{"id":7314,"date":"2008-11-08T14:30:19","date_gmt":"2008-11-08T20:30:19","guid":{"rendered":"http:\/\/magic1host.com\/blog\/2008\/11\/08\/understanding-business-entity-choices-if-you-want-to-go-public\/"},"modified":"2008-11-08T14:30:19","modified_gmt":"2008-11-08T20:30:19","slug":"understanding-business-entity-choices-if-you-want-to-go-public","status":"publish","type":"post","link":"https:\/\/magic1host.com\/blog\/?p=7314","title":{"rendered":"Understanding Business Entity Choices If You Want To Go Public"},"content":{"rendered":"
by Patrick Gibson<\/div>\n

People start businesses for a host of reasons. Some are valid and some are more whimsical. One goal often cited is to take the business public and make big money. To do this, you business needs to be set up correctly. <\/p>\n

First things first. A business entity is the structure of the company. It can be a shell entity such as a corporation and limited liability company or something more direct such as a partnership. If you want to go public one day, only one choice will work.<\/p>\n

The corporation and limited liability company are by far the most popular entity choices these days. Why? Each can be used to shield the owners<\/a> from problems arising from the functioning of the business. If the business gets sued, the owners do no lose their homes. <\/p>\n

The first LLC was created by politicians in Wyoming. In the last 1970s, they were looking for a way to raise tax revenues. Their answer was to come up with an entity that provided the protection of a corporation, but without the paperwork. The LLC was born. <\/p>\n

This, of course, resulted in all the other states passing similar laws, right? Actually, no. It was not until roughly ten years later when the IRS said LLCs could be taxed as partnerships that other states started paying attention. <\/p>\n

Once the IRS ruling hit the streets, every state in the Union took notice. They began passing legislation allowing for the creation of the LLC. The government had come up with a business entity that actually helped small businesses. Shocking, eh?<\/p>\n

This mad rush eventually resulted in some problems. People began to realize the LLC was not all it was cracked up to be. State fees could be high. One of the biggest was discovered when people tried to take their limited liability companies public. <\/p>\n

Sometimes it is the simple things that create a mess. To be publicly traded, a company must have shares that can be traded back and forth. The LLC has none. It only has ownership interest expressed as percentages.<\/p>\n

To take a company public, the ownership must be held in shares. Otherwise, how can the ownership be bought and sold on an exchange? This is why you see all large, publicly traded entities with shares and dividends based on shares.<\/p>\n

If you want to take your company public one day, you must choose a corporation as the business entity. Any other choice is going to be problematic.<\/p>\n

\n
About the Author:<\/div>\n
Visit VentureCapitalInvestmentFirms.com to find out the different types of venture capital<\/a> available to companies.<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

People start businesses for a host of reasons. Some are valid and some are more whimsical. One goal often cited is to take the business public and make big money. To do this, you business needs to be set up correctly.<\/p>\n","protected":false},"author":1671,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84],"class_list":["post-7314","post","type-post","status-publish","format-standard","hentry","category-entrepreneurs","tag-entrepreneurs"],"_links":{"self":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/7314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1671"}],"replies":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7314"}],"version-history":[{"count":0,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/7314\/revisions"}],"wp:attachment":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}