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LLC's are also passthrough by default, though you can elect another tax treatment easily enough. The problem with s-corps is that a valid s-election requires th
by zekevermillion 10y ago
LLC's are also passthrough by default, though you can elect another tax treatment easily enough. The problem with s-corps is that a valid s-election requires that all stockholders are humans. The presence of a business entity stockholder would void your s-corp status. Keep in mind that an s-corp is not a different kind of entity, it is just a corporation that has a valid election for passthrough taxation under subchapter s and equivalent state income tax provisions.
- edoceo 10y agoYes. And sometimes the investment round you take is from a group of investors that have formed their own LLC - this one LLC takes smaller monies from investors and then, as the LLC becomes an investor in your Corp. So, their LLC need you to be a C-Corp. Or add each of the dozen+ LLC members to your own cap table, what a mess.