How many directors do I need for the Board of Directors?
For Delaware startups, only one director is required, but you can have as many as you want.
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Why am I paying for all the founder shares issued to me if my common stock is not vesting for 12 months?
As a founder and stockholder, you are paying for all the shares because you will own all 6,000,000 shares. The concept of vesting can be confusing to a lot of founders because vesting as it relates to founder shares is...
Read MoreWhat is the Board Consent in Lieu of First Meeting?
The Board Consent in Lieu of First Meeting is the first document that gets the business of the startup going. Here are a few of the most common resolutions adopted by the newly appointed board: Appoints the officers NOTE:...
Read MoreWhy is my Delaware franchise tax bill so high and how is it calculated?
As a technology startup incorporated in Delaware, you will receive a tax bill from the State of Delaware. It isn’t necessarily tied to income, but it is a tax you need to pay because the company’s place of origin is in the...
Read MoreWhen do I need to file the 83(b) election?
You should file an 83(b) election when you are issued shares with vesting (which is the standard). If you don’t file the 83(b) election, the IRS will consider each vesting milestone a taxable event. For example,...
Read MoreStock Ledger : What Should It Look Like (in its simplest form)?
A simple stock ledger should be created for each startup. This ledger contains the list of stockholders in the company along with: Stock Certificate Number Type of Stock Name of Stockholder Number of Shares Date the Shares Were...
Read MoreState securities filing requirements…It’s important!
Each time the startup issues shares, you need to consider (or ask your attorney to consider) conducting a state securities analysis. The securities analysis will involve reviewing the state securities laws to determine if a...
Read MoreWhat is vesting for founders’ shares?
The standard for startups is to put vesting on the shares issued to the founders. Our recommendation is to put vesting on the shares. Here’s what you need to understand: The Principle: Vesting is placed on founders’...
Read MoreWhat officers should I have for my Delaware corporation?
“Every corporation organized under this chapter shall have such officers with such titles and duties as shall be stated in the bylaws or in a resolution of the board of directors which is not inconsistent with the bylaws...
Read MoreC-corporation versus S-corporation
The difference between a C-corporation and an S-corporation is merely a tax distinction. They are both the same legal entity — a corporation. An S-corp (like an LLC) allows for pass-through taxation. Each dollar that comes...
Read MoreWhat state should I incorporate in?
Almost all our startups are incorporated in Delaware. The standard for startups is to incorporate in Delaware for a few reasons: The corporate laws in DE are generally more company favorable. The case law in Delaware is much...
Read MoreWhat is the Action by Sole Incorporator?
After the Certificate of Incorporation and Bylaws, the next step in the formation of your technology startup involves getting all the players situated. There are two documents to get this done: Action by Sole Incorporator...
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