Should I form an LLC or C-Corp for my start up tech company?

I have 1 partner from Australia. The split it 50/30 with 20% left open for investors.

Asked on August 23, 2015 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

There ia little to choose from between an LLC and an S-corp for either liability protection or tax consequences they both offer the same advantages. An LLC has somewhat less paperwork and formalities than an S-corp, and is often prefered for that reason. An LLC is also advantageous if
1 Ownership is not based purely on economic investment, since owneraship of a corp. is based on shares bought, wheras ownership of an LLC can be based on any criteria. You can separate corp. ownership from straight investment, but it's more complicated. Also, it's easier to separate control from ownership with an LLC, if you want. LLC's are generally more flexible, especially for a start-up, than a sub-S.


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