I am planning on starting a business with some angel investors. If I am taking angel capital, but do not plan to raise any additional money (until sale / exit), is it still recommended to go the c-corp route? How would angel investors react to a pass-thru taxation entity?

Thank you!

  • YourAverageExecutive@alien.topBEnglish
    1·
    10 months ago

    I’ve built and scaled SaaS ventures from seed to liquidity (with vc/pe capital).

    I’d suggest a c/s corp for future tax savings. Depends on stock issuance timelines and when you plan on liquidity. Section 1202 allows for some small business stock to exclude cap gains from federal tax. HUGE SAVINGS if applicable. You can’t just “fix” your equity at a sale event either to qualify.

    For example, it saved me millions in taxes on recent venture when we had liquidity.

    https://www.investopedia.com/terms/s/section-1202.asp

    • ShillForExxonMobil@alien.topOPBEnglish
      1·
      10 months ago

      That’s very interesting. When you say service companies - how would healthcare services be considered? The business I’m interested in is medical spas - they provide injectables / botox, as well as laser treatments.