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I have talked to many consultancies, law firms, CAs etc. What I found common from their suggestions is that I shouldn't choose Inc./Corp. for small startup. They suggested me to start with LLC/Pvt. Ltd. and convert that to Inc./Corp. when grown up.

I want to know what difficulties can I face if my small startup is Inc./Corp.? Legal establishment cost of Inc./Corp. is under my budget. Why should I avoid it?

Update:
I am talking about common problems, but if its really important: I am interested for all major countries, but here are some countries of higher interests: US, Canada, India, UK, Singapore.

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It would help if you'd mention your jurisdiction. – littleadv Aug 27 '12 at 9:51

1 Answer

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From my limited knowledge the main point of LLC is to be lightweight so you don't waste too much time complying to requirements. For example:

The LLC structure was formed around the principle of the freedom to contract. This basically means the owners only have to agree among themselves how the company will be run and the agreement will be held up in court. As an LLC, resolutions, amendments, meeting minutes, and annual board meetings are not required by law, as they are with corporations.

If you're not a legal expert those things may take up an unexpected amount of time, which is the most precious resources in a startup.

There are also things like C-Corp suffering from double taxation, etc.

On the other hand of the spectrum being a corporation also has advantages, like being preferred by VCs.

Happy Googling!

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