Author: Ryan Roberts
-
Funding Your Buy-Sell Agreement For All Scenarios
Before you execute a buy-sell agreement, make sure that you have adequately funded it. To adequately fund your buy-sell agreement, take each event that would trigger your buy-sell agreement (death, disability, retirement, etc.) and ask yourself “If this event happened tomorrow, would there be enough available funds to purchase the shares?” The most common mistake…
-
6 Traps To Avoid When Raising Capital
Brad Sugars of Action International has published an article titled “6 Biggest Mistakes in Raising Startup Capital.” In the article, Brad lists the following as the 6 biggest mistakes you can make when raising capital for your startup: 1. Half-baked business plans 2. Focusing too much on the idea and too little on the management…
-
Getting Subpoenaed Does Not Make You a Target–Just Be Sure to Tell the Truth
As a former Securities and Exchange Commission legal clerk and a current Apple fanatic, the following story is of high interest: Steve Jobs subpoenaed in backdating case September 20 2007: 5:27 PM EDT SAN JOSE, Calif. (AP) — Apple CEO Steve Jobs has been subpoenaed by the Securities and Exchange Commission to give a deposition…
-
How to Make Sure Your Startup Company Will Fail
1. Don’t form an LLC or incorporate. Make sure you and your partner have all the personal liability legally possible. 2. Don’t have any difficult conversations with your partner. Leave important global issues with your partner unaddressed so that you can fight over them later when you have less time and more stress. 3. Agree…
-
Why Giving Your Employees Phantom Stock Can Boost Your Company
The problem of motivating and retaining key employees without giving away your company’s equity can be solved by the use of a phantom stock plan. Many company owners are hesitant to provide key employees with an actual company ownership interest. Such an ownership interest would likely entitle key employees to notice, inspection, and voting rights.…
-
Why Customizing Your Startup Documents to Your Industry is a Mistake
You need to customize your articles of incorporation and corporate bylaws if you are serious about doing things the right way at your startup company. But be careful how you customize these important startup documents. Don’t fall into a common trap where you think you are customizing your startup documents, but in reality, you are…
-
The Benefits of NOT Raising Money
Some startup company founders are determined to raise cash from day one. Of course, some startup companies will only experience day one if they raise capital and thus have no choice but to put their best foot forward with investors. Other startup founders rank raising cash somewhere between death and disability on their personal wish-list.…
-
Why Your Startup Company Needs to Keep the Number of its Investors Low
If you can’t self-fund your startup company and must take on investors, keep the number of your investors as low as possible. A low number of investors will reduce your startup company’s transaction costs and headaches associated with raising funds. I’d rather my client raise $90k from one investor than $100k collectively from ten based…
-
Why Good Communication with Your Partner is Essential from the Start
Today I’ll get right to it: You need to have good communication with your partner from the start or else you’ll fumble your initial corporate documents. For example, if a multiple-owner corporation’s bylaws are less than 7 pages, that tells me the corporation’s co-founders did not have enough discussion about how their corporation should be…
-
How to Make a Late Election for S-Corporation Status
Filing for S-corporation status with the IRS requires compliance with strict time guidelines. Form 2553 must be filed by the 15th day of the third month after your corporation’s fiscal year. For most corporations, that means you must file by March 15 for the S-Corporation election to be effective for the current fiscal year. If…