DELAWARE C-CORPORATION
LIMITED LIABILITY COMPANY (LLC)
Recommended for
Recommended for
Founders needing maximum growth potential, liability protection, and the ability to attract investors. Best for startups that plan to raise money, distribute equity to employees, and either sell or IPO within 5-10 years.
Owners who primarily want pass-through taxation and liability protection. Best for companies that plan to stay small to mid-size and startups that will not require outside investment.
Best for founders optimizing for
Best for founders optimizing for
Growth, long-term savings
Short-term savings
Corporate ownership
Corporate ownership
Shareholders
Members
Limited liability protection
Limited liability protection
Unlimited number of owners
Unlimited number of owners
Intellectual Property (IP) protection
Intellectual Property (IP) protection
Required by investors
Required by investors
Designed to easily distribute ownership (stock) to attract investors, advisors, and employees
Designed to easily distribute ownership (stock) to attract investors, advisors, and employees
Structural flexibility
Structural flexibility
More standardized — Built around best practices well-understood by investors, like ownership that is represented by stock, governance by a Board, and officers to handle the day-to-day.
Extremely flexible — Very few restrictions around governance structure, voting rights, etc. This can cause lengthy due diligence work on the behalf of the investor during fundraising.
Taxation
Taxation
Corporate taxes — The corporation is taxed on its net income, and shareholders are personally taxed on any dividends received and on capital gains when they sell their stock. Since almost
all startups reinvest revenue back into the company for at least the first few years, there are generally no profits to tax at either level.
Pass-through taxation — Owners pay personal income tax on income generated from the business. This means owners of LLCs operating at a loss can reduce their taxable net income.
Pass-through tax advantage
Pass-through tax advantage
C-corps can elect pass-through status through the subchapter S Election. Best for initially founder-funded startups1.
Inherent to LLCs.
Qualified Small Business Stock (QSBS) tax credit
Qualified Small Business Stock (QSBS) tax credit
In the event of an exit, eligible shareholders are not taxed on the first $10 million of
capital gains2.
Not eligible.
1 For more information on the advantages (and disadvantages) of the S Election, visit https://gust.com/blog/s-corps-llcs-and-tax-savings-for-startups/
2 For more information on QSBS and eligibility requirements, visit https://gust.com/blog/s-corps-llcs-and-tax-savings-for-startups/
Already an LLC?
Although we don’t do LLC to DE C-Corp conversions, we’ve worked closely with many founders of LLCs to create a new standalone Delaware C-Corp with Gust Launch. We always recommend founders work with their lawyers to properly transfer their assets and liabilities (if any) from their LLC to the new C-Corp. Before ultimately deciding the best option for your business, consult your tax and legal representatives. For more information, see this Gust Launch blog post that details your various conversion options from an existing LLC.
We’re pretty good at what we do, but you don’t have to take our word for it.
“Gust Launch is a sleek product for any entrepreneurs looking to manage their governance, risk, and compliance. I am very happy with their overall engagement with the entrepreneurs. The webinars from various service providers cut down the time an entrepreneur would spend to get
the services.”
the services.”
Arun Siva
“As a founder myself, I created my business
with Gust.
As a mentor for Techstars, and half a dozen other accelerators and entrepreneurial programs, I advise all my companies to use Gust to create their entity.”
with Gust.
As a mentor for Techstars, and half a dozen other accelerators and entrepreneurial programs, I advise all my companies to use Gust to create their entity.”
Ari Block
“We really felt that the Gust team was by our side as we worked through the various documents for our first C-corp.
And when we had questions, they were super responsive and helpful. I highly recommend their platform and their people.”
And when we had questions, they were super responsive and helpful. I highly recommend their platform and their people.”
Jules Walters
“Gust Launch has felt like our own virtual startup advisor. I originally began using Gust for the same reasons most people do: cap table management and incorporation. While managing both of those things with Gust Launch is a breeze, what I wasn’t expecting to find was the immense amount of digestible and actionable knowledge that Gust had to offer on nearly every startup-related obstacle that I would run into.”
Sam Rystrom
I’d recommend Gust over and over. The product is amazing, the team is even better.
I wouldn’t look anywhere else to incorporate, or to manage everything else we use Gust for.
I wouldn’t look anywhere else to incorporate, or to manage everything else we use Gust for.
Chance Mayfield
I absolutely love using Gust. If you’re a founder or an entrepreneur, Gust is your single most valuable resource to getting started.
I wish I discovered them earlier in my start-up journey, I would have saved a boatload of time and money.
I wish I discovered them earlier in my start-up journey, I would have saved a boatload of time and money.
Kyle Jekielek
“I love the simplicity of incorporating through Gust Launch, and their customer service is amazing. We needed to incorporate our startup immediately as we were already invoicing a big client. It was so easy, streamlined and fast. Once I entered my info, it took only 3 days-including the weekend!”
Stephanie Houng
Gust Launch was unbelievably helpful when we wanted to establish our startup.
Their team goes above and beyond, and their platform makes incorporation and equity management extremely easy and straightforward.
Their team goes above and beyond, and their platform makes incorporation and equity management extremely easy and straightforward.
Syl Yip
“I’m incredibly impressed with the communication and streamlining of processes through Gust Launch.
As someone relatively new to entity formation and fundraising, I am supported in all ways to be successful.”
As someone relatively new to entity formation and fundraising, I am supported in all ways to be successful.”
Brent Totty
“The disruptively simple way to help serious founders prepare for growth, funding, and a successful exit.
Gust Launch makes it easy to start and run a high-growth business by integrating world-class services with the click of a button.”
Gust Launch makes it easy to start and run a high-growth business by integrating world-class services with the click of a button.”
Howard L. Morgan
“I never thought filing for incorporation could actually be a pleasant experience, but incorporating my company with Gust Launch actually was. It was clean, simple, intuitive-and most importantly, quick. I work with startups every day, and I recommend Gust Launch to everyone who hasn’t already incorporated.”
Chris Gorges
“Gust is simplifying and taking the friction out of early stage investing, all of which is good for emerging companies and our economy as a whole.
The forms are top notch and are a perfect fit for start-ups and our growing entrepreneurial ecosystem.”
The forms are top notch and are a perfect fit for start-ups and our growing entrepreneurial ecosystem.”
Daniel DeWolf
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Aleksey Gurtovoy
“Gust Launch is an amazing platform that helps founders understand their business.”
March Chadwick