requirements). If you're bootstrapping or lifestyle-focused, an LLC may be simpler.
Why Delaware?
Delaware has the most developed body of corporate law, experienced courts, and investor-friendly statutes. Most investors and lawyers are familiar with it, reducing friction.
Steps to Incorporate
1. Choose a registered agent in Delaware
2. File Certificate of Incorporation (~$90)
3. Adopt Bylaws & issue founder shares
4. File an 83(b) election within 30 days of share issuance
5. Apply for an EIN (free via IRS)
6. Open a business bank account
The 83(b) Election — Critical
If your shares are subject to vesting, file an 83(b) election with the IRS within 30 days of grant. Missing this window can result in massive tax liability when shares vest. This is one of the most common costly founder mistakes.