Relatives and buddies may be a source that is great startup funding. As they are ready to donate the income to your startup, you likely wonвЂ™t desire to spend the present income tax on that amount of cash. Instead, it is possible to either structure it as financing or you can offer them shares of one’s company.
Unless your family and friends are advanced investors, using cash as that loan is typically cleaner than offering them a share of this company for three reasons:
- Undesired company advice: also tiny equity owners might think that they will have the ability to have an important say within the strategy and operations of this company. Continue reading Friends & Family Loan Terms & Skills