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Cohen Law > Posts tagged "start-up"

Is a LLC or Corporation Better for a Startup Company?

What type of business entity should be formed for a startup company, and which are preferred by investors, angels, or venture capitalists?  The common convention is that VCs tend not to like limited liability companies (LLCs) and prefer a C-corp over most other entity types.  Some of the reasons for that is because VCs tend to not like pass-through entities, and LLC are for the most part treated as partnership pass-through entities for tax purposes.  Further, LLCs do not allow for different classes of stock such as preferred stock (which is what most VCs require), many other instruments of ownership...

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