Thanks, I stand corrected on your prior participations. Proprietor was too narrow a term, and better that I had said that it represents an example of the larger case where outside participation is simple, or non-existent.
These are the relevant quotations. If one has simple capital structure and do not desire to structure non-cash employee incentives, and have no need for new rounds of investors who might make new structural demands that conflict with prior agreements of LLC present member/owners, then the LLC is good enough.
Quotations:
6 – Equity Compensation - Equity compensation in entities taxed as partnerships is much more difficult, complex and expensive to draft and administer than equity compensation in a C or S Corporation. For example, to grant profits interests in an LLC, it is typically necessary or advisable to “book up” the capital accounts of the owners prior to granting the profits interests, and this must happen at each award. If there are successive rounds of equity grants each year, these books-ups can become very expensive and time consuming. This same complication occurs with options or warrants to acquire LLC interests.
7 – Raising Capital - Raising additional capital through an LLC is much more difficult than raising a next round through a corporation. LLC agreements are more difficult and complex to prepare than their corporate counterparts. In addition, you can hit upon sticky and highly complex tax issues in the LLC context that just don’t exist or arise in the corporate context.
