LLC vs C-Corp — The Bookkeeping Implications
| LLC | Delaware C-Corp | |
|---|---|---|
| Best for | Bootstrapped small business, no VC plans | VC-backed startups, stock options (ISOs), SAFE notes |
| Tax filing | Schedule C, Form 1065, or Form 1120-S | Form 1120 (C-corp) |
| Bookkeeping complexity | Low–Moderate | Moderate–High (double taxation, dividends, 83(b) elections) |
| Investor requirement | VCs generally cannot invest in LLCs | Required for institutional VC investment |
| Cap table | Membership interests tracked in operating agreement | Share ledger, option pool, SAFE notes, convertibles |
| Stock options | No ISO (incentive stock options) | ISOs available — 83(b) election within 30 days of grant |
At Sharma Jyoti and Co, we work with both structures. For C-corps, we coordinate with your startup attorney on cap table reconciliation and with your CPA on Form 1120 workpapers.
What to Set Up in the First Week After Incorporation
- Dedicated business bank account — Never mix personal and startup expenses. Use Mercury, Brex, or a traditional business checking account.
- QuickBooks Online or Xero — Connect your bank account for automatic transaction feeds. Choose your accounting basis (cash for early stage, accrual when investors require GAAP).
- Chart of accounts — Set up expense categories relevant to your startup: payroll, contractor labor, SaaS tools, AWS/hosting, office, travel, marketing, legal/accounting fees, R&D.
- Expense policy — If you have co-founders or early employees, document what can be expensed and the receipt requirement ($75 threshold).
- Founder equity documentation — If founders contributed cash or assets, record the initial equity entries. If shares were issued, document the purchase price (important for 83(b) elections and low FMV early shares).
83(b) election deadline: If founders receive restricted stock or options with a vesting schedule, the 83(b) election must be filed with the IRS within 30 days of the grant date. Missing this deadline can result in ordinary income tax on future vesting events instead of capital gains. Your startup attorney handles this, but your bookkeeper needs to know about the grant date to flag it.
Monthly Deliverables — What Sharma Jyoti and Co Provides
Pre-Revenue Stage
- Monthly bank reconciliation — every cent of investor or founder money tracked
- Expense categorization — every expense coded so it survives due diligence
- Monthly burn rate report — gross burn (total outflows) and net burn (outflows minus revenue), runway calculation
- Monthly balance sheet — cash position, liabilities, equity
- Contractor 1099 tracking
Post-Revenue / Seed Stage
- Everything above, plus:
- Revenue recognition — when to record revenue (especially for SaaS: ratable over the subscription period)
- Monthly P&L — gross margin, OpEx, EBITDA
- Accounts receivable tracking — invoices outstanding and aging
- Payroll reconciliation — if you have W-2 employees
- Deferred revenue tracking (prepaid contracts)
Series A Preparation / Investor-Ready Financials
- Conversion from cash basis to accrual basis (if not already done)
- GAAP-compliant financial statements — income statement, balance sheet, cash flow statement
- 12-month trailing and YTD financials for investor data room
- Cap table reconciliation with your attorney
- R&D expense segregation for Section 174 amortization (post-2022)
Burn Rate — The Number Every Startup Must Know Monthly
Burn rate is the single most important financial metric for a pre-revenue or early-revenue startup. Two types:
- Gross burn rate: Total cash outflows per month (all expenses, regardless of revenue)
- Net burn rate: Gross burn minus revenue. This is your actual cash consumption per month.
Runway = Cash in bank ÷ Net burn rate (months)
Example: $500,000 cash, $30,000/month revenue, $80,000/month expenses. Net burn = $50,000/month. Runway = 10 months.
At Sharma Jyoti and Co we deliver your burn rate report alongside the monthly P&L within 5 business days of month-end. This gives you 25 days each month to make decisions before the next month closes.
What Startup Bookkeeping Costs
| Provider | Monthly Cost | Notes |
|---|---|---|
| Pilot (startup-focused) | $499–$1,500/mo | US-supervised, accrual basis, GAAP |
| Kruze Consulting | $800–$3,000/mo | Full-service startup finance, VC-backed focus |
| US CPA firm | $1,000–$4,000/mo | Overkill for early-stage monthly bookkeeping |
| Sharma Jyoti and Co | $200–$500/mo | Monthly reconciliation, burn rate report, investor-ready P&L and balance sheet, 1099 tracking, year-end CPA workpapers. ICAI CA firm. |
Most early-stage startups do not need a $1,500/month bookkeeper. They need clean records, a monthly burn rate report, and a CPA workpaper package at year-end. That is what we provide — and what we are trained to deliver. Your US startup CPA or attorney handles tax filings and legal matters.
Related Reading
Frequently Asked Questions
Dedicated business bank account, QuickBooks or Xero setup, chart of accounts for startup expenses, recording every expense with receipts, and founder equity documentation. At Sharma Jyoti and Co we set up startup books and handle ongoing monthly bookkeeping from $200/month, including monthly burn rate reports.
Delaware C-corp if you plan to raise VC funding or issue ISOs — investors require it. LLC if you are bootstrapping without VC intent — simpler and avoids double taxation. Consult a startup attorney before choosing. Both structures require clean monthly bookkeeping.
Net burn rate is total monthly cash outflows minus revenue. Runway = cash in bank ÷ net burn rate (months). At Sharma Jyoti and Co we deliver your monthly burn rate report alongside the P&L within 5 business days of month-end, giving you accurate runway visibility every month.
Cash basis is fine for early stage and most tax filings. Switch to accrual when investors require GAAP financial statements (typically at or before Series A). At Sharma Jyoti and Co we run books on either basis and handle the conversion when your investors require it.
Pilot: $499–$1,500/month. Kruze Consulting: $800–$3,000/month. At Sharma Jyoti and Co: $200–$500/month for startup bookkeeping — monthly reconciliation, burn rate report, investor-ready P&L and balance sheet, 1099 tracking, and year-end CPA workpapers. ICAI CA firm — your US CPA or startup attorney files your returns.