The founder’s entity-selection decision sheet
The entity you start with is a bet on how you will raise money, not a form-filling choice. Answer these six questions in order and the right vehicle usually decides itself. The full reasoning is in Pvt Ltd vs LLP vs C-corp.
Work through it in order. Question one, whether you will raise equity, decides most of it; the rest refine the answer.
Will you raise outside equity?
The single most decisive question.
- If yes, you need a company that can issue shares: a Private Limited (India) or a C-corp (US). An LLP cannot take venture equity.
- If no, and you are a services or bootstrapped business, an LLP keeps compliance light.
- If unsure, assume you will raise, and start as a company. Converting later costs time.
Will you issue ESOPs?
Equity incentives need share capital.
- If your hiring plan needs an option pool, choose a company. An LLP cannot run a normal ESOP.
- See ESOP pool sizing for how big and who bears the dilution.
Where do your investors and customers sit?
Geography points to the vehicle.
- India-first revenue and Indian investors: a Private Limited company.
- US customers and US venture money: a C-corp, usually Delaware, over an Indian subsidiary.
- Gulf market: read Delaware vs UAE vs India for the holding question.
What compliance load can you carry?
Every form has a running cost.
- A Private Limited company carries MCA and ROC filings, board and audit, active or not.
- An LLP is lighter: fewer filings, audit above thresholds.
- A C-corp adds US filings and Delaware franchise tax. Do not run one dormant.
What does conversion cost later?
The cheapest entity now can be the expensive one in two years.
- An LLP that later needs equity must convert to a company: approvals, filings, tax.
- Forming a US C-corp with no US nexus adds cost and a double tax layer too early.
- Model the two-year path, not just today's registration fee.
Read the recommendation
Map your answers to a starting entity.
- Raising equity, India-first: Private Limited company.
- No raise, services or bootstrapped: LLP.
- Raising US venture money: US C-corp over an Indian subsidiary.
- Full reasoning: Pvt Ltd vs LLP vs C-corp.
Choose the entity for the company you are becoming, not the one you are today. Almost every entity mistake is answering the fundraising question too late, then paying to convert. Decide whether equity is in your future first; the vehicle follows from there.
Not sure which entity to start with?
Tell us your fundraising plan and where your customers and investors sit, and we will recommend the entity and the sequence, before it costs you a conversion.
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Email us and we will send the current version, and the updated one each time the law moves. Or print the page: it is built for paper.
This sheet is general information for founders, not legal or tax advice for your specific company. Entity rules and tax rates in India and the US change; confirm every point against current law before relying on it. Have the choice reviewed before you incorporate.
Prepared by Infinilex Consultancy · infinilex.io · Verified as of 3 July 2026. Printed copies date; check infinilex.io/resources/ for the current version.