Category: Incorporation
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The Delaware Franchise Taxes Freak-Out
The New Year. For some, it’s time to reflect on the past and look forward to the future. For others, it’s time to make resolutions to change for the better. But for me, it’s time to respond to client inquiries regarding their apparent 5-figure bill for Delaware franchise taxes due March 1. Here’s how to…
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Accountants Heart LLCs
I’ve never had a client’s accountant recommend any legal form besides the LLC for a new startup. Even though I heart corporations, I still believe the LLC can be an appropriate legal entity for some companies and ventures. But when it comes to a startup looking to (i) raise capital, and/or (ii) issue incentive equity…
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How to Split the Startup Founder Equity Pie
Founders frequently ask me to provide guidance on how their startup should split equity between co-founders. My answer is always: (1) It Depends, and (2) Quickly. (1) IT DEPENDS If you’ve ever hired a lawyer, you will (unfortunately) hear the phrase “it depends” several times. In this situation, the “it depends” hinges on the respective…
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Is Your Startup’s Name Available in Delaware?
Delaware has a pretty sweet Name Availability Search Tool via their Division of Corporations. If your desired entity name isn’t available to reserve, then that name isn’t available for a new corporate entity filing in Delaware. If your startup name is available, you can reserve the name online for $75. Finding out whether you can…
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Don’t Create an “Issuance Pool”
“We want to have 30% of the startup company at exit.” -Anonymous Startup Founders Occasionally, founders will plan out their startup’s lifespan to the point of pre-determining their final equity figure after all hires and investments have been made. Usually, a set of founders want to end up with a final equity percentage in the…
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Startup Docs from TheFunded.com
TheFunded.com has just released a “Complete Set of Founder Friendly Legal Docs” via its website. (Hat tip to @bradleyjoyce at the Fort Worth Startup Blog) The sample startup documents, located at docstoc.com, include: – Bylaws – Certificate of Incorporation – Initial Stockholder Consent – Invention Assignment Agreement – Restricted Stock Purchase Agreement – Indemnification Agreement…
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You Can’t Spell Corporation Without “IP”
I watch “Shark Tank” on ABC. I hope one day they get pre-money and post-money right. A segment on Sunday’s episode did manage to highlight a key point for startups: TRANSFER THE INTELLECTUAL PROPERTY TO YOUR STARTUP COMPANY In the episode, Coverplay Inc., was looking to raise about 350k from the show’s angel investors. A…
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What is a Registered Agent?
A registered agent is someone, either a company or an individual, that a corporation appoints to receive service of process and other official notices such as state franchise tax notices. Service of process is how a third party gives your company notice of a pending legal matter, which allows your company to respond accordingly. A…
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The 83(b) Election For Startup Founders
If founders stock is issued subject to a vesting period, each founder should make a Section 83(b) election with the IRS within 30 days of purchasing the restricted stock. If a founder fails to make a 83(b) election, each vesting milestone will be a taxable event for the founder. “Income” will be calculated as the…
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The Funded Founder Institute Posts “Class F” Startup Documents
I got a tip from @Pietari that another set of startup documents were released today. The Funded Founder Institute just released a very founder-favorable set of startup documents centered around “Class F Common Stock.” The Class F Common offers founders various protective provisions such as: -2 to 1 Board votes per founder relative to non-founder…