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Attorney Arcadier
Attorney Arcadier, Attorney
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How does stock affect an LLC and S or C Corp. And how many

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How does stock affect an LLC and S or C Corp. And how many shares of stock should the LLC or S or C Corp have available? I had aksed the question..."Hello:

I am opening a business using a downloadable application using a cell phone. This application was just approved and now supported by MADD so I need to create the appropriate business structure. I currently have an LLC in place and have been advised to open up a S Corp or C Corp. I have myself and one partner. The partner owns 51 per cent of the stocks whereas I own 48 per cent of the stocks. What are the reasons to open both an LLC and S or C Corp? And if so, how does that affect and/or protect the sale of stock of investor involvement? ..But Im not still not understanding the asnwer from the other atty.....
Submitted: 2 years ago.
Category: Business Law
Expert:  Attorney Arcadier replied 2 years ago.

Attorney Arcadier : All s corps are c corps but not all c corps are s corps. s corps are simply c corps that elect through irs to become s corps for tax purposes. As two partners ( so long as no foreign ownership) you will be able to have an s corp. Number of shares is completely up to you. Number to choose is irrelevant as to corp structure. Most attorneys recomend to start out with 10,000 shares regardless of y our corp structure. If your llc is in Delaware, there is no difference to having an s corp based on two partners, so I have no idea why you were adviced to open an s corp in lieu of your llc.
Customer:

Hello. I was told that by opening the LLC and then the subsequent S or C Corp that we would have a better advantage regarding stock. is that correct?

Attorney Arcadier : No. If you already have an llc from delaware and you are not needing to have a separate corporation to separate liability, then no need to form another corporation. Your llc is fine. Now, if you are intending to sell shares to the public, then certainly, best way to go is a c corp,, however, not for two partners, or even 10 partners.
Customer:

Hello: We have three partners One @ between 10 -20 percent One person who owns 48 per cent (me) and one who owns 51 per cent. We would subtract the shares from us to to accomdate the third partner

Attorney Arcadier : any of the three forms of corporation is fine.
Customer:

Ok so then we don't need the secondary S Corp or C Corp is there any reason why one of the partners feels strongly that one should be created?

Customer:

I wanted to thank you for your answers.

Customer:

They have been very helpful ;}

Attorney Arcadier : If he is not a u.s. resident or citizen, would be one reason. Slightly cheaper yearly filing fees could be another. Stronger fiduciary duties by the board of directors in complex dealings could be another. Cant think of anything else, other than bad advice.
Attorney Arcadier : Please click on accept answer so I may get credit for my time. Thanks.
Attorney Arcadier, Attorney
Category: Business Law
Satisfied Customers: 1106
Experience: Contract questions and Incorporation questions answered.
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