Entrepreneur’s Diary

You’re making great progress. You’ve got a board, you are about to hire two key employees, and you are just about ready to start executing your company business strategy. But, you need a company structure to embody these attributes. In fact, you can’t even open a bank account without an Employer’s Identification Number (EIN). This is no simple decision. In particular, your board (typically made up of “older” types) will probably steer you in the direction of a conventional commercial corporation, aka C-Corp. Why, because they are familiar with it. People just about always think what they are familiar with is best, else why would they have been doing it all these years? I believe that a limited liability corporation (LLC) is probably your best bet at this point of your company history for a variety of reasons we discuss in this chapter. I’m not a lawyer, and this is where you should seek legal advice once you think you know what you want to do. In fact, never go to a lawyer and ask them an open-ended question such as “What should I do?” They will just about always guide you in the most conservative direction legally, and this may not be best for your company.

Types of Ownership Structures

Before you can decide on an ownership structure for your business, you should learn a little bit about how each structure works. As a good reference on deciding which ownership structure is most suitable for your business, read “Choosing the Best Ownership Structure for Your Business” (go to www.nolo.com/lawcenter).