Important Things For Starting Your Businesss

When you start a new business you need to select the right entity for your business. We made a huge mistake when forming our company initially that ultimately cost us $20,000 in legal fees to correct. When we formed the company in 2012 we did it simply as a Tennessee LLC. Quick and easy and cheap we figured it was the best way to get our company up and rolling, however we did not realize is that an LLC is a no go for institutional investors. Any outside investors such as private equity, angel investors, or venture capitalists will insist that your company be a Delaware C Corp. This is because Delaware has an abundance of case law that is favorable to corporate structure, investors, and board members and is generally accepted as the standard by the investor community. When we raised capital last summer we came to the table with our Tennessee LLC and almost got laughed out of the room. We had to pay a specialist attorney to dissolve the old LLC and very carefully assign everything to the new proper entity which is a Delaware C Corp. My advice to anyone forming their company is to to carefully consider going with a Delaware C Corp. if they plan on raising outside investors capital.