Should I join a startup as myself or as a company?

Question

I've agreed to join a start-up as a co-founder. We have already finished the partnership agreement, but I haven't signed yet. Could it perhaps be better for me to create an LLC or another company and make the LLC the partner in the agreement? Or should I just put down my personal information and join "as is". We are forming a C-Corp, if that matters, and have elected several board members.

Answers: 1 public & 0 private

25da12c4d3
Patent Attorney

You seem to be conflating some terminology. If the startup is forming a corporation, your equity ownership would make you a shareholder (or stockholder, unit holder, etc.) and not a "partner." The distinction is important: in the absence of a entity through which you are collectively doing business, you would likely be treated as a common law partnership and thus personally liable for generally what the business and your other partners are doing. Whether you should join the enterprise personally or through a proxy-LLC is mostly a tax matter: assuming the group properly behaves as a corporation, you personally would generally enjoy limited liability ass merely a shareholder / officer / director. You can insert a LLC in between your person and the equity ownership in the corporation, and create an additional layer of liability protection (again presuming your LLC and the corporation behave as such), though it may create some additional administrative work for you. Whether there is some particular tax advantage or disadvantage in acting behind a holding company-type LLC will depend on your and the corporation business' financial situation. You should contact local corporate counsel to obtain actionable advice.

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