Forums: Discussions for entrepreneurs and small business.

According to my lawyer an LLC is better because you can have different class of stock. When you are ready to negotiate the operating agreement with your angel investor you have more options.  Forming a regular corporation only allows 1 class of stock putting everyone on the same playing field so to speak. With an LLC you can limit the control the investor has by selling a different class of stock.

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Your very welcome!

Check out the pitch,  its posted in this forum Angel investors, loans, bootstrapping, grants, VC

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The "single class of stock" restriction applies to "S" corp structure. The C corp structure can have m,ultiple classes of stock as defined in the articles of incorporation.

Unless you have some special circumstances, I would suggest creating the operating agreement before engaging with investors.

Robert Johnson

It depends on what you are looking to do with your corporation. We chose on the advice of our lawyer a LLC to prevent double taxation that you can get when you sell shares of a C corp. Here is a link that compares C corp to LLC.

http://www.laughlinusa.com/llcvscorp.asp

As a business person depending on your business plan an its exit strategy is what you should use to determine what type of corporation you need to set up.

hi.. i just want to know that how much should you be prepared to offer your stakes to your investor while seeking seed funding from him....  thank you...