Should a self-funded searcher register an LLC?
Could somebody please help me understand the pros and cons of registering an LLC for a self-funded searcher?
Also, what could be the possible impacts of searching without registering an LLC?
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by a searcher
from University of Cincinnati - Carl H. Lindner College of Business
in Bear, DE, USA
in Bear, DE, USA
5yrs ago
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by a professional
5yrs ago
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
Entity choice is not a one size fits all approach. A lot of factors can influence the decision. I always recommend starting out the Search vehicle as a LLC taxed as a partnership and if it makes sense to be a C-Corporation once you find a Target, you can structure the acquisition to achieve the entity choice you need/want (after a thorough analysis) via a tax election or use of a C-Corporation acquisition vehicle.
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by a searcher
2yrs ago
from University of Virginia in Boston, MA, USA
from University of Virginia in Boston, MA, USA
Agree that you can benefit fromredactedQSBS), but be very careful when planning this! There are a lot of conditions that must be met in order to qualify (among them, you need to do an asset purchase, I believe). So if you aren't careful, you may pay C Corp taxes and at the end of it all not even get the 1202 benefit on sale. Also worth noting QSBS really only makes sense for a quick sale (ie the 5 years mentioned above). Longer, and you're paying C Corp taxes for longer, with the same one-time benefit upon sale. Just my 2 cents.
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