• July 2018
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Do you need an LLC first to collect investors?

I saw a big red flag in your question – the fact that you want to seek funding as an LLC. Investors don’t like LLCs for the following reasons: (1) VC’s despise “pass-through” entities; (2) the tax partnership rules are super complicated; (3) it doesn’t allow for stock option plans, convertible notes, etc., and (4) it gets more expensive and complicated down the road.

If you’re already an LLC it isn’t too difficult to convert into something like a C-Corp down the road when you’re raising. An LLC is cheaper and faster to set up so your converting costs might be offset by the initial benefits of starting off as an LLC.

Visit LawTrades for competitive pricing on company formation as well as converting corporate entities when you’re ready to make the switch. Good luck!

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