Category: Incorporation
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Why LegalZoom Fails Startups
Thinking of saving some cash and using LegalZoom to incorporate your startup? Think again. While incorporating with LegalZoom is a viable option for some new businesses, LegalZoom comes up way short for startups. LegalZoom just doesn’t offer the documents a typical startup needs: Shareholders Agreement? Nope. Stock Purchase Agreements? No. Tech transfer agreements? Nada. What…
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Delaware is Suffering: Will Incorporation Fees Increase?
I’ve blogged before about the benefits of incorporating in Delaware. Thus, I was somewhat shocked to see the Deal Journal blog about how Delaware is becoming another victim of the credit crunch. I never thought about how much revenue Delaware receives from its Division of Corporations, but the article contained this statistic: Delaware’s Division of…
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Skip the LLC
“My startup will start out as an LLC and then change to a corporation when/if…” This quote, or similar derivation, is a common fact pattern I hear from new clients or general inquiries. I think most entrepreneurs are attracted to the LLC because they hear it is “simple” or “easily-managed” or “flexible.” Sure, LLCs are…
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Par Value for a Startup Company’s Stock
Par value is the minimum price that a corporation can issue its shares. In the US, par value was created during the time of the great depression in order to ensure a shares could not be sold under a certain price. Today, that concept is somewhat archaic, but it still plays an important role and…
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How Many Shares of Authorized Stock Should a Startup Company have at Incorporation?
An often overlooked aspect of filing a certificate of incorporation is determining how many shares of authorized stock should the new corporation authorize at incorporation. This decision doesn’t really matter to most businesses (I don’t have a clue how many shares I authorized when I incorporated my law firm), but startup companies aren’t like most…
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A Primer on LLCs
The limited liability company (LLC) is a relatively new legal entity which got its start in the late 1980s. As the name implies, an LLC provides limited liability to its participants called “members” while containing the assets and operations of the business enterprise. Please keep in mind that LLCs are regulated at the state level,…
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How to Incorporate Your Sole Proprietorship
Many entrepreneurs begin their startup as a sole proprietorship. Eventually, some sole proprietors desire to incorporate so they can reduce their personal liability and protect their personal assets. But the act of incorporating a going business does not, by itself, transfer the current business being conducted as a sole proprietorship to the new corporation. The…
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Why Your Startup’s Founders Stock Should Vest Over Time
How to vest your startup company’s founders stock over time to prepare for an exiting founder
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Series FF Stock: How Some Founders Get Liquid at Funding
How Series FF Stock Provides Startup Company Founders with Cash at Funding
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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…