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Incorporating startup as a subsidiary company of LLC. Is it a good idea ?


I am an foreign national (H1B visa holder) trying to incorporate my startup in US. One of the co-founder is US citizen and I am thinking of incorporating with US citizen as CEO while I stay on board as a passive investor. My lawyer said that this option will work out. However the citizen co-founder already has a LLC registered on her name and I was wondering if its possible to incorporate as a subsidiary company of this existing LLC. I wanted to know your opinion on incorporating as Delaware C corp vs subsidiary company of an existing LLC.

First of all, Is this a good option compared to Delaware C corp?

If yes, What is the minimum amount of equity must the parent company hold ?

Does subsidiary company (me) in this case should also be incorporated as LLC or can we still incorporate as Delaware C corp ?

Does parent company pay taxes for subsidiary as well? Or do they pay taxes separately ?

Does subsidiary get same EIN (Employer Identification Number) as parent company ?

Approximately how much tax do we have to pay each year in case of Delaware C corp vs. subsidiary ?

4 Replies

Lucas Jaz
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Lucas Jaz Entrepreneur
Cofounder at Westeros
There are tons of discussions on here on this topichttp://members.founderdating.com/discuss/topic/LLC - really helpful to do a search first on FD as there are amazing conversations to tap into
Ronis Gracie
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Ronis Gracie Entrepreneur
Product Manager at LeadsMarket.com
Forget about LLC, go for the C-Corp in Delaware.
Irwin Stein
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Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
The main issues are tax related. The subsidiary should get its own EIN but there are ways to allocate income and expenses between the entities to minimize or shift the tax burden. You need advice that is specific to your situation. Get it from your attorney and accountant. A generalized answer from an FD group will not help you.
✔Tee Davis - PolyGreen (ICFs) Buildings LLC
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Commercial Energy Efficient Services
I agree strongly with Irwin Stein.
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