Minimizing the red tape and taxes of a startup
Another common question I get from technical entrepreneurs is how should I set up my company to minimize my setup costs, tax liabilities, and risk of lawsuits? The answers are different in every part of the world, but the parameters here in the U.S. should give you the considerations you need in any environment. I'll offer you a few simple rules of thumb.
If you are certain that you are building a large national corporation with more than 100 investors and multiple classes of stock, as mentioned in an earlier section, then you might as well start with a Delaware or Nevada C-Corp. If you aren't so sure, need something fast, or need to keep your costs low, then an LLC is the best legal and taxable entity to facilitate your startup. Here are the key steps:
Form the simplest legal entity early to cover your efforts: Don't wait for that first investor, the first prototype, or that first lawsuit. Incorporate your startup after the business plan but...
