When deciding on a legal structure for a startup, entrepreneurs frequently find themselves choosing between a C corporation and a limited liability company.  LLC’s have become increasingly popular because they combine the limited liability of a corporation with the ability to avoid double taxation.  LLC’s also offer a great deal of flexibility concerning ownership structure, management structure, and governance.  Nevertheless, C corp.’s are still the preferred choice for many technology and other startups.  A startup probably should organize as a C corp. if it plans to raise money from angel investors or venture capitalists, or if it plans to go public.  A C corp. may also be preferable if the business owners plan to build up value in the business rather than distribute profits.

I am a lawyer and an entrepreneur in Denver.  This is the second in a series of posts about legal issues affecting startups.