Corporate Formation - Business Law & Order Event SeriesAnnArborSPARK
This presentation was given by Carrie Leahy of Bodman PLC, Russ Brown of R.D. Brown PLC and Jerry Grady of UHY Advisors.
When forming a business one of the first decisions an entrepreneur will make is choice of entity. This session will cover the possible legal structures for your business activities, including the advantages and disadvantages of each type of entity in terms of limited liability, management of the business, employee compensation and tax matters. Learn the basics of Corporate Formation and understand the pros and cons of incorporating in Michigan and Delaware.
In depth presentation on considerations for choosing the most beneficial entity for a particular business or financial situation - LLC, Sole Proprietorship, General Partnership, etc. Contact Goldin Peiser & Peiser, LLP for more information or visit www.gppcpa.com.
Corporate Formation - Business Law & Order Event SeriesAnnArborSPARK
This presentation was given by Carrie Leahy of Bodman PLC, Russ Brown of R.D. Brown PLC and Jerry Grady of UHY Advisors.
When forming a business one of the first decisions an entrepreneur will make is choice of entity. This session will cover the possible legal structures for your business activities, including the advantages and disadvantages of each type of entity in terms of limited liability, management of the business, employee compensation and tax matters. Learn the basics of Corporate Formation and understand the pros and cons of incorporating in Michigan and Delaware.
In depth presentation on considerations for choosing the most beneficial entity for a particular business or financial situation - LLC, Sole Proprietorship, General Partnership, etc. Contact Goldin Peiser & Peiser, LLP for more information or visit www.gppcpa.com.
Introduction to Business Entities in Pakistanhamidjalal
The document provides a brief description of Legal Entities that could be incorporated in Pakistan to start a business and the merits and demirits of using each entity as a launch pad
The first seminar of a four-part series on growing a business and preparing it for sale led by the co-chair of Kegler Brown's M+A practice, Eric Duffee. Eric partnered with Jeff Tubaugh and Maggie Gilmore of BDO for this presentation, which focused on the fundamentals of entity selection. It detailed different entity types and the related impacts from tax reform affecting them. It also discussed concerns related to outside investors, partnerships, various structural forms and the tax impact of each.
Organizational Types for Small Businesses with Evelyn RitchiePeopleFund
In this session, you will learn the pros and cons of different business structures. Participants will become familiar with the common types of business formations and what structure will work best for their business.
A Limited Liability Company (LLC) is a business that is its own legal entity; they can be a single member LLC (a single owner) or a multimember LLC (multiple owners).
An LLC is NOT an INCORPORATED business like a C Corporation or an S-Corp, but it has the benefits without the burdensome and expensive regulations and corporate formalities, making it an ideal way to start a small business or convert an existing business for personal asset protection.
Structuring Your Business from Startup Through Growthnextfab
Follow up slides from PENN LAW ENTREPRENEURSHIP LEGAL CLINIC AT NEXTFAB
http://nextfab.ticketleap.com/penn-law-entrepreneurial-legal-clinic-at-nextfab/details
Introduction to Business Entities in Pakistanhamidjalal
The document provides a brief description of Legal Entities that could be incorporated in Pakistan to start a business and the merits and demirits of using each entity as a launch pad
The first seminar of a four-part series on growing a business and preparing it for sale led by the co-chair of Kegler Brown's M+A practice, Eric Duffee. Eric partnered with Jeff Tubaugh and Maggie Gilmore of BDO for this presentation, which focused on the fundamentals of entity selection. It detailed different entity types and the related impacts from tax reform affecting them. It also discussed concerns related to outside investors, partnerships, various structural forms and the tax impact of each.
Organizational Types for Small Businesses with Evelyn RitchiePeopleFund
In this session, you will learn the pros and cons of different business structures. Participants will become familiar with the common types of business formations and what structure will work best for their business.
A Limited Liability Company (LLC) is a business that is its own legal entity; they can be a single member LLC (a single owner) or a multimember LLC (multiple owners).
An LLC is NOT an INCORPORATED business like a C Corporation or an S-Corp, but it has the benefits without the burdensome and expensive regulations and corporate formalities, making it an ideal way to start a small business or convert an existing business for personal asset protection.
Structuring Your Business from Startup Through Growthnextfab
Follow up slides from PENN LAW ENTREPRENEURSHIP LEGAL CLINIC AT NEXTFAB
http://nextfab.ticketleap.com/penn-law-entrepreneurial-legal-clinic-at-nextfab/details
One of the greatest challenges of the modern world is to be able to focus.
It’s undoubtedly a world full of distractions, which may prevent you from starting a productive day, staying healthy and fit when the temptation of fast food treats and inactivity beckons, or enjoying the calm and quiet in the midst of a chaotic world.
Being able to focus will give you peace of mind, as you take on the world at your own pace. It will help you simplify things and focus only on the things that will have a significant impact on your life.
Once you learn to focus, you will value the smaller things in life. This means that you will become more effective in handling things that life offers you. You will only spend time on things that matters, controlling wasted time on things that have only caused economic, societal, and individual problems.
The Second part of the Top Ten Tools from Jeremy Kourdi.
Features the following:
Information life cycle
Seven habits of highly effective people
Change curve
Pareto
Win-win
Tips for Choosing the Right Business Entitycarbonadmin
This presentation highlights some of the key considerations for startup and small business founders in choosing the right business entity. We hope you find the information useful as you start your business by making sure you have adequate protection and growth potential for your venture.
C-Suite Snacks Webinar Series: Tax Structures to Reduce Cost and Improve Comp...Citrin Cooperman
Sign up for our weekly C-Suite Snacks webinars here: https://www.citrincooperman.com/infocus/c-suite-snacks
Our C-Suite Snacks webinar series provides the middle market with brief, strategic, and tactical business improvement information for 30 minutes every week. Join Citrin Cooperman live every Thursday at noon for snack-sized insights for business executives.
Running a business can be quite difficult, and the process of getting things up and running often overshadows other considerations, such as what type of business tax structure you should operate under. During this session, we covered how to structure your business for optimal tax benefits. Key takeaways included:
- Best tax structure for your business
- New insights on tax structure
- Tips to avoid tax traps based on the type of structure
CONVERSION OF PARTNERSHIP FIRM INTO LLPANMOL GULATI
-This document contains all the conceptual knowledge about: 1. partnership firm 2. LLP
- suitability/ unsuitability of both form of organisations
- benefits of LLP over firm
- Conversion process
- statutory compliances
Understand the various legal forms of a business and the opportunities and challenges associated with each form
http://frombootstobusiness.com/category/from-boots-to-business/business-legal-principles/
Briefly discusses pros and cons of popular forms of business and how these business can reduce their liability exposure. Includes sole proprietorship, general partnerships, limited partnerships, corporations, and limited liability corporations.
Similar to 2015-11-4_WSU_Defining a Corporate Structure for a Startup Company (20)
This presentation discusses the patent application disclosure requirements under 35 U.S.C. Section 112 and relates, in particular, to the Supreme Court and Federal Circuit case law relevant to patent specifications and claims protecting inventions in the life sciences, biotechnology, and pharmaceutical industries
Commil v. Cisco: Brief of Biotechnology Industry Organization as Amicus Curi...Gary M. Myles, Ph.D.
Amicus Brief submitted by BIO (Biotechnology Industry Organization) to Supreme Court of the United States in Commil USA, LLC v. Cisco Systems (No. 13-896)
Biotechnology Patents: Utility and eligibility requirements under 35 USC 101. This presentation follows the historical development of the utility requirement from the early 19th century case Lowell v. Lewis (MA 1817), the origin of the specific, substantial, and credible standard for a patent disclosure from Brenner v. Manson (SCOTUS 1966), and the modern application of the Brenner standard for biotechnology patents in In re Fisher (Fed. Cir. 2005). Biotechnology eligibility requirements are discussed from the early Supreme Court case Funk Brothers v. Kalo, the seminal biotechnology Supreme Court case Diamond v. Chakrabarty (SCOTUS 1980) where the court holds that statutory subject matter includes "anything under the sun that is made by man," through the recent Supreme Court decision in Myriad v. ACLU (SCOTUS 2013) where the court held that diagnostic method claims and nucleic acid claims that read on products of nature are patent inelibible. Practice tips are provided to ensure that patent claims avoid the exceptions of 35 USC 101 and withstand scrutiny during litigation and business transactions, such as licensing.
Biotechnology Patents: Disclosure Requirements under 35 USC 112. Discusses case law development of the enablement and written description requirements from In re Wright (Fed. Cir. 1993) through Ariad Pharmaceuticals v. Eli Lilly (Fed. Cir. 2010), including the origin of the "super enablement" requirement in Regents of the University of California v. Eli Lilly (Fed. Cir. 1997), the thought provoking dissent by Chief Judge Rader in Enzo Biochem v. Gen-Probe (Fed. Cir. 2002), the paradoxical "nascent technology" holding in Chiron v. Genentech (Fed. Cir. 2004), and the risks of relying on functional claim language from Rochester v. Searle (Fed. Cir. 2004). Practice tips are provided for avoiding the pitfalls in patent and claim drafting in view of these seminal cases.
Merchant & Gould Whitepaper: Association of Molecular Pathology v. Myriad Ge...Gary M. Myles, Ph.D.
This Merchant & Gould whitepaper summarizes the holding of the recent Supreme Court Association of Molecular Pathology v. Myriad Genetics decision, outlines its impact, and provides practice tips to those endeavoring to protect nucleic acids, genes, cDNAs, and other biological molecules, including proteins and antibodies as well as diagnostic methods that relate to laws and products of nature.
This presentation addresses the why, what, and how to protect inventions from the vantage point of the early-stage, pre-financing, start-up company that is interested in patenting its inventions and developing an intellectual property portfolio that maximizes the company's valuation and sets it up for success during the intellectual property due diligence that accompanies financing rounds, corporate partnerships, commercialization, and merger and acquisition.
This presentation discusses the historical context for the recent court decisions that affect the patent eligibility of biotechnology inventions, including those directed to genes, cDNAs, proteins, antibodies, and diagnostic methods. Discussed are the early Funk Brothers and Chakrabarty decisions as well as the Lab Corp, Bilski, Prometheus, Classen, and Myriad court opinions. The impact of the court holdings on the future development of biotechnology inventions, in particular personalized medicine inventions, is analyzed as is the erosion of the requisite incentives of innovative companies to invent and commercialize in areas where patent protection is less certain.
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
Introducing New Government Regulation on Toll Road.pdfAHRP Law Firm
For nearly two decades, Government Regulation Number 15 of 2005 on Toll Roads ("GR No. 15/2005") has served as the cornerstone of toll road legislation. However, with the emergence of various new developments and legal requirements, the Government has enacted Government Regulation Number 23 of 2024 on Toll Roads to replace GR No. 15/2005. This new regulation introduces several provisions impacting toll business entities and toll road users. Find out more out insights about this topic in our Legal Brief publication.
ASHWINI KUMAR UPADHYAY v/s Union of India.pptxshweeta209
transfer of the P.I.L filed by lawyer Ashwini Kumar Upadhyay in Delhi High Court to Supreme Court.
on the issue of UNIFORM MARRIAGE AGE of men and women.
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
VIETNAM - DIRECT POWER PURCHASE AGREEMENTS (DPPA) - Latest development - What...
2015-11-4_WSU_Defining a Corporate Structure for a Startup Company
1. How To Define a Corporate Structure for Start-ups:
What, Why, Where, & How?
Gary M. Myles, Ph.D.
Mark P. Walters
Intellectual Property Attorneys & Members
Lowe Graham Jones PLLC
November 5,2015
2. How to Define a Corporate Structure
for Start-ups
• "A well-defined corporate and organizational structure
is key to attracting investors"
• Topics for Discussion
WHAT: Overview of Business Entities
• Legal, Tax, and Liability Considerations
WHY: Choosing the Best Business Entity
• Ensuring Successful Business Transactions
• Financing, Partnering, M&A, IPO
HOW: Logistics of Incorporation
3. Choice of Business Entity
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
4. WHAT?
Sole Proprietorship
• Definition:
Business entity in which all assets are owned by one
person
• Management:
Management and operation decisions are wholly in the
control of the owner
• Liability:
Owner is personally liable for all business liabilities
• Tax Treatment:
Income and loss are recognized by the owner directly on
his or her personal tax return
No separate entity tax return required
5. HOW?
Sole Proprietorship
• Formation:
No governing statute
No legal formation requirements
File master business application with Washington
Business Licensing Service (http://bls.dor.wa.gov/)
Acquire employer identification number (EIN) from IRS
(https://www.irs.gov/Businesses/Small-Businesses-&-
Self-Employed/Employer-ID-Numbers-EINs)
6. WHY?
Sole Proprietorship
Pros:
• Simple and cheap
• No legal formation
requirements
• No non-tax record
keeping
• Single level of taxation
Cons:
• Unlimited personal
liability
• Co-owners prohibited
• Business ceases with
owner’s death
7. Choice of Business Entity
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
8. WHAT?
General Partnership
• Definition:
An association of two or more persons to carry on as
co-owners a business for profit
• Intent to form a partnership is not necessary
• Sharing in profits evidences partnership
• Management:
Vested in the partners, unless specifically delegated to
one or more partners
• Delegation of management does not limit a partner's
liability for the obligations of the partnership
9. WHAT?
General Partnership
• Liability:
Each partner has joint and several liability for
• His or her acts and the acts of the other partners
• Debts and obligations of the business
A partner is not liable for obligations of the
partnership incurred before the partner's admission to
the partnership
10. WHAT?
General Partnership
• Tax Treatment:
A general partnership is a flow through entity
• No entity level taxation
• Income and loss are reported and recognized by the
partners on their personal tax returns
• Cash distributions of the partnership are taxable if
they exceed a partner's tax basis in his or her
partnership interest
• A federal partnership tax return must be filed
11. WHAT?
General Partnership
• Costs:
Limited formation and maintenance costs
• Transferability of Interest:
A partner's economic interest is transferable
A partner’s right to manage the partnership or vote are
not transferable unless …
• all partners consent, or
• provided by the Partnership Agreement
12. HOW?
General Partnership
• Formation:
Governed by the Uniform Partnership Act (RCW 25.05
http://apps.leg.wa.gov/RCW/)
A Partnership Agreement setting forth terms of
ownership, voting rights, distribution of profits, ability
to transfer interests, dissolution -- not required but
recommended
13. Pros:
• Simple and cheap.
• No non-tax record-
keeping requirements
• Can allocate profits and
losses specially among
the partners
• Single level of taxation
• Practical where liability is
minimal
Cons:
• Partners have unlimited
personal liability
• Problems inherent in
shared management
responsibility
WHY?
General Partnership
14. Choice of Business Entity
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
15. WHAT?
Limited Partnership
• Definition:
A partnership comprising
• one or more general partners who manage [the]
business and who are personally liable for
partnership debts, and
• one or more limited partners who contribute capital
and share in profits but who take no part in running
[the] business and incur no liability with respect to
partnership obligations beyond contribution
16. WHAT?
Limited Partnership
• Tax Treatment:
A flow through entity
Income and loss are reported and recognized by the
partners on their personal tax returns
A federal tax return must be filed by the partnership
17. WHAT?
Limited Partnership
• Liability:
General Partner
• Unlimited personal liability for the obligations of the
partnership
Limited Partner ("silent partners”)
• Liability is limited to the extent of his or her capital
contribution to the partnership
• A limited partner who participates in the
management of the partnership may lose his or her
limited liability protection
18. HOW?
Limited Partnership
• Formation:
Formed by filing a Certificate of Limited Partnership
with the Secretary of State
(http://www.secstate.wa.gov/_assets/corps/LPCERT.pdf)
Partnership Agreement not required by statute, but is
highly recommended
Partners can be individual persons or entities
19. WHY?
Limited Partnership
Pros:
• General partner retains
control of partnership
• Limited partners have
limited liability
• Capital structures are
more flexible than
general parnerships
• Single level of taxation
Cons:
• General partners have
unlimited personal
liability
• Limited partners may lose
limited liability protection
if they participate in
management and control
of the partnership
20. CHOICE OF BUSINESS ENTITY
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
21. WHAT?
Limited Liability Partnership
• Definition:
A partnership that files a statement of qualification of
registration as a limited liability partnership according
to state law
Elements of both partnerships and corporations
• Limited liability is analogous to liability of corporate
shareholders
• Unlike corporate shareholders, LLP partners can
directly manage the business
22. WHAT?
Limited Liability Partnership
• Tax Treatment:
A flow through entity
Income and loss are reported and recognized by the
partners on their personal tax returns
A federal LLP tax return must be filed by the
partnership
23. WHAT?
Limited Liability Partnership
• Liability:
Generally, a partner is not liable for acts or omissions
of other partners (“full-shield liability”)
In some states, a partner is liable for the debts of the
LLP and for acts or persons under the partner’s direct
supervision and control (“partial-shield liability”)
24. WHAT?
Limited Liability Partnership
• Transferability:
A partner’s economic interest in an LLP is transferable
A partner’s right to manage/vote is subject to a LLP
Agreement and state law
25. HOW?
Limited Liability Partnership
• Formation:
Formed by filing a Certificate of Limited Liability
Partnership with the Secretary of State
(http://www.sos.wa.gov/_assets/corps/forms/LLP_Reg2015.pdf)
Partnership Agreement not required by statute, but is
highly recommended
Partners can be individual persons or entities
26. WHY?
Limited Liability Partnership
Pros:
• High level of flexibility
and control
• Limited liability protection
• Commonly used entity for
accountants and lawyers
• Single level of taxation
Cons:
• Limited liability protection
vulnerable to application
of “piercing the corporate
veil” theories
• Formality and expense
similar to LLCs
• Uncertainty owing to
under-developed case law
27. CHOICE OF BUSINESS ENTITY
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
28. WHAT?
Limited Liability Company
• Definition:
A company that is characterized by
• Limited liability
• Management by members or managers
• Limitation on ownership transfer
Ownership interests (i.e., “membership interests”) are
held by members of the company
• Management:
Management of an LLC may vest in its members or in a
member or non-member manager
29. WHAT?
Limited Liability Company
• Tax Treatment:
LLCs can be treated as partnerships for federal income
tax purposes thereby avoiding taxation as a
corporation (i.e. single vs. double taxation)
LLCs may elect to be treated as corporations for
federal tax purposes
If an LLC has operations in multiple states, its state to
state tax treatment may vary
30. WHAT?
Limited Liability Company
• Liability:
Members of an LLC enjoy limited liability protection
Liability of managers is limited by statute absent a
breach of fiduciary duty
Limited liability protection may, however, be negated
by “piercing the corporate veil” theories
31. WHAT?
Limited Liability Company
• Transferability:
A member’s economic interest in an LLC is transferable
A member’s right to manage/vote is subject to a LLC
Operating Agreement and state law
32. HOW?
Limited Liability Company
• Formation:
Formed according to state statute by filing a Certificate
of Formation with the Secretary of State
(http://www.sos.wa.gov/_assets/corps/forms/LLC_Formation2011.pdf)
The LLC and its members execute an Operating
Agreement (i.e., LLC agreement) setting forth the
agreement of the members as to the management of
the affairs of the LLC and the conduct of its business
33. WHY?
Limited Liability Company
Pros:
• Members enjoy limited
liability protection
• Flexible capital structure
May have different classes
of membership interests
Admission to membership
without a capital
contribution
Membership interests
without economic interests
• Fewer statutory
formalities than for
corporations
• Partnership tax treatment
Cons:
• Uncertainty owing to
under-developed case law
• State to state variability in
LLC statutes
34. CHOICE OF BUSINESS ENTITY
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Limited Liability Company
• Corporation
S-Corp
C-Corp
35. WHAT?
Corporation
• Definition:
A legal entity that is formed under state law and in
which ownership interest (i.e., stock) is owned by one
or more shareholders
• Management:
Corporations have centralized management that is
vested in a board of directors and company officers
The board of directors is elected by the shareholders
Officers are appointed by the board of directors
36. WHAT?
S Corporation
• Tax Treatment:
A corporation electing to be taxed under Subchapter S
of the Internal Revenue Code
S corporations are flow-through entities and are taxed
like partnerships thereby avoiding double taxation
S corporations must file federal corporation tax returns
S corporations have the following restrictions
• No more than 100 shareholders
• Shareholders must be individuals or trusts (NOT
corporations or partnerships)
• Shareholders may not be non-resident aliens
• Limited to one class of stock, which can include both
voting and non-voting common stock
37. WHAT?
C Corporation
• Tax Treatment:
A corporation taxed under Subchapter C of the Internal
Revenue Code
C corporations are subject to double taxation
• Income of the corporation is taxable at the entity
level and distributions to shareholders are taxable
to the shareholders
Election for Subchapter C treatment is NOT required
38. WHAT?
Corporation
• Liability:
Shareholder liability is limited to the extent of his/her
investment in the corporation unless a court “pierces
the corporate veil”
Limited liability protection and indemnification of
corporate officers and directors unless they breach a
fiduciary duty
40. HOW?
Corporation
• Formation:
Formed according to state statute by filing Articles of
Incorporation with the Secretary of State
(http://www.sos.wa.gov/_assets/corps/forms/ProfitArticles2010v2.pdf)
Must adopt by-laws addressing management and
control of the corporation
Must observe significant corporate formalities
• Authorizing resolutions
• Issuing shares
• Subscription agreements
• Preparing minutes of board and stockholder
meetings
• Maintaining books and records
Must provide buy-sell arrangements and transfer
restrictions in a Shareholder or Founder Agreement
41. WHY?
Corporation
Pros:
• Shareholders enjoy limited
liability protection
• Familiar corporate structure
and well-developed juris
prudence is appealing to
investors and lenders
• Tax advantages in many
liquidity transactions
• Availability of incentive
compensation (e.g., stock
options)
• C corporations may have
more than one class of stock
Appealing to venture
capital transactions (i.e.,
preferred stock)
Cons:
• Double taxation with C
corporations
• Significant and on-going
formalities and filing
requirements
• Detailed and restrictive state
corporation laws
• Income and loss must be
allocated in proportion to
shares owned
42. Which Entity to Choose?
• Primary choices
Limited Liability Company
S corporation
C corporation
• Key Considerations
How will your business be financed?
• Self financed
• Grants
• Angel investment
• Venture capital
• Bank loans
Substantial outside financing disfavors an
LLC
43. Which Entity to Choose?
C-Corp S-Corp LLC
Pass-through
Tax Treatment
No Yes Yes
Flexible
Ownership and
Capital Structure
High Low High
Attractive to
Investors
Yes No No
Complexity Moderate Moderate Moderate to High
Costs Small to
Moderate
Small to
Moderate
Small to High
Ideal Profile VC or angel
backed
Early state
intending to
convert to a C
corp
Insubstantial
outside
investment
Adapted from http://wtnnews.com/articles/7526/
44. Incorporation in State of Principal Office
or in Delaware?
• Variability in State filing fees, taxes,
and response times
• Variability in extent of limited liability
protection and indemnification of
officers/directors
• Variability in maturity of case law
• Variability in favorability of regulations
and business laws