Ask HN: Easy way to issue equity if you don't have a (Delaware) C-corp

1 points by b20000 2y ago ↗ HN

The common sense advice I've read on HN is if you are not fundraising or dealing with VCs, to get a normal LLC in the state you live in. How do you deal with issuing equity to advisors and people you want to bring on in return for equity if you have an LLC? It has tax implications and potential other issues if you make them LLC members?

2 comments

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hendler 2y ago ↗

Mostly has to do with SEC rules. % ownership of an LLC can work but has risks. You could try https://slicingpie.com/, but in practice I found it burdensome.

jschveibinz 2y ago ↗

IANAL but you are correct about membership in an LLC--it does have tax implications, but only once you are generating revenue. This is also true of an S-corp. The typical approach to dealing with members/partners in these sutuations is to do cash distributions to cover taxes. We did this in our company for years until we were acquired.

You need to talk with a lawyer and an accountant about your situation. Organizing as LLC, S-corp or C-corp has subtleties that you need to consider beyond taxes.

Cheers!