legal - C-Corp vs LLC. How much more complex? - OnStartups Beta ...

I'm in the process of converting from an LLC to a c-corp, so I can give you some perspective:

To start, try searching for sample c-corp bylaws and scan a few pages. Every well-formed c-corp has bylaws -- the laws by which your corporation is governed. Most bylaws are dozens of pages used to describe board meetings and fiduciary duties and so-on.

It's a little overwhelming at first, but they are there to bring consistency and accountability to your business, stuff that any good biz owner wants anyway.

I don't think bylaws are a requirement of a c-corp -- you an create a corporation with Delaware and file virtually nothing but the bare essentials. But while that might be fine for the short term, you're just pushing the complexity till later on.

If you form a "real" and "usable" c-corp with bylaws, it's more complex simply because there is more structure involved.

But Keep in mind: you don't have to follow your bylaws if it's just you and your partner... you can skate by, as it's just YOUR company. But the more people who get involved (more execs, board members, advisers, investors), the more important it will be to play by the books (literally).

LLCs, on the other hand, are uber-flexible. There is no "standard" out there, beyond just copying c-corp standards and baking them into an LLC format. You can proclaim anything you want in an LLC, or proclaim nothing at all.

But when you grow, this free-form structure may or may not work for you. And when you talk with lawyers, almost all of them will recommend going the c-corp route because it's so standard. LLCs require them to actually think, write, and edit. Additionally, investors are LLC shy because of the lack of the c-corp structure (and thus protection) that they are used to.

I formed the LLC initially because I thought it was more simple, and I didn't expect to get serious funding. But lucky me, I did get funded, which means I get to learn all about the complexity of a c-corp.

In short, it's kind of like veggies. You can eat around them for a while, but eventually you need to eat your veggies to grow up big and strong.

Source: http://answers.onstartups.com/questions/44776/c-corp-vs-llc-how-much-more-complex

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