Entity Formation
The structure you choose
defines everything after.
Entity type, state of formation, governance documents, equity structure. These decisions made on day one shape your taxes, liability exposure, fundraising options, and eventual exit for the life of your business. We help you get them right.
Side by Side
Entity Types Compared
No entity type is universally better. The right choice depends on your specific situation. Here is how the most common structures stack up.
| Factor | LLCLimited Liability Company | C-CorpC Corporation | S-CorpS Corporation | PartnershipGeneral or Limited Partnership |
|---|---|---|---|---|
| Taxation | Pass-through (default) | Double taxation (entity + shareholder) | Pass-through | Pass-through |
| Liability | Limited | Limited | Limited | General partners: unlimited; Limited partners: limited |
| Management | Flexible: member or manager managed | Board of Directors + Officers | Board of Directors + Officers | General partner(s) |
| Equity | Membership interests | Common & preferred stock | Common stock only (≤100 shareholders) | Partnership interests |
| VC Ready | No | Yes | No | No |
| Best For | Small businesses, real estate, professional services, single-owner ventures | Venture-backed startups, companies planning to raise institutional capital or go public | Profitable small businesses seeking payroll tax savings; not suitable for VC | Joint ventures, investment funds, real estate partnerships |
How It Works
The Formation Process
Filing articles of organization takes ten minutes. Building a business that is properly structured, protected, and ready to grow takes considerably more. Here is what we do.
Entity Selection
We analyze your business model, ownership structure, funding plans, and tax situation to identify the right entity type. Getting this wrong is expensive to fix later, and we make sure you get it right the first time.
Typical factors: anticipated revenue, number of owners, need for outside investment, exit strategy, state of operation, self-employment tax exposure.
State of Formation
Most small businesses should form in their home state. Nevada and Delaware are popular for larger companies due to favorable corporate law, privacy protections, and well-developed case law.
Nevada advantages: no state income tax, strong asset protection statutes, no information sharing agreements with the IRS, charging order protection for LLCs.
Drafting Governing Documents
This is where most DIY formations fail. Generic operating agreements and bylaws don't account for your specific ownership dynamics, capital structure, or dispute resolution needs.
LLC: Operating Agreement covering capital contributions, profit/loss allocation, member rights, voting thresholds, transfer restrictions, and dissolution. Corp: Bylaws, initial resolutions, stock purchase agreements.
Filing & Registration
We prepare and file all formation documents with the appropriate state agency, obtain your EIN from the IRS, and register in any additional states where you operate.
Nevada filings: Articles of Organization (LLC) or Articles of Incorporation (Corp) with the Nevada Secretary of State. Registered agent appointment required.
Organizational Formalities
A properly formed entity isn't enough; you need to maintain the corporate veil. We set up your initial meeting minutes, issue equity, open business banking, and establish the paper trail that protects your liability shield.
Required: initial resolutions, equity issuance (membership certificates or stock certificates), capitalization records, and a separate business bank account.
Founder Agreements
If you have co-founders, this is the conversation most people avoid until it's too late. Vesting schedules, IP assignment, non-competes, and what happens when someone leaves are all things that must be addressed at formation.
Common documents: Founders Agreement, IP Assignment Agreement, Restricted Stock Purchase Agreement with vesting, Buy-Sell Agreement.
What Matters Most
Key Considerations
Tax Treatment
LLCs and S-Corps offer pass-through taxation: profits flow to owners' personal returns, avoiding entity-level tax. C-Corps face double taxation but offer qualified small business stock (QSBS) exclusions worth up to $10M in tax-free gains on exit. The right choice depends on your exit horizon and anticipated profitability.
Liability Protection
All formal entities (LLC, Corp) provide limited liability: your personal assets are generally protected from business debts. But this shield can be pierced if you commingle personal and business funds, fail to maintain proper records, or under-capitalize the entity. Maintenance matters as much as formation.
Equity & Ownership
Corporations issue stock, which is familiar to investors and easily transferable. LLCs issue membership interests, which can be structured with significant flexibility but require careful drafting. If you plan to bring on employees with equity, C-Corp stock options (ISOs and NSOs) are far more tax-advantaged than LLC profits interests.
Fundraising Readiness
Institutional investors (venture capital firms, angel syndicates) almost universally require a Delaware C-Corp. If your roadmap includes a Series A or beyond, forming as an LLC first and converting later costs time and money. If VC is in your future, start with a Delaware C-Corp.
Management & Governance
LLCs are flexible: you can run them like a sole proprietorship or with a formal management structure. Corporations require a board, officers, annual meetings, and resolutions. That formality is a feature, not a bug: it creates clear decision-making authority and investor-friendly governance.
State-Specific Factors
Nevada has no state income or franchise tax, strong privacy laws (no public disclosure of member names), and robust charging order protections for LLCs. For companies operating primarily in Nevada, forming here often makes more sense than a Delaware formation with a Nevada foreign registration.
Common Questions
FAQ
How long does entity formation take in Nevada?
Standard filings with the Nevada Secretary of State typically process in 5-7 business days. Expedited processing is available for a fee, and same-day and 1-hour options exist for urgent situations. We can have your entity fully formed and operational, including governing documents and EIN, within one week under normal circumstances.
Can I convert my LLC to a C-Corp later?
Yes, but it is not free. The conversion process involves tax consequences, legal fees, and operational disruption. If you have any intention of raising institutional capital in the next 3-5 years, it is almost always better to form as a C-Corp from the start. We help you make this call correctly at formation.
Do I need a lawyer to form an entity? Can I use LegalZoom?
You don't need a lawyer to file articles of organization; it's a form. What you need a lawyer for is everything that comes after: the operating agreement that actually governs your business, the equity structure, the founder agreements, and the capitalization table. LegalZoom files the paperwork. We make sure your business is actually protected.
What is a registered agent and do I need one?
Nevada requires every LLC and corporation to maintain a registered agent: a person or company with a physical Nevada address who can receive legal process and official correspondence. If you operate outside Nevada, you cannot serve as your own registered agent. We can refer you to trusted registered agent services.
Should I form in Nevada or Delaware?
For small businesses operating primarily in Nevada: form in Nevada. You avoid the cost of registering as a foreign entity and paying both Nevada and Delaware fees. For VC-backed startups: Delaware C-Corp, because that is what investors expect. We will tell you honestly which makes sense for your situation.
Ready to Form?
Let's build the right foundation for your business.
Initial consultations are straightforward: we ask the right questions, give you a clear recommendation, and handle everything from there.
Attorney Advertising. The information on this page is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed until a written engagement agreement is signed. See full Disclaimer.