Ask HN: Company Structure and Timing
My partner and I are committed to starting a company (so this is no "dream," rather a real commitment). We checked the market (it's viable, profitable, and growing), we wrote some test code for a proof of concept (so we'd be convinced it can actually work), we spoke with some potential business partners (they're interested), etc. On the surface, everything is going smoothly.
At this point, we believe we should incorporate: to avoid potential problems between us in the future (so far so good), to allow investors to come in, and to allow us to work with other business partners and affiliates. We have no revenue at this point (we haven't put anything out in the open, yet, only tests).
1) What does your experience tell you about forming: a. LLC b. C Corp (Delaware)
We understand the differences between LLC and C-Corp. My question is really whether LLCs are so "bad" (we were told by a lawyer that VCs would be reluctant to invest in us in the future, if we choose this structure). Is it such a big deal to change the LLC to a C-Corp in the future?
2) Considering we also want to bring in other individuals and offer them equity (again, we don't have money so our idea, proof of concept, and equity are the only way), is it the right time to incorporate now, or can the incorporation wait?
3) Did you defer payment to the law firm, or pay upfront? We spoke with one prominent Valley firm and we were told that it could cost us ~$5000 to set up a C Corp and write up all the stock verbiage. Is it better we bite the bullet, dig deep, and pay now, or defer (again, from your experience)?
4) How much do you normally pay equity to UX specialists? A one time job (could take 3 months) vs. long haul.