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California LLC or dodgy Delaware company to avoid $800 fee?

Business is slow at home here in california and I don’t want to face the annual LLC fee of $800.

I know people who escape the fee by incorporating in Delaware and having their mail forwarded back to them in California where they live.

Should I just do this? Is it legit, safe, not going to get busted? worth it? Or suck it up and pay the $800/yr ?

  • you should just go as a sole proprietor. That has the benefit of, you know, not being fraudulent.

    Delaware corps are responsible for the 800 fee if they are in California.

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  • An option to consider is converting to an S corp. Unlike sole proprietorship, S corp gives some legal protection from personal liability claims – as does your LLC. If you are pitching investors, or have investors whose opinions you are concerned about, stay with the LLC. S corps and sole proprietorships are often perceived as amateurish, which can hurt your bargaining power with regard to valuation and other terms.

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  • You’ll have a $250 DE annual fee for an LLC, more for a C-Corp. Plus another $150 for a registered agent in DE since you won’t be a resident. So factor in whatever costs you have setting up LLC/C-Corp plus the DE state and registered agent fees, and make a decision. Now either way, you will be much better off with a Delaware entity than a California one.

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  • Depends, if you want to get it setup correctly then I think it’s worth paying a lawyer, or a tech-enabled law platform to do it right. I mean, you’re planning on being successful so you don’t want a shoddy platform to build your company on.

    I hear good things about the Clerky folks, they’re pretty popular amongst the YC set: https://www.clerky.com/

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