Dear Fellow Forum members,
I need help in structuring my business.
I am raising money from private investors (friends) to invest in real estate in overseas (Land Development). Right now I am writing a promissory note and also giving a post dated check, sort of like a hand loan but I am writing in the note about terms and returns,I am going to return the principle and interest in USA. so far I have raised around 60k , pretty soon I need to start a corporation or LLC to do things in the right way. I need suggestions on how to structure the business.
Business model is … raise money in usa , invest in land in oversees and pay the investors in USA.
I am sure I missed a lot of details, please ask questions.
Thanks in advance for your help.
Best Regards
Pawan
Hi,
Are you in the USA today? Stop everything your doing and hopefully you have not taken any money yet even though you have commitments?
In the US you can have up to 10 people invest in a single project or long term entity without it being considered a securities deal? So 10 people get together, decide there corporate entity, create an operating agreement and elect a manager for an LLC or create an executive management team for a corporation. Then transfer capital as agreed for each person in the agreed amount!
If you create a entity in advance you can get 10 total investors but that’s it, otherwise it’s a securities offering!
Now as a securities offering it generally falls under the SEC Securities Exchange Commission Regulation D 504, 505 or 506b or c offer! 504 is the only offer that can be made to any investor but to only raise $1m dollars or less, a 505 offer can have up to 35 investors who meet reasonable sophistication standards and an unlimited number of accredited investors to raise up to $5m dollars or less, and a 506b or c offer can raise an unlimited amount of capital from accredited investors only the difference being a 506b offer can not advertise to get investors while a 506c offer can tombstone advertise.
Your talking about taking money from investors in the US and investing overseas so you will have to create a corporation say in France owned by your US entity. You can not just buy overseas willy nilly without protecting investors liabilities and managing tax and regulatory issues. You may find with a few hundred thousand dollars your regulatory requirements and international taxes before US make investing financially unfeasible at that small scale.
You might be better off raising capital overseas for a land investment because of double taxation.
GR
Hi Gold River,
Great explanation.Thanks for sharing the information.
Hi Gold River,
Good and well-written explanation. The business structure is the basic concept to establish a business.
Thanks for sharing the information!!