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Comment by foreign-inc | Hacker News Reader

My understanding is that if you form a C Corp, then you have to pay corporation tax and then your personal income tax. With LLC you can avoid that. Probably not an issue if you are paying yourself the minimum salary.

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You pay corporate tax on profits. You're not going to have any recognizable, taxable profits if you're bootstrapping a company that will take VC at some point.

Exactly, and salaries are generally deductible as a business expense from the company's income. So you're not getting double-taxed there.

I am certain that you pay taxes on revenue, not on profit.

Businesses pay tax on profit, not revenue.

The company pays taxes on its income, but the salaries are generally deductible from the income that the company is taxed on (as are a whole bunch of other expenses).

If you are bootstrapping then it is quite likely that you will make a profit [1]. The reason why is that you need to build up capital in the business to provide a buffer for anything going wrong or to take advantage of new opportunities. Trying to run a bootstrapped company on the knife edge of break even is not easy.

1. This is assuming that you have not been lent the capital required to the company.

You do have a minimum state tax regardless of revenue or profit, but corporate income tax is only on profit. Therefore double taxation does not matter until you are profitable. In addition, you can "carryover" losses from previous years to profitable years in order to reduce your tax burden. In other words, if you lose $10K in year one and have a profit of $10K in year two then you have $0 taxes in year two. The paperwork is complicated for "carryover" so please consult an accountant.

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