The paperwork issues are a red herring. The same things will bite you in the ass any time you convert from any structure to any other structure; it's just a coordination problem.
There are minor tax benefits to an LLC, and there's a major simplicity benefit. The driver (for us) to move to S-Corp is to safely grant equity.
There is no reason to overthink any of this. Just do what's easiest. But don't run a sole proprietorship just because an entry in the YC FAQ says you're easier to fund without incorporating. News flash: YC isn't investing in you anyways; by all available evidence, your odds of being accepted are low, probably lower than your odds of just succeeding with the company.
Comments
The paperwork issues are a red herring. The same things will bite you in the ass any time you convert from any structure to any other structure; it's just a coordination problem.
There are minor tax benefits to an LLC, and there's a major simplicity benefit. The driver (for us) to move to S-Corp is to safely grant equity.
There is no reason to overthink any of this. Just do what's easiest. But don't run a sole proprietorship just because an entry in the YC FAQ says you're easier to fund without incorporating. News flash: YC isn't investing in you anyways; by all available evidence, your odds of being accepted are low, probably lower than your odds of just succeeding with the company.