
Ask HN: Must a company be a Corporation to award equity? - abbadadda
Are the only types of corporate structures that allow equity allocation Corporations? Or would this type of offer work with LLCs?
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davismwfl
There are ways of awarding "equity" in LLC's as well, but it works differently
than a traditional S or C corp. Even in a S corp you are limited to how many
people can have shares before you are forced to convert to a C corp but you
are still at least dealing with shares.

In an LLC you do not have shares, you generally have "units" which equate
similarly but are geared towards "profit interest in the business", which
usually ties back to a capital contribution but doesn't necessarily tie to
cash.

IANAL so you should seek one out if you are trying to do anything along these
lines. Anytime you set up a business pay the money for an attorney to go over
it so you have the correct information and structure, it is so worth it and
doesn't cost that much in the long run. And fixing things later can cost way
more.

Personally, I always prefer LLC's as I don't seek venture funding for my own
companies, and even if you do raise some money from friends/family or high net
worth people an LLC is generally fine in these cases. If you plan to raise
funds from large Angels or VC's always setup the proper C corp from the
beginning and use an attorney that has done it before. If you aren't sure, you
can always convert an LLC to a C corp, just tell your attorney that it is
possible you will do this. That way they can include the proper language in
the operating agreement to make that conversion as tax neutral as possible.

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abbadadda
Thanks for the detailed answer!

