Fortunately for Black Cat, the switch from sole proprietorship to S-corporation status was a relatively simple one. Business owners face the biggest risks when they try to change a company from a C corporation into a limited-liability company. The LLC is a relatively new form of corporate structure that has gained popularity and acceptance by almost all states in the past 10 years. My real goal was to create a broader base of financing for the company, which I'm convinced is easier with C-corp structure. Indeed, the biggest advantage to C-corporation status is the way it facilitates financing deals, especially those involving major equity infusions.
S corps are completely unsuitable for a public offering.
And although it's not impossible to carry one out with an LLC, these deals have happened so seldom that investors are wary of them. But with the right structure and financing now in place, I'm in great shape to do what I want to do, which is go after new market opportunities. Jill Andresky Fraser is Inc. 's finance editor. The Company Corporation. All rights reserved.