Chapter 3: Entity Types
You may have heard of companies filing their entities in Delaware due to the taxes or friendliness to business law. This is only applicable for C Corps, or corporations that are subject to corporate income tax (income is taxed as the company profits, and then taxed again when shareholders receive their share as personal income). This practice is not widely applicable to start ups, since it wouldn’t make sense for many startups to file as a corporation off the bat. Generally, a conversion to a C Corp only makes sense when gearing up for an IPO to be publicly traded, or raising large amounts of capital through Series A and B raises (although still not necessary, you can run a Series A as an LLC or S Corp).