Startup Funding Espresso -- Legal Entity
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In launching your startup you must have a legal entity to raise funding. Start with an LLC or Limited Liability Company. This can be filed with your Secretary of State at your state government.\xa0 The cost is low and it will serve well for the early days of the business.\xa0\xa0 For family and friends funding this is sufficient. In the early days, you can use an S-Corp designation with an LLC to defer taxes to your personal filing. As you move to raise funding from angel investors and venture capital, some will want to invest in a Delaware Corp.\xa0\xa0 It\u2019s easy to move from an LLC to a C-Corporation. It\u2019s more difficult to move from a C-Corp. back to an LLC.\xa0 In most cases, investors will ask for a Delaware Corporation as it\u2019s the gold standard for legal entities in the U.S. as it provides the best protection for investors. Most venture capital funds have set up their investment documents to invest in a Delaware Corporation entity and they are not going to change it for your business. When you are ready to raise funding beyond family and friends, make clear to investors you will convert to a Delaware Corporation. Entity conversion does come at a cost, so make the conversion contingent on fund closing. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today.-----For more episodes from Investor Connect, please visit the site at: Check out our other podcasts here: For Investors check out: For Startups check out: For eGuides check out: For upcoming Events, check out For Feedback please contact info@tencapital.group