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I 100% agree with you on principal, but the initial purpose of this seems to be specifically to set up companies within accelerators, which are all going to be
by zrail 11y ago
I 100% agree with you on principal, but the initial purpose of this seems to be specifically to set up companies within accelerators, which are all going to be Delaware C corps so the VCs will invest in them (as you say).
An LLC can elect to be taxed as a C corp, but that's not the same thing from an investor point of view. An LLC taxed as a C corp still has interests instead of shares and still has use an Operating Agreement under the relevant state LLC act.
Changing entity types isn't especially hard, but it's tedious. Usually you do some sort of subsidiary merger maneuver.
- IncRnd 11y agoThere are also tax consequences for switching corporate structure. The laws may have changed from when we did a few switches between LLC, S, and C, but those were far from only tedious. There was a lot of money we suddenly became liable in taxes.