Talking Points — 2026
The answers to these questions can have far-reaching consequences that you may not be aware of at this time.
Example: How do you intend to organize your company?
Corporation, Limited Liability Company, Limited Partnership
Your Exit Strategy
Sooner or later, you will likely want to monetize the value of the company and reward the people who invested with you. The likely scenario is that you will sell to another company. Not wanting to assume the potential liabilities of your company, the buyer will insist on an "asset sale." In other words, they will purchase your assets but not your shares or units. Their purchase check will be made out to the company. A corporation will be required to pay tax on the asset sale, and after paying the tax, the company will distribute the remaining money to its shareholders, who will then also be required to pay tax. If an LLC, there will be only one tax event, not two.
Corporation, Limited Liability Company, Limited Partnership
Corporations will also be required to annually pay taxes on earnings before shareholder distributions. In the early stages of your operation, you will need to provide your investors with a return and also build cash for growth and expansion. There is more money available for growth and investors if an LLC.
Converting from LLC to Corporation
In many states, filing a simple form can convert your LLC to a corporation. You can check this option with the state you intend to organize in. If ultimately, you decide it is more advantageous to be a Corporation, file the form.
Profit Distributions
Allows you to distribute to your investors profits that you would otherwise pay taxes as a corporation. Adding a Profit Distribution clause to your Private Placement Memorandum becomes an additional selling point to prospective Investors.
Our Consultation Process
We will spend several hours discussing your options so you can make informed decisions on these questions. The answers also become part of your investor solicitation responses.
