Which state to incorporate in if I plan to raise money eventually? Should it be LLC, S-corp or C-corp?

Which is the best state to incorporate in if you eventually want to finance your startup with angel funding?

I currently have an LLC in my state and not sure if it will be optimal. I went with an LLC since the paperwork is easier and I can file it as a single member LLC for simplicity.

Raising money wasn't part of the plan when forming the LLC. Tax efficiency is also important to me, as is a way of distributing profits to everyone with equity in the business.

You'll need a Delaware C-corporation.

It's what almost 100% of investors will want, if not require.

Reasons:

• Delaware has the most corporate friendly laws that cut through crap, especially in the event it comes to litigation.
• C-corps are structured for both external investment and larger entities.
• Shareholders have no tax implications from profits or losses as a result of owning shares in the entity, and would only have to pay taxes if they were to receive a dividend payment from the company or were to sell their shares for a profit.
  
• "Corporate Veil" of C-Corps is very strong in legal situations. Virtually unheard of that a shareholder would have any legal liability for the actions of the business by simply being a shareholder.
  

The main downside to C-corps (which you can't avoid if you're going to be raising money): Somewhat more costly to maintain from a legal and tax filings perspective, and face "double taxation" when distributing profits to shareholders.

This was covered here, but you should consult a professional. The answer will depend on where you live, e.g. not all states are equally (un)favorable), your ownership setup and how far out is fundraising. I heard DE and CA are preferred by Venture Capitalists and NY isn't very liked.