Can shares be both Class B and Preferred at the same time?

FrunobulaxFrunobulax New Englandsubscriber Posts: 1 Member

Hi, I'm a "wantrepreneur" who has finally gotten together enough cash to take the first few steps. I am getting my business plan together and thinking about investors. I want to start by with incorporating so I can open a business bank account, put the money in it, etc. After looking at my needs and goals, I'm thinking an S-corp would probably be best for me. But I have questions.

Obviously I have the same desires all entrepreneurs have - maintain control of the business I put my blood, sweat, and tears into, be attractive to investors, and make a lot of money. IN THAT ORDER. I've read/heard from several sources that when it comes to "making lots of money" and "having control", people say that in general the more you have of one, the less you have of the other. And that's OK with me. Given a choice between control and money, I'd rather have more control and less money. I need investment, but I want to have control of major decisions and not worry about investors trying to mess with business strategy/direction etc.

Therefore, I'm investigating having different classes of stock so that I have more voting rights but investors are still attracted. In my research, I've come across Class A and Class B shares, of course, and also Preferred stock. Since I want control, I understand that investors might be nervous getting class B. And as I understand Preferred stock, if everything comes crashing down and the business fails, owners of Preferred shares get their money out before holders of common stock. I don't mind offering that to investors. I want to be able to say that if things go south they get paid first.

So I'm asking how to accomplish this. Can a share be BOTH Class B (fewer votes) AND Preferred at the same time? What's the best way to maintain control and still be attractive to investors?

Note: this is a sort of service/retail SMB which won't really have inventory.

Advice appreciated! Thanks.

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