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S Corp, C Corp or LLC?

You’ll have to choose a form of business organization. Typical choices are corporation (C or S), limited liability company, partnership, etc. Your lawyer and/or accountant can advise you on the best approach.

Here are some quick thoughts:

  • Odds are that if you’re looking for venture capital, a corporate structure is best since that is the structure that allows you to sell stock. But it isn’t that hard to change from an LLC or S Corp to a C Corp.
  • S Corps and LLCs are “pass through entities”, which means as a legal entity, they don’t need to submit tax returns.  Instead, the gain or loss flows through to the owners.  That’s generally not something investors want (which is why most of them prefer C Corps).  But in some situations, a pass-through may be what the owners/investors want.

Read more in the tag cloud links for choice-of-entity.  Then talk to your attorney about which type of entity is best for you!  But do pick one – and get a legal entity set up!