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Comment by tvladeck | Hacker News Reader

This is not true. It's very easy to convert from LLC to C corp but not vice versa. As a general rule it's easy to go from flow-thru entities to tax paying entities but not vice versa. This asymmetry of irreversibility, combined with the fact that most startup exits are asset, not stock, sales, makes the thesis of your post incorrect.

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Sure, as a general rule, but conversions from LLCs to C corps can get very complicated as well in short order, especially when there have been different types of equity issued to founders/employees (e.g. profits interests, convertible notes, etc.). If the cap table is sufficiently large, it can cause ballooning legal costs pretty quickly. Not outrageously so, but companies can expect at least a few thousand to get added to the bill.

... which is roughly how much money it'll cost to have a good lawyer carefully set up a C-Corp for you.

This is exactly the part of the process that the first iteration of Gust Launch solved. All the paperwork for incorporation and company formation are streamlined and pretty easy to fill out, and included in the monthly cost. So conversion is much, much more expensive.

So it's "a few thousand" when/if the need arises vs, at a minimum, $2.4k/yr definitely.

That doesn't sound clear-cut at all.

The subscription cost isn't for the incorporation and formation. Being a Delaware C-Corp is just a prerequisite for users, so we include it as the first step.

Yup. Noting also that incorporation costs are generally a fixed ceiling, whereas the conversion costs are a likely minimum. ;)

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