Is it better to form a corporation or LLC before starting a search?

by a searcher from University of California, Riverside

2 years ago

Is it better to form a corporation or llc before starting a search? Just to get the general legal stuff down. After that step, then search out backers. I would like to try and beat the average of 18 months for the search fund process.

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13 comments

professional from University of Minnesota - Twin Cities Campus

In addition to what others have posted, I would note that, at least in my experience, LLCs tend to have easier administrative burdens than corporations. This is particularly convenient when starting up as a single-owner entity, although your mileage will vary by state.

2 years ago | like reply | 0 likes

professional from Walsh College of Accountancy and Business Administration

For tax purposes, you should start out as a LLC and not a corporation. The default tax classification for a LLC is disregarded if owned by one person and a partnership if owned by more than one person. If later in the Search process it is determined that you need or want to be a corporation (whether C or S) then you can easily make an election for the LLC to be treated as a corporation for tax purposes by filing a form with the IRS.

2 years ago | like reply | 2 likes

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