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Before you start a Deleware C corp, discuss the idea with your lawyer. If you don't have a lawyer now, you will almost certainly wind up with one if you start a Delaware C corp because Delaware C corps have sophisticated filing requirements and non-trivial fines if you don't meet those requirements.

And honestly, a Delaware C corp would be "playing house." The hard work is finding customers/users not filling out forms and writing checks.

Good luck.



Probably better to go with an LLC. In many states they are low cost and have few requirements, but still provide limits on liability and provide a professional image. If the startup becomes successful enough to need a corporate structure, then you can hire the lawyer and go the more expensive route.


Finding customers is the best thing.

The only good reason for a Delaware C Corp is because an investor requires it…in other words, the only good reason is because someone else is willing to pay for it.

But yes, an LLC can be a reasonable option, but a sole proprietorship is the simplest thing that might work. And it requires no work beyond business records and tax reporting…and then only if you are making revenue.

Until then, it is a multiplication problem with one or more factors being zero.


I wouldn't want to find a customer without a liability veil in place. At least in my state, an LLC is maybe $150 to set up and $70 every ten years. The paperwork is really 1 notarized form plus your bylaws (templates are available) and a report every 10 years. That's a small price for liability protection. If you make it generic enough, you can reuse it for future business ideas too.


I wouldn't want to find a customer

An LLC won’t protect you when you work with customers you can’t trust.

An LLC won’t make finding good customers any easier either.

And it won’t save you any legal fees if you get sued or make collecting what you are due when someone doesn’t pay any more likely.

But sure an LLC is easier than finding customers and then you can set up bank accounts and design a website and avoid the hard problem with those too.


I looked into this a while back and came to the conclusion I maybe/probably didn't need to do it upfront but it was cheap enough that it was probably worth going ahead and doing. As it turns out, my timeframes for doing anything with the business slid out but a don't really regret having put the LLC un place.


YAGNI…without customers and forming an LLC can happen as contracts are being written…but if you think your first potential customer is likely to sue before there’s a contract, walk away and find a different first customer.

It seems like what Paul Graham called “playing house.” Forming an LLC feels like progress but it’s not.

http://www.paulgraham.com/before.html

What I mean is as I have been thinking about my opinion today I think my opinion comes from a deeper intuition developed over the years.

The standard arguments for forming an LLC are not based on better meeting the needs of actual or potential customers.

Even worse I think is that the standard argument is based on assumptions that the relationship is adversarial, arms length, and short term.

Good customer relations are way more valuable than limited liability because problems tend to be worked out before lawyers get involved.


It's not so much about the legal liability. But a lot of companies want to deal with other companies and you can deal with that by just making up a name, doing a DBA with your town or whatever for probably tens of dollars, or making an LLC for hundreds of dollars.

It probably doesn't really matter for small-time stuff. It may also be worth spending a small amount of money in advance to put some structure in place. I agree that involving lawyers and thousands of dollars in advance a lot of the time is probably not worth it in many/most cases.


spending a small amount of money in advance

If you have cash in hand, you can form an LLC if one is needed.

If an LLC is not needed, the cash in hand can be spent on something that is needed.




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