I got a verbal agreement to fund my search! what's next? taxes, documents?

by a searcher from Brigham Young University

7 months ago

Hey all, I have verbally secured funding for my search! The investors will pay me as a contractor for 12 months###-###-#### I will likely have to cover some of the expenses. So, I'm trying to figure out what would be the best approach for tax purposes. Ideally, I would like to deduct expenses to pay less taxes, but what type of business entity should I use? Also, any guidance on how to instrument on paper my agreement with the investors? 

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professional from University of Michigan - Ann Arbor

Hi ^Searchfunder member‌, First, congratulations. That's a big first step. Second, and to answer you questions, an LLC is likely the correct choice of entity (both from a tax and flexibility standpoint). Typically, you would also enter into a subscription agreement with your investors. But I can't tell from your message whether your investors have proposed a different arrangement? Feel free to DM me to setup a time to talk / ask more questions. Always happy to help.

7 months ago | like reply | 0 likes

searcher from Babson College

Set up an LLC- and create a bank account under the company name.. Have your investor put the money in the LLC account, and give them viewership privelage so they feel comfortable. Write our budget and socialize it to the investor before funding.

I would make sure to include a budget for closing fees in there so when it’s time to go- you have money to pay for legal and QofE.

good luck!

7 months ago | like reply | 2 likes

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