On: How does one self fund a start up properly?

[coglethorpe]

That's an interesting thought. Our product line would be named differently from our corporation, so I guess there shouldn't be a problem.

We would start with 4 shareholders and have two people working full time to start out, so we could say "we" from the start. :-)

[tptacek → coglethorpe]

Oh, see, that "4 shareholders and two full time people" thing? That's a pretty important detail. =)

Do all the shareholders work for the company?

Are any of the FTE's NOT principals of the company?

[coglethorpe → tptacek]

The first employees would be principals. None of the initial employees would be principals, but we might need to hire if things go well.

[tptacek → coglethorpe]

Put it this way: if every employee will receive 1099 distributions instead of a W2 paycheck, or if no W2 employee will formally be given equity to begin with, you're better off with an LLC.

If not, you were right to go for an S-Corp. It's just paperwork, and you're not going to screw yourself over with it. We're converting right now without a huge amount of legal pain.