Legal Question in Business Law in Virginia

I started a business with a friend and we registered it as an LLC. I have a 51% stake currently. We mutually agreed that she is going to be taking a 10-15% stake going forward and I am now seeking more investors. I want to set up a holding company (that I own 100%) and buy my current LLC (or maybe convert it to a corporation -not sure which is better?) after valuing it and then offer my partner a smaller share for her contribution to the business. Should I incorporate as a C-Corp or S-Corp? This is what I know about the two options �

C-Corp: I can have different levels of stocks � preferred vs. common � which is great since I probably want to do this (Pro). Dividend will be double taxed (Con)

S-Corp: No double taxation (pro), but I cannot have different levels of stocks (con)

Also, should I keep my current company an LLC or turn it into a corporation? If so, what kind?


Asked on 3/10/14, 12:09 pm

2 Answers from Attorneys
Michael Hendrickson Law Office Michael E. Hendrickson

Would recommend that you seek to arrange for a consultation regarding this matter with an Virginia attorney who handles business entity formations r.

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Answered on 3/11/14, 7:57 am
Robert Beatson, II Law Offices of Robert Beatson, II

There are a number of different types of legal entities that can be

used for a business structure under VA law. There are many variables

and fact-specific issues (business law, tax, intellectual property,

etc.) that need to be carefully worked through to properly form the

business under Federal and VA law, protect the business assets, provide

limited liability protection for the business owners/participants, etc.

An experienced business law/tax attorney should be able to handle this

under Federal and VA law. Please note that my legal services are

available only with a signed engagement agreement in accordance with

the Virginia Rules of Professional Conduct applicable to attorneys

licensed in the state of VA. If I can be of any help to you, contact my

offices as I would be pleased to provide legal/tax support.

Sincerely,

Robert Beatson II; 4-24-2014, 10:30 p.m. EST

Law Offices of Robert Beatson, II

9818 Glynshire Way

Potomac, MD 20854

Email: [email protected]

Website: www.beatsonlaw.com

Licensed to practice law in DC, MD, VA, and NY

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Answered on 4/24/14, 7:33 pm


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