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As Terretta mentions, you'll be offering "membership interests" and as far as I remember from our experience with an LLC, you don't offer shares but "units". Y
by asanwal 16y ago
As Terretta mentions, you'll be offering "membership interests" and as far as I remember from our experience with an LLC, you don't offer shares but "units".
You'll have to detail unit interests in your operating agreements and set up unit subscription agreements with your employees. Most of it is akin to what you'd do with a C-corp but the terminology is a bit different.
One note: If you're contemplating raising outside investment in the future from angels or VCs, a C-corp may be preferable as it appears to be their preferred structure (not a hard and fast rule but a preference). I've heard LLC to C corp "conversions" can be less than pleasant.
- 18pfsmt 16y agoAny of the VC names you read about on this site or others like it will not fund you without transitioning to a C-Corp. As far as converting from an LLC is concerned, you just form a Delaware C-Corp, which acquires the LLC.
- Slmnhq 16y agoInvesting in a C-corp keeps the personal taxes of the investors simple. LLC's are pass-through entities which means all income of the LLC must be mentioned on their personal tax returns via a K-1 schedule.