Family and friends are a source that is great startup funding. You likely wonвЂ™t want to pay the gift tax on that amount of money while they may be willing to donate the money to your startup. Alternatively, it is possible to design it either as that loan or you can offer them stocks of your business.
Unless your family and friends are advanced investors, using cash as that loan is normally cleaner than offering them a share of this company for three reasons:
- Undesirable company advice: also tiny equity owners might believe they will have the straight to have a significant say within the strategy and operations associated with the company. Continue reading