Hey fastlaners! Brand new to the thread, so I apologize if this is in the wrong forum or if it's already been answered. I need some advice and help with a dilemma. Yes, I've researched this, but I've gotten different answers from different "legal" and business information pages, hoping someone on here has run into this situation.
My business partner and I are starting a subscription based website/app business. We like the concept of LLC for our business for several reasons. 1. We don't plan on hiring employees. 2. We like the concept of income pass through, not getting double taxed 3. It's easier to incorporate.
The great thing about starting a website and app, as many of you know, startup capital is relatively low! Well, the only thing we need to really invest money into is our site and app development. We don't exactly have $10,000 laying around to pay a developer. But good news! I have a highschool buddy of mine, who along with his friend are starting a software company. They're both coding geniuses (both have worked for government contractors as coders). We're going to workout a deal where they will create our site and apps, and well allow them to use it in their portfolio to show off their work to future clients. We haven't settled on reimbursement yet, but in order to defer some of the cash cost, we are willing to offer them 5-10% equity.
Here's the questions. Can you "sell" equity in an LLC? Some sites I read said you can, however the 5% equity owners become equal partners. Other sites say that you can limit their involvement or say in the business through our businesses' bylaws.
I know with an S Corp you can sell shares, but we don't know if it's worth the time, money, effort to start an S Corp, get a valuation on a startup, divy up shares, etc etc
If anyone has any experience with this, help would be greatly appreciated!
My business partner and I are starting a subscription based website/app business. We like the concept of LLC for our business for several reasons. 1. We don't plan on hiring employees. 2. We like the concept of income pass through, not getting double taxed 3. It's easier to incorporate.
The great thing about starting a website and app, as many of you know, startup capital is relatively low! Well, the only thing we need to really invest money into is our site and app development. We don't exactly have $10,000 laying around to pay a developer. But good news! I have a highschool buddy of mine, who along with his friend are starting a software company. They're both coding geniuses (both have worked for government contractors as coders). We're going to workout a deal where they will create our site and apps, and well allow them to use it in their portfolio to show off their work to future clients. We haven't settled on reimbursement yet, but in order to defer some of the cash cost, we are willing to offer them 5-10% equity.
Here's the questions. Can you "sell" equity in an LLC? Some sites I read said you can, however the 5% equity owners become equal partners. Other sites say that you can limit their involvement or say in the business through our businesses' bylaws.
I know with an S Corp you can sell shares, but we don't know if it's worth the time, money, effort to start an S Corp, get a valuation on a startup, divy up shares, etc etc
If anyone has any experience with this, help would be greatly appreciated!
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