Switching The Form Of Your Business
Published Wednesday, August 9, 2006 at: 7:00 AM EDT
- The comparative ease and expense of forming each kind of business
- To what degree each might shield you from personal liability
- The tax benefits or drawbacks of each business set-up
- How many owners you had or planned to have,Whether passive investors had ownership stakes
- How much protection from creditors each entity would afford you.
If you formed your business as an S corporation and now want equity financing from foreign firms or corporations, you’ll have to become a C corporation or LLC in order to admit these new owners.
If you’re one of several owners of a professional firm that decides to share profits according to each owner’s annual contribution to the bottom line, you won’t be able to use a corporate form. But partnership rules could accommodate this arrangement.
If your growing software company, formed as an LLC, decides to go public, you’ll have to become a C corporation.
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