Startup Finances [Interview]

The process of going from idea to start-up business to big enough for an IPO (initial public offering) is filled with adventures.

When starting up, you should look at what kind of entity are you looking to create.

Many people choose between staying as a sole proprietor and incorporation. There are different options in incorporation, most commonly, creating an LLC, S-corporation and C-corporation. Entrepreneurs need to make a very important decision on what they expect for the work involved in the operation of a business and the paperwork involved.

The largest differences between being a sole proprietor, LLC (limited liability company), S-corporation, and C-corporation can be seen in the way they are taxed, liabilities incurred, and how they raise capital. By incorporating your company, you create separate entities between your personal property and your business's assets. Incorporating your business may be a great idea especially if you have many assets to protect.

Larger businesses may be funded by venture capitalists, usually in amounts upwards of 1 million dollars. Smaller businesses, on the other hand, usually get funding from more personal connections such as friends, family and angel investors.

Press play to learn more about start-up finances with Tom Tauli, business finance adviser, and writer for Forbes and BusinessWeek.

 

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