How does a Delaware C-Corp compare to an LLC?

Only Delaware C-Corporations are designed for high-growth startups that need the ability to scale, issue equity to employees, raise money from angel investors or VCs, and have a successful exit one day. While LLCs can provide some short-term savings for their owners, the expense and headache of converting to a Delaware C-Corporation down the line far outweigh any immediate gains. We at Gust Launch cannot stress enough how important it is for serious founders to incorporate as a Delaware C-Corporation from the beginning.
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.
Group 7
Arun Siva
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.
Group 12
Chance Mayfield
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.
Group 11
Sam Rystrom
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.
Group 10
Kyle Jekielek
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. Gust's interface is clean and simple to use and the info they provide every step of the way really helps you get educated on best practices so you feel comfortable and understand what you're doing (for example, issuing stock grants to an advisor). All of this helps you get prepared so you have the best chance of raising money from investors.

The team at Gust has also been unbelievably helpful and generous with their time. Every single seminar they put on is easily digestible, information-packed, and has made me a better, more educated founder. They've even been generous with their time to help answer some complex questions we had about getting our cap table organized. Gust has been like an advisor to us, only better, because they don't ask to be on our cap table :)
Group 9
Ari Block
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. its simple Gust was built for growth startups who will seek investor funding and need equity agreements, NDA's, IP control, vesting, etc. if that's you it will cost you many thousands of dollars to work with lawyers a lot of heart ack and confusion or one significantly cheaper (10X), and an incredibly simple system to get all that done and more. Use gust to avoid the fuss!
Group 7
Jules Walters
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.
Stephanie A265488e5bd0cda66f30a9b87e05ab8ceddb255120df04412edde4293bb19ee7
Stephanie Houng
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!
Sylphiel2 4ac7317f5f652bf5fa0084d871f83f84be9eb731b28548c64c2f2342b2042ebe
Syl Yip
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.
Brent D55d81dbb4f7d2a1e91ae14248d70b445552e6f4f64c2412a5767280fe225c96
Brent Totty
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. My company is treated like a top priority at all times which provides peace of mind as I focus on the other challenges of starting a business. I recommend this service to any other founder.
Howard
Howard L. Morgan
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.
Aleksy 169fdd24bc6a53d5efd0f4e23dd4b7d64ed2995b893698c0b9b684506ac73842
Aleksey Gurtovoy
Gust Launch is a superb product backed by a responsive, knowledgable support team.
Daniel 16e42a10da6be80f32fb4bc73b67960bf3eaf7532190599e82c4faaddc8d59db
Daniel DeWolf
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.
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Chris Gorges
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.
March 115fd8c6f1dba2e11ed4cc46ab9f578ec326af737df86537e83ef892c1a82f10
March Chadwick
Gust Launch is an amazing platform that helps founders understand their business.

Let’s start your company.