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Incorporation

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 different than vesting as it relates to...

What 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: Delaware requires at least a President and...

Why 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 State of Delaware.  All active corporations...

When 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, let's say that you are sold and issued 1,000,000 shares...

Stock 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 Issued Address of Stockholder Date the...

State 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 filing is required to obtain an exemption...

What 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' stock to make sure they stick around and work to...

What 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 and as may be necessary to enable it to sign...

C-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 into the company is only taxed on the...

What 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 more developed and, therefore, if an issue...

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.