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Answer from our Guest Expert Kent Capener of Capener Consulting

PAGE 5

The Funding Factor

What difference does a C corporation or an S corporation make in funding? It can be a big difference. In short, S-corporations can't be public companies. S-corporations, however, can evolve to C corporations. The reverse isn't allowed generally. Remember the pass through of profits provision of an "S" corporation? Well, losses pass back through too.

It isn't uncommon for a company to start out as an "S" corporation with investors in to seed fund it and take the tax benefits from the losses passed through and stay in as the corporation converts to a C corporation to take advantage of any appreciation.

How do partnerships do in getting equity funding? Okay, once they convert to a corporation they have the same chances as every other corporation.

My Final Answer!

The spirit of your partnership can remain active and viable much easier in a corporate environment. In addition to all the protections you receive as an officer/owner of a corporation, in the case of partnerships, probably the most damaging problem is when one partner becomes liable for the actions of the other financially. It's true you can be logically in a corporation as well, however, your personal assets are protected. In a partnership, you can be like a violation waiting for the health inspector.

I hope this helps you! Please contact me if I can be of further assistance.

Kent Capener of Capener Consulting

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