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Be warned, though, that neither alternative is generally appealing to investors. So what kind of corporate entity would be appealing to investor?
by danskil 16y ago
Be warned, though, that neither alternative is generally appealing to investors.
So what kind of corporate entity would be appealing to investor?
- kgrin 16y agoC corp; it's just that getting there from the questioner's LLC may be expensive/cumbersome
- staunch 16y agoWhat is hard or expensive about converting an LLC to a C corp? Assuming two 50/50 partners in a simple California LLC.
- watchandwait 16y agoIt probably is not an issue for a young web company but it may be a taxable event...it all depends on the LLC's assets and liabilities and their tax accounting basis.
- spolsky 16y agoWe're going through this right now ("converting" an LLC to a C-Corp to make VCs happy). It's not hard, not expensive, and not cumbersome. We're creating a new C Corp, and making the old LLC a subsidiary of the C Corp. It's common and standard and it's about 5% of the paperwork that lawyers do to close a Series A round. It's basically the easiest part of our financing. Don't worry about starting your company as an LLC. If you don't take VC, you'll be MUCH happier with an LLC than a C Corp, because it avoids double taxation in many scenarios. The best of both worlds is to start as an LLC and only convert to a C Corp when and if you take Series A financing, in which case you'll be doing so much paperwork the conversion will be the least of your worries.