How to start a company…without maybe losing all your favorite stuff

Photo by Vladislav Babienko on Unsplash
  • Limited liability
  • Professional investors generally prefer corporations
  • Easy to issue equity incentives (stock or stock options) to employees and others
  • Double taxation (without an S-election; see below)
  • Limited flexibility in management
  • Generally more complex to manage than an LLC
  • Limited liability, just like a corporation
  • Single level of taxation usually means tax savings
  • Flexibility in financial and management means the owners can decide exactly how they want the business to run
  • Fewer time-sucking administrative requirements than corporations
  • Professional investors generally prefer corporations
  • Nearly impossible to issue equity incentives to employees and others
  • Can have no more than 100 shareholders
  • Can have only one class of stock (so no preferred stock, which is what outside investors usually want)
  • Can only have shareholders who are individuals (so no companies can be shareholders, again meaning many investors are shut out)
  • All shareholders must be U.S. citizens or lawful permanent residents

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Robbie Allen

Robbie Allen

Investor @TweenerFund. Previously, Founder @AInsights , Co-Founder @InfiniaML, Distinguished Engineer @Cisco, Writer @OReillyMedia