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0 pointsalabut17y ago0 comments

I was giving YC of an example of how to approach pre-seed funding startups - if you don't have revenue or funding, and angels or incubators offer to deal with the paperwork in forming your company as a condition of receiving their money, then all that matters in the beginning is rapid iterations to test out both the idea and team chemistry. Anything else is a distraction.

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tptacek17y ago· 2 in thread

It's good advice for 3 people with an idea and an application to YC. It definitely makes it easier for YC to set you up; we're in the process of converting from an LLC, and it is a huge pain in the ass.

It is one of the poorer pieces of advice on this site for someone who actually wants to run a company, and I wish YC would clarify it. To actually run a business, you need a incorporate for tax reasons, so you can invoice and be invoiced, so you can make binding, valid equity grants, and so your vendors, partners, and customers can't sue you for your house.

It will take you 2-3 hours, spread over 2 weeks, to set yourself up with an LLC and an EIN. It's not one of the Great Distractions you face starting up.

davidw17y ago

> converting from an LLC, and it is a huge pain in the ass.

Yeah, how so?

sachinag17y ago

It's just a fundamentally different structure - LLCs were invented in the 80s, so the conversion is a huge PITA. If you want the benefits of incorporation, you should strongly consider incorporating as an S-corp (if you qualify: must be US citizens, no more than 75 shareholders, all of whom must be natural persons).

To change from an S-corp to a C-corp is just one piece of paper. You're already a corporation, not an LLC, and you get the flow-through benefits and limited liability.

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