It is often difficult for a business owner, entrepreneur, startup, and technology venture to decide how to organize itself and acquire the capital and funds the owners and executives will need. Another important consideration is the need for equity or sweat equity as a method of incentivizing and ensuring that each employee has the motivation needed to be able to grow and develop as a professional.
Also, each individual investor must be provided assurance against the risk of loss from investing in the venture by a method that satisfies the owners, executives, without dilution of the employee’s sweat equity, and the investor’s ability to offset the gains or losses and the tax consequences of how the company is organized. One of the methods of quickly organizing a company and still having the ability and flexibility of reorganizing or restructuring the Company is either, as a Corporation, a Limited Liability Company, and electing to be taxed as a partnership or an S-Corporation.
Without understanding the business plans of an individual, the entrepreneurs, the clients, or the individuals participating and undertaking the venture there is no way for any corporate Attorney to advise counsel or guide a client on the proper method of organizing a company and how to structure the first company. Once, the first company is created it can be reorganized into a holding company and an operational entity, or a spin off and a subsidiary for purposes of testing a new market, product or service that may allow your clients to continue to grow and develop their own business, retain key employees, provide a return on investment to the first and/or key investors, and foster loyalty and trust among the key parties.
Making sure that each individual is allowed to have the most flexibility to grow, acquire the professional guidance, mentorship, develop key business, professional and personal relationships of their own without inhibiting or stifling the growth of the company, key employees, officers, and contribution from investors with additional capacity to provide capital or funds the business is merely setting itself up for failure in the long run. To find out more about the Chicagoland entrepreneurship community see: www.eebrunchclub.com, www.bipeblawg.com or www.vrplawgroup.com, or www.vrplaw.com