What's the most cost effective way to set up a corporation (one that I could legally sell shares to investors)? Is Limited Liability Corporation the best way to go or which? I'm thinking along the lines of bringing investors in on my various web projects (have several websites). Perhaps there is a better way, maybe similar to a group of doctors bringing a new doctor into the firm. I would likely need a larger group of investors though. Your thoughts and advice? What kind of expense can I expect? Thanks in advance
I strongly suggest that you at least browse the following web site: http://www.greentradertax.com Then, if that does not answer your question, email him - he is pretty good about answering questions. nitro
I'm thinking along the lines of bringing investors in on my various web projects (have several websites). Perhaps there is a better way, maybe similar to a group of doctors bringing a new doctor into the firm. I would likely need a larger group of investors though. LLC is probably the better form of business. It limits the liability of your investors, and that's what they're going to look for before they hand you money. Go to the library and pick up a book on Partnerships and read about the various forms of incorporation a business can take. See if you can find: The partnership book : how to write a partnership agreement / by Denis Clifford & Ralph Warner.
This is very easy to do yourself if you know what you are doing. In this case the expense could be as little as a couple hundred dollars and your time. You can research this yourself by reading the IRS code and the candidate states corporation codes etc. Since you have several web ventures there must be sombody that you can ask among your contacts that has already gone through this process: This board is NOT the place to be looking for this type of advice .... You need a trusted advisor for this kind of information and a blind referral off a public board is not the way to go ....
I have formed a few corporations. Most recently, I have an S-Corp I formed through mycorporation.com for a few hundred. If you have never incorporated, though, I'd recommend seeing a lawyer so that you'll get the shares part correct and file correctly with the secretary of state. It is worth the extra $$$ to make sure it's done right the first time. I also had a CPA do the taxes the first year to get one done correctly and accurately. It cost about $2000. Since then I do them myself with TurboTax business and model them off of the previous year. Your accountant can also help you decide which type of corporation or partnership to choose. An s-corp was right for me in this latest case. I would not bypass the accountant part. Good luck, and let me know if you need further info.
You can get a service company to do the paperwork for you. Cost is few hundred dollars typically. However, you should be aware that "bringing in investors" is a highly regulated legal area that is full of landmines that would not be apparent to the layman. For example, you are limited in how many you can bring in without registering with the SEC. State blue sky laws impose additional limits.
Go to your State of residence website and look for a link to the Department of Financial Institutions. You should find some good information there and required forms to fill out. LLC's do not have shares, at least not in Wisconsin. It's based on membership. I think you could sell membership to other individuals, but it would probably be easier to bring in investors as an S corp or C corp with stock. Which form you choose depends on a number of factors. This should be discussed with a CPA I feel. There are advantages and disadvantages to each entity. If you file the papers yourself, you can expect the cost to be in the hundreds. If you hire a firm or CPA it could go into the thousands. Good luck, Banker
Thanks to all ... I rather thought the bringing in investors part would be tricky. Thanks again, good places to start.