Starting a real business
If you&#x27;re just starting out, the worst decision you can make is to incorporate as a C-corp. An LLC makes vastly more sense, even for the tiny proportion of companies that want VC funding (and specifically institutional funding - funding from other sources would not matter as much - I&#x27;ll explain why below). Stripe Atlas really ought to make the default an LLC.<p>The two major reasons why:<p>1. When you&#x27;re a C-corp, you pay taxes twice. Once at the corporate level, and once at the individual level. This matters both for ongoing income but also for any liquidation event - as most liquidation events are asset, not stock, sales, you&#x27;re getting taxed twice here too.<p>2. You can go from LLC -&gt; C-corp easily but not the reverse. Why would you make the decision before you have to? Start as an LLC. In the <i>very</i> unlikely event you are taking institutional funding you can convert; in most cases, you&#x27;ll happily stay as an LLC and keep the extra tax dollars you&#x27;d be giving the government.<p>Finally - all this business that VCs prefer to invest in Delaware C corps because of the legal knowledge there is - sorry - bullshit. They do it because they <i>have</i> to invest in taxed entities, because they themselves are partnerships so their interest in any flow-through entity will flow up to <i>their</i> investors, some of which are non-profits. Non-profits, like pensions, risk losing their non-profit status if they have unrelated business taxable income. There <i>is</i> a solution here, which is to have a special purpose blocker corp that sits in between the VC partnership and the LLC. This is done <i>all the time</i> in private equity but not in VC and there is no principled reason why not.<p>So there you have it. Don&#x27;t do Stripe Atlas because you&#x27;re forcing yourself to make a decision you don&#x27;t need to make right now, that&#x27;s irreversible, and that may end up costing you a lot of money.<p>IANAL, but I am a Wharton MBA