Post a new topic
    3 Replies Latest reply on Dec 18, 2009 7:21 PM by odgrell

    Right business entity

    JoshYB Newbie
      Hi-
      I am hoping you all can help with this. I am in the process of starting up a joint venture technology company and am having some difficulty determining what type of business entity this new joint venture will be. Here are the details:

      -Ownership of the new entity will initially be 50/50. 50% owned by an existing C-Corp and the other 50% owned through my business entity (TBD as a LLC or Corp)
      -We are looking to raise funds for the company where we will give some portion of equity in the company thus reducing the equity split above.
      -From the funds we raise we estimate about $100k cash will be left in the business at the end of the year that we will NOT want to distribute so as to keep some working cash.
      -These are all California businesses

      Questions:
      1. Does it matter if the 2nd ownership entity (my company) is a corporation or an LLC? What would be preferred?
      2. Should the new joint venture be a S-corp, C-corp, pass-through LLC, or LLC taxed as either corporation? Which reduces the tax liability for both the corporation and the owners?
      3. Can you leave any cash in an LLC entity at the end of the year? If so, I assume it is taxed?

      Thanks very much for any help!
      Josh
        • Re: Right business entity
          LUCKIEST Guide
          Right business entity, Welcome Josh

          Go to Members page and share some info.

          Everybody in business should have both an accountant and a lawyer.

          Good luck
          <!--Session data-->
          • Re: Right business entity
            JoshYB Newbie
            Thank you and I couldn't agree more. We are in the process of securing both an accountant and a lawyer.

            In the meantime, would it be possible to get some advice from anyone before we meet with the CPA??

            Thanks!
            • Re: Right business entity
              odgrell Adventurer
              With a corporation it would be easier if one of you wanted to get out of the venture, or if you wanted to raise capital. Personally, I think one should opt for an S-Corp wherever possible. If not possible, an LLC would be the best bet, tax wise, if you are sure that both parties are fully committed. If you are not 100% sure and you do not qualify for S-Corp status, then I would recommend a C-Corp. Just my personal opinion.