How to Raise Capital: LLCs vs. Corporations for Startups



For startups looking to raise capital, the difference between LLC and Inc is crucial. While both offer liability protection, their ability to attract investors and raise funds differs significantly.

Raising Capital with LLCs:

  • Limited Investment Appeal: LLCs cannot issue stock, which limits their ability to raise large sums of capital from investors.

  • Investment Through Membership Interests: Investors can buy a percentage of the LLC, but the process is less formal and harder to scale for large investments.

  • More Control for Owners: The flexible management structure of an LLC allows founders to maintain greater control over decision-making.

Raising Capital with Corporations:

  • Issuing Stock: Corporations can issue both common and preferred stock, making it easier to raise substantial funds through investors, venture capitalists, or even through public offerings.

  • Attracting Venture Capital: Corporations, especially C-Corps, are the preferred structure for venture capital firms and angel investors because of their ability to issue stock.

  • Exit Strategy: Corporations are better suited for businesses planning an IPO (Initial Public Offering), offering a clear exit strategy for investors.

If you’re a startup looking to raise significant capital, a corporation might be the best option due to its ability to issue stock and attract outside investors. BizTax Strategy can guide you in determining which structure works best for your fundraising goals.

Let BizTax Strategy, the best LLC formation service, help you choose the right structure to raise capital and grow your business.

Location: Las Vegas, NV, USA

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