By Doug Bend, Founder of Bend Law Group, PC, a law firm focused on small businesses and startups.
Most California LLCs that are small businesses never convert to a Delaware corporation for five reasons.
1. In addition to paying the California annual franchise tax you would also need to pay the Delaware annual franchise tax.
2. You would also need to have a registered agent for service of process in Delaware.
3. It often costs more to have a CPA prepare a corporate tax return than a partnership tax return for a multiple member LLC that has not made a tax election. A single member LLC that has not made a tax election does not need to file a tax return at all.
Also, your investors will most likely require that your company be a Delaware corporation for three reasons.
1. Many investors are