Elgin, IL asked in Business Formation for Illinois

Q: If I plan to issue stock in my company, should I form as a corporation or something else?

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2 Lawyer Answers

A: The issuance of "stock" implies for lawyers a "C corp." or "Subchapter S" corporation. Alternatives like an LLC entity allow sale of ownership interests that are not technically stock or shares but perform the same legal function. You should consult a business formation lawyer to consider the options — which relate more to tax consequences than the legal technicalities of corporate-entity classification.

Mazyar M. Hedayat
Mazyar M. Hedayat
  • Romeoville, IL
  • Licensed in Illinois

A: You wish to issue stock in (i.e. shares of) an enterprise.

While this may be accomplished via a corporate format, it is also possible via a limited liability company (LLC), limited partnership (LP) and, in some states, the limited liability partnership (LLP). Ultimately, your choice will depend on how many shares you with to issue, why you wish to issue shares (i.e. to raise capital, to distribute control, etc.), and how loosely or closely you wish to control the entity. A corporation is the most paper and time intensive format, with the LLC generally being the least paperwork intensive.

I hope this information was helpful. Best of luck.

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