If I am trying to start a company, which structure should form?

My business is mixed signal integrated circuit and smart sensor module design based here in the U.S. My customers could be from different states and also oversea countries such as China, Taiwan, Japan. My ultimate goal is to build a IPO company, however at initial stage I would like to be flexible and make it simple. We will provide design service and consultation for our customers. My current plan is to start LLC first, then in the second phase switch to S or C corp. Is it a right plan? Also, based on my understanding domestic LLC will only limited to do business within the register state, right? For overseas customers from China, Taiwan, what type of LLC should I form?

Asked on March 13, 2018 under Business Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

While you would ultimatley need a corporation if you hope to go public, an LLC is a more flexible structure, involving less record-keeping and formalities, and so is a better start-up or small business structure. You plan is a sound one.
An LLC may accept orders from anywhere: taking an order from out-of-the state is not doing business elsewhere (other than where you are located) for purposes of registration and authority to do business. So you can form the LLC in, say, Oregon, and take orders worldwide.
If you establish a real presence or operations in another state, such as manufacturing plan, R&D center, or sales office, you could have to register in that state a "foreign" business doing business in the state--but that is a rather simple matter of filing out paperwork and paying a registration fee and should not deter you.
We only provide U.S.-based answers, so we cannot answer the question as to what you'd have to do if you established an office or presence in, say, Taiwan: for that, you'd need to consult with an attorney familiar with that nations' business law.


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