langford/IANAL or an accountant, but choosing your business type:

## IANAL or an accountant, but choosing your business type:
I do apps for a living, and lots of the people I do apps for need to make companies. In addition to owning and operating a couple myself, I am often somewhat involved in the creation of others. There are many types of company you can make, and they each have different use cases and tax advantages and audit risks

Type one for small companies that do not expect to carry over losses very often, and do not need foreign ownership or venture capital:

LLC Filed federally as a C-corporation, promoted to a S-Corp shortly after founding for the purposes of taxes: This is what I have. You have to file taxes for it separately, but you largely do not pay tax directly from this for income taxes, but you don't have to do things like hold director meetings with yourself, or maintain minutes. You get the flexibility of a LLC operating agreement, and you can employ yourself easily as well. This form is also rarely audited, and the nature of the tax structure makes book keeping rather easy, taxes rather easy, and keeping yourself separate from the business finances rather easy. This form is not great though if you need to make big investments in the company that take years to recoup, or if you need investment. This business is the most favorable tax treatment for most people for profitable businesses.

Delaware C Corp: This is what you need if A> you are going to grow into a large company, B> you are ever getting venture funding or C> you see yourself wanting to sell a stake to anyone, for any reason. Delaware is the only place you look at because it has laws that are very biased towards the majority of the board, and allows selling the company without conscent of minor shareholders. You can hire lawyers to give you a very standard setup of this company for not very much. Minuses: Profits (not your salary) are taxed at the corporate rate...then you pay taxes again personally on the dividends. Additionally, the feeds for this every year (which you pay to deleware) are kinda high. You also need to hold board meetings with yourself and things like that which are annoying.

LLC Filed a a C-corporation: This is what you need if outside investment isn't a huge deal, but you do need to carry losses for many years. You can devolve a LLC filed as a S corp back to this if you want...but the other direction is hard to do and has onerous time limits. The taxes for this are identical to the deleware corp for many purposes. But, you don't need the rando meetings and such. While you can take outside investment with this form, it's fuzzier due to the operating agreement instead of the shareholder agreemnt of a real C-Corp


Now: onto the suing. None of these stop you from personally being sued. None of these even stop you from losing that lawsuit. What helps that is: correctly capitalizing the business (aka, having a reasonable amount of money in the business to keep it operating), having a lawyer who vets your contracts, having liability insurance for accidents that can happen that matches the tasks you do and lastly, keeping your personal money *super* separate from the buiness. All of these "cost" money, although the capitalization in a way is still money you control, just that you haven't paid yourself yet. This insurance costs me a couple thousand dollars a year. I have two main types that have riders for specific forms of harm I may cause. One type is general liability, everyone needs this. This is if me or my employee trips or injures someone phsyically. The other is Errors and Omissions liability, which is if I make a mistake of expertise that I am liable for, this covers the damages from that. The problems with these contracts is they're so riddled with exceptions it's incredibly easy to buy something close to worthless for you. That said the $0 dollar lawyer guarentee is really nice for you personally (aka, as soon as someone brings suit alledging liability, the insurance lawyer goes after them). It makes *me* sleep better at night, and also if one of the areas that I truly am covered in the insurance contract comes to bar, and I didn't happen to keep the corporate veil well enough, this will let me keep my house and personal assets intact.

What you say? The company itself doesn't stop that? Nope! Being a well capitalized business who does a good job keeping things very separate is the criteria from stopping the personal veil from being pierced...but that's a legal decision, not a guarentee. Being poor yourself (the you can't get blood from a stone principle), being insured and being good at not getting sued by working things out reasonably is the real trick.
	I do apps for a living, and lots of the people I do apps for need to make companies. In addition to owning and operating a couple myself, I am often somewhat involved in the creation of others. There are many types of company you can make, and they each have different use cases and tax advantages and audit risks

	Type one for small companies that do not expect to carry over losses very often, and do not need foreign ownership or venture capital:

	LLC Filed federally as a C-corporation, promoted to a S-Corp shortly after founding for the purposes of taxes: This is what I have. You have to file taxes for it separately, but you largely do not pay tax directly from this for income taxes, but you don't have to do things like hold director meetings with yourself, or maintain minutes. You get the flexibility of a LLC operating agreement, and you can employ yourself easily as well. This form is also rarely audited, and the nature of the tax structure makes book keeping rather easy, taxes rather easy, and keeping yourself separate from the business finances rather easy. This form is not great though if you need to make big investments in the company that take years to recoup, or if you need investment. This business is the most favorable tax treatment for most people for profitable businesses.

	Delaware C Corp: This is what you need if A> you are going to grow into a large company, B> you are ever getting venture funding or C> you see yourself wanting to sell a stake to anyone, for any reason. Delaware is the only place you look at because it has laws that are very biased towards the majority of the board, and allows selling the company without conscent of minor shareholders. You can hire lawyers to give you a very standard setup of this company for not very much. Minuses: Profits (not your salary) are taxed at the corporate rate...then you pay taxes again personally on the dividends. Additionally, the feeds for this every year (which you pay to deleware) are kinda high. You also need to hold board meetings with yourself and things like that which are annoying.

	LLC Filed a a C-corporation: This is what you need if outside investment isn't a huge deal, but you do need to carry losses for many years. You can devolve a LLC filed as a S corp back to this if you want...but the other direction is hard to do and has onerous time limits. The taxes for this are identical to the deleware corp for many purposes. But, you don't need the rando meetings and such. While you can take outside investment with this form, it's fuzzier due to the operating agreement instead of the shareholder agreemnt of a real C-Corp


	Now: onto the suing. None of these stop you from personally being sued. None of these even stop you from losing that lawsuit. What helps that is: correctly capitalizing the business (aka, having a reasonable amount of money in the business to keep it operating), having a lawyer who vets your contracts, having liability insurance for accidents that can happen that matches the tasks you do and lastly, keeping your personal money super separate from the buiness. All of these "cost" money, although the capitalization in a way is still money you control, just that you haven't paid yourself yet. This insurance costs me a couple thousand dollars a year. I have two main types that have riders for specific forms of harm I may cause. One type is general liability, everyone needs this. This is if me or my employee trips or injures someone phsyically. The other is Errors and Omissions liability, which is if I make a mistake of expertise that I am liable for, this covers the damages from that. The problems with these contracts is they're so riddled with exceptions it's incredibly easy to buy something close to worthless for you. That said the $0 dollar lawyer guarentee is really nice for you personally (aka, as soon as someone brings suit alledging liability, the insurance lawyer goes after them). It makes me sleep better at night, and also if one of the areas that I truly am covered in the insurance contract comes to bar, and I didn't happen to keep the corporate veil well enough, this will let me keep my house and personal assets intact.

	What you say? The company itself doesn't stop that? Nope! Being a well capitalized business who does a good job keeping things very separate is the criteria from stopping the personal veil from being pierced...but that's a legal decision, not a guarentee. Being poor yourself (the you can't get blood from a stone principle), being insured and being good at not getting sued by working things out reasonably is the real trick.