Forming a Company

Where can I find Delaware corporate formation documents? I’m launching a startup where I plan to get venture funding.

QUESTION:

I’m launching a startup where I plan to get venture funding.   Where can I find Delaware corporate formation documents?  I’m looking for angel & VC funding, so I want something that would be acceptable to both.

ANSWER:

Below is a link to the formation documents for a Delaware Corporation provided by Orrick.  You need to check with your counsel to make sure these work with your company.

Go see Corporate Formation Docs

Incorporation Questionnaire

LLC vs. S Corp — Incorporating Your Startup

Which entity is best for a start-up?

First, let’s define each type of entity and how they can be formed.  Then we will discuss which is best.

An LLC (Limited Liability Company) is a hybrid of a partnership and Corporation.  Instead of “Shareholders”, owners are referred to as “Members”.  In a corporation there are officers that run the company, such as President, Treasurer, Secretary.  With an LLC there are no officers, instead they are referred to as “Managers”.

Starting Your Own Business

by Martin Vivek

Starting your own business is exciting. Putting your dream in action, ideas down on paper and out for the world to see can be challenging. Becoming an entrepreneur can hold some difficulties. You must be prepared for hard work, planning every aspect of the business and how it will become profitable, meticulous organization, and strong dedication.

Best Advice on Starting a Business

Best Advice on Starting a Business – Entrepreneurs from The Lean StartupConference relay the best advice others gave them when they first set out to start a business.

This video and article was produced by David Spark, who was reporting for the New Relic Blog (http://blog.newrelic.com) at The Lean Startup Conference in San Francisco.

Are there any laws I need to follow when issuing stock to founders in different states?

Naomi Kokubo

Naomi Kokubo

Question: One of our founders asked us, “We’re starting the company with founders residing in more than one state.  Are there any laws that we should be aware of?”

Answer by Naomi Kokubo, Editor of Founders Space

I’m a big fan of Startup Law 101 series:  http://www.grellas.com/faq_business_startup.html

You need to look at the securities law surrounding the founder’s stock purchase and what is known as “blue sky” laws:

http://www.grellas.com/faq_business_startup_012.html

Don’t Have an Idea for Your Startup? Try This…

Are you having trouble coming up with a great idea for your startup?   Well, try these four sites, and you’ll get a good laugh.  You may even recognize some of the ideas!

Now That’s What I Call Startups

Startup Idea Generator

It’s This For That

What are the advantages & disadvantages of incorporating in Delaware?

Naomi Kokubo

Naomi Kokubo

Question: What are the advantages and disadvantages of incorporating in Delaware?  I hear it’s important for an IPO, but if we don’t plan on going public anytime soon, should I bother to incorporate in Delaware?

Answer by Naomi Kokubo, Editor of Founders Space

That’s a really good question.  We did some research and we found an interesting article on the advantages and disadvantages of incorporating in Delaware.

What’s the best way to bring on a partner?

Ethan Stone

Ethan Stone

by Ethan Stone, Stone Business Law

First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish an lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site.

Perfecting Your Investor Pitch

Bill Reichert

Bill Reichert

by Bill Reichert at Garage Technology Ventures

Endless articles, books, and blogs have been written on the topic of business plan presentations and pitching to investors. In spite of this wealth of advice, almost every entrepreneur gets it wrong. Why? Because most guides to pitching your company miss the central point: The purpose of your pitch is to sell, not to teach. Your job is to excite, not to educate.

Where can I find a stock plan & equity compensation documents?

Dan Walter

Dan Walter

Below is a link to the Equity Compensation Documents provided by Orrick.  These are a good starting point, but we still highly recommend that you speak with your attorney and go over these documents together.

Go see Equity Compensation Docs

Stock Plan

Many companies use employee stock options to compensate, retain, and attract employees. The Stock Plan is the general governing document containing the standard terms and conditions of the options to be granted. This document represents the standard provisions for a Silicon Valley start-up company.

Is an LLC or a Corporation better when starting a new services business?

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Editor of Founders Space

I found a couple of interesting articles that might help answer this question.  One from Wikipedia on S Corporation, and here’s an excerpt:

S-corporations pay a franchise tax of 1.5% of net income in the state of California (minimum $800). This is one factor to be taken into consideration when choosing between a limited liability company and an S-corporation in California. On highly profitable enterprises, the LLC franchise tax fees, which are based on gross revenues (minimum $800), may be lower than the 1.5% net income tax. Conversely, on high gross revenue, low profit-margin businesses, the LLC franchise tax fees may exceed the S corp net income tax.

What are the tax implications in California between an LLC and a Corporation?

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Editor of Founders Space

It’s probably best to understand the difference between LLC, S Corporation and C Corporation first before we can sort out the tax implications between LLC and Corporation.

There are two legal business entities that relate to this question.  One is LLC (limited liability company) and the other is C Corporation (traditional corporation).  S Corporation is an election by limited liability companies or traditional corporations to be taxed as such.  In other words, both limited liability companies and traditional corporations can choose to be taxed as S Corporation.

Startup Company Forms

Richard Hsu

Richard Hsu

by Richard Hsu at One Page Blog

My former Venture Law Group colleague and Harvard Law School graduate, Jeff Thomas, has been teaching entrepreneurship courses in various law and business programs. He formed his own company CrazyBrains LLC with the goal of helping entrepreneurs by open sourcing startup corporate forms. Here is his nicely put together one-pager.

Click here for downloadable PDF: Startup Company Forms

Click here to read more from Richard Hsu.

How do I set up a virtual company in Vermont?

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Editor of Founders Space

Okay, this is a great question and very intriguing. I did some research, and here’s what I found:

This site walks you through the basics of Vermont Virtual Companies:
http://vermontvirtual.org/Main_Page

Is a ‘Virtual Company’ Worth the Effort?
http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202448133306

Here’s a book the covers Virtual Company Formation:
http://bit.ly/bkt6De

How does an Indian citizen and resident form a company in the U.S.?

Ethan Stone

Ethan Stone

by Ethan Stone, Stone Business Law

QUESTION:

I am currently a citizen of India, and I live in in India.  However, I’d like to incorporate my new startup in US.  How do I go about this?

ANSWER:

First, a quick but important clarification: I’m not your lawyer and this answer doesn’t establish a lawyer-client relationship. I’m giving a generic answer to a generic question to educate the users of this site. The information below is general in nature and should not be understood as a substitute for personal legal advice.

How much equity should I grant to a crucial programmer?

QUESTION:

I’m starting a Web service with two partners. I am Partner A and bring x to the table. Partner B brings y to the table. (The nature of x and y aren’t important for purposes of this question.) Partner C is our tech person and programmer. He’s an invaluable resource — years in the industry, past CTO of a successful internet company, etc. We’re lucky to have him aboard.

Does it make sense to set up an LLC or S-Corp for my startup?

QUESTION:

I would like to incorporate a value-added engineering software reseller business. It would be a Pennsylvania based company of about 15-25 employees working out of their home offices (no corporate office). The business involves sales representatives and technical employees delivering on-site training, demonstrations, and technical support.  Would it make more sense to set up an LLC or an S-Corp?

ANSWER:

Antone Johnson

Antone Johnson

by Antone Johnson at Bottom Line Law Group

Does my startup need to be incorporated for the terms of service to hold up?

QUESTION:

If I am launching a social networking site, do I need to incorporate it in order for the terms of service, terms & conditions, privacy policy and all that stuff to hold up?

ANSWER:

Antone Johnson

Antone Johnson

by Antone Johnson at Bottom Line Law Group

Should I form a separate company around each of my websites?

QUESTION:

I want to start a network of websites all with similar names and themes to sell certain merchandise.  Should I have one C-corp with all of the websites registered under it and individually trademark the sites? Or should I register each website as a different entity, even though it will be far more tedious?  As far as exits go, how will I be affected if I want to sell one of the sites, but not all?

ANSWER:

Do I need an attorney to incorporate?

QUESTION:

I will be incorporating my company in Los Angeles, CA and was interested in knowing if I would need a licensed attorney to represent my company before I submit.

ANSWER:

Naomi Kokubo

Naomi Kokubo

by Naomi Kokubo, Cofounder of Founders Space

Legally, you don’t need an attorney to incorporate, but unless you’ve done it many times before, it’s a good idea.  You may want to have an attorney look over your documentation and make sure you are choosing the right entity for your business.