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Nutter McClennen & Fish LLP
Seaport West
155 Seaport Boulevard
Boston, Massachusetts 02210
Telephone 617.439.2000
www.nutt...
First, a word about our title….
Nutter McClennen & Fish LLP • www.nutter.com 2
Nutter McClennen & Fish LLP • www.nutter.com 3
Lingo Boot Camp
Equity and Debt Concepts
•  Equity is a bundle of sticks
 ...
Lingo Boot Camp
Corporate Structure Basics
•  Owners (Stockholders and Members)
•  Officers
•  Directors or Managers
Nutte...
Lingo Boot Camp
Understanding Capitalization
•  Fully-diluted equity
 Authorized shares vs. issued shares
•  Convertible ...
What to consider when you’re
considering….
Nutter McClennen & Fish LLP • www.nutter.com 6
Personal
Liability
Taxation
Runn...
The Most Likely Candidates
•  Sole Proprietorship
•  Corporation
•  Limited Liability Company
Nutter McClennen & Fish LLP ...
Sole Proprietorship
Unincorporated business owned by one person
•  Liability?
 Complete personal liability for debts of b...
Corporations – C and S Corporations
Formal entity registered with state
•  Liability?
 No personal liability for sharehol...
Limited Liability Companies
Limited liability and tax flexible entities
•  Liability?
 No personal liability for members
...
Consider the Lifecycle of the Business
•  When will you generate taxable income?
•  Who are the owners at formation?
•  Wh...
Nutter McClennen & Fish LLP • www.nutter.com 12
Adam B. Ghander, Esq.
Nutter McClennen & Fish LLP
155 Seaport Blvd.
Boston...
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Optimize Your Corporate Structure for Investment

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So you have an idea? Now it’s time to make a company, but where to start? This online Google Hangout will help you get started. Learn the best way to structure your company in preparation for investment and how to choose between some of the various options, such as corporations, limited liability companies, sole proprietorship and partnerships.

http://www.thecapitalnetwork.org/events/optimize-your-corporate-structure-for-investment/

Published in: Business, Economy & Finance
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Transcript of "Optimize Your Corporate Structure for Investment"

  1. 1. Nutter McClennen & Fish LLP Seaport West 155 Seaport Boulevard Boston, Massachusetts 02210 Telephone 617.439.2000 www.nutter.com Optimizing Corporate Structure for Investment Adam B. Ghander October 10, 2013
  2. 2. First, a word about our title…. Nutter McClennen & Fish LLP • www.nutter.com 2
  3. 3. Nutter McClennen & Fish LLP • www.nutter.com 3 Lingo Boot Camp Equity and Debt Concepts •  Equity is a bundle of sticks  Economic rights – dividends, upside  Control rights – nominate directors, control votes •  Debt is a bundle of pointy stick  Economic rights – interest, senior position to equity  Control rights – hammer control provisions
  4. 4. Lingo Boot Camp Corporate Structure Basics •  Owners (Stockholders and Members) •  Officers •  Directors or Managers Nutter McClennen & Fish LLP • www.nutter.com 4
  5. 5. Lingo Boot Camp Understanding Capitalization •  Fully-diluted equity  Authorized shares vs. issued shares •  Convertible debt Nutter McClennen & Fish LLP • www.nutter.com 5
  6. 6. What to consider when you’re considering…. Nutter McClennen & Fish LLP • www.nutter.com 6 Personal Liability Taxation Running the Opearation Getting Investors
  7. 7. The Most Likely Candidates •  Sole Proprietorship •  Corporation •  Limited Liability Company Nutter McClennen & Fish LLP • www.nutter.com 7
  8. 8. Sole Proprietorship Unincorporated business owned by one person •  Liability?  Complete personal liability for debts of business •  Taxation?  One level of taxation—paid by owner on personal return •  Running the Shop?  No significant administrative burdens •  Invest-ability?  Generally speaking, nope. Nutter McClennen & Fish LLP • www.nutter.com 8
  9. 9. Corporations – C and S Corporations Formal entity registered with state •  Liability?  No personal liability for shareholders •  Taxation?  C Corporations – two levels of taxation  S Corporations – one level of taxation •  Running the Shop?  Corporate formalities •  Invest-ability?  C Corporation – quite inviting  S Corporation – still inviting but some restrictions apply Nutter McClennen & Fish LLP • www.nutter.com 9
  10. 10. Limited Liability Companies Limited liability and tax flexible entities •  Liability?  No personal liability for members •  Taxation?  Complicates owners’ filings but only one level of taxation •  Running the Shop?  Some formalities but boatloads of flexibility  Incentive equity complications •  Invest-ability?  “UBTI” and effectively connected income Nutter McClennen & Fish LLP • www.nutter.com 10
  11. 11. Consider the Lifecycle of the Business •  When will you generate taxable income? •  Who are the owners at formation? •  Who will you need to bring in later? •  What’s the exit strategy? Nutter McClennen & Fish LLP • www.nutter.com 11
  12. 12. Nutter McClennen & Fish LLP • www.nutter.com 12 Adam B. Ghander, Esq. Nutter McClennen & Fish LLP 155 Seaport Blvd. Boston, Massachusetts 02210 email: aghander@nutter.com office: 617-439-2991
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