I started a website that is software as a service. Currently I am a solo founder, and have not incorporated the company yet. The website is now bringing in some revenue (about $360 in recurring subscription fees), and is growing slowly but surely. Each client pays $40 a month, and the goal is to increase the business to a $1,000/month, with the goal of $4,000/month in 6 months. I live in California and now I want to incorporate this business as an LLC. Any advice as to where?

I'll keep try to keep this answer brief, but there are several factors and nuances that can be discussed in more depth. Where you decide to incorporate partly depends on what your future goals are with your company. Companies that plan to seek venture capital or go public typically choose Delaware as the state of incorporation, and usually choose a C-Corp. Delaware has a very well developed body of law surrounding corporate governance and that provides comfort and more certainty to future VC investors. If you're not planning to seek VC money any time soon, an LLC is a smart decision because of the tax benefits it can provide to you as the owner.

It sounds like you want to grow your company on your own without outside financing. If that's the case, I would recommend forming your LLC in California. Regarding California vs. Delaware, one benefit to forming your LLC in California is that you can avoid paying a registered agent fee which can cost anywhere from $100-200 a year. If you plan to seek venture capital down the road, you can reincorporate in Delaware.

Answered 8 years ago

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