S1, Episode 7: Entity Formation

Season One, Episode Seven– An introduction to some of the main forms of for-profit business entities, a comparison of their similarities and differences, and the five main considerations entrepreneurs should keep in mind when choosing an entity.

Episode Description: Edward Kim (Fordham Law ‘19) and Geoffrey Kelly (Fordham Law ‘18) join to discuss considerations for choosing and forming a for-profit business entity. Topics include financing, ownership and operations, personal liability, taxes, and the formation process. Ed and Geoff share a step-by-step example of a new business entity formation to assist entrepreneurs in this process.

Episode Roadmap:

[:31] Edward Kim and Geoffrey Kelly introduce themselves as Fordham Law students under the supervision of Professor Bernice Grant.
[1:45] Main considerations when choosing an entity include financing, ownership and operations, personal liability, taxes, and the formation process.
[2:24] What every new entrepreneur needs to consider regarding how financing impacts choosing a business form.
[6:42] Ownership and operations considerations for an LLC, partnership, and C- and S- Corporation.
[11:25] The main differences and benefits of a Benefit Corporation versus a C- or S-Corporation. Clarification of how Benefit Corporations differ from Certified B-Corps.
[14:43] Ways entrepreneurs can protect themselves from liability, requirements to maintain limited liability protection, and importance of business insurance.
[17:24] Tax requirements and considerations for each entity type.
[20:03] The formation process, associated costs, and which state to form your business in.
[22:08] A step-by-step hypothetical example of a new business entity formation.
[25:36] Key takeaways and considerations for entrepreneurs when faced with a new business entity formation.

Tweetables:

“The key is to prioritize your needs as the entrepreneur and to pick the business type that best suits those needs. Often those considerations can be narrowed down to five things--financing, ownership and operations,…

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“Venture capital funds and angel investors will be much less likely to invest in an LLC or a partnership than a corporation.” -Edward Kim

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“No matter what business type you choose to form, you’re going to have to register it with the state to make it official.” -Geoffrey Kelly

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Mentioned in This Episode:

How to Form a New Business Entity in Delaware

Additional Resources:

Fordham’s Entrepreneurial Law Clinic
Follow us on Twitter @FordhamELC

Sponsors:

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Startup LAWnchpad is a new podcast that helps bridge the gap between entrepreneurs and their legal needs. This podcast is a series of virtual legal workshops that will educate entrepreneurs about legal issues they commonly face as they develop, launch and grow their business.