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Choose a Business Entity > Partnership - Pg. 32

First Steps Note 32 NOTE Venture and investmentfunds will generally not investin an LLC due to tax implications for their investors. Taxation The LLC is a pass-through entity. Corporate investors may be attracted to the form because LLCs allow for custom allocation of profits and losses to members. An LLC can also be incorporated, sometimes tax-free, at any time, making it a sound initial-stage entity form. A frequent strategy is for a company to organize as an LLC initially if it expects to generate losses. After those losses have been allocated to early investors, the company can incorporate if necessary. Liability