Category: Incorporation & Formation
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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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Don’t Oversmart Your Startup’s Business Plan
A couple of weeks ago, I retweeted a Brad Feld post titled “Startup Cost Projections for First-Time Entrepreneurs.” The passage that interested me the most was: The biggest mistake first time entrepreneurs make is that they fall prey to the idea that they need to put together a five year P&L forecast and cash flow…
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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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7 Legal Documents for Your Tech Startup
When launching a startup, you want to make and keep your startup as valuable as possible. But in order to do that, your tech startup needs to ensure that (a) the intellectual property is owned by the startup, and (b) the co-founders who own the startup have proper incentives and rules to handle inevitable contingencies.…
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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…