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Stock Purchase vs. Asset Purchase
A stock purchase occurs when the buyer acquires shares of the target company directly from its shareholders. This gives the buyer ownership and control of the entire company, including its assets, liabilities, and contracts. Because the legal entity itself does not change, most contracts, licenses, and permits remain intact, allowing business operations to continue without disruption.
Licensing Agreements for Startups: How to Protect, Monetize, and Scale Your IP
If your startup is built on software, content, data, or inventions, you likely need a Licensing Agreement. Whether you’re giving others the right to use your IP or licensing third-party tech for your own product, a well-drafted agreement is the key to protecting your rights and unlocking revenue.
FAQs
Open allWill corporate conversion affect existing contracts and tax IDs?
If done correctly, conversion preserves continuity, meaning contracts, tax IDs, and operating history typically remain intact.
Why do startups convert from LLC to C-Corp?
This is common when raising venture capital, preparing for an IPO, or offering equity compensation, since investors typically require the C-Corp structure.
What is corporate conversion?
Corporate conversion is the legal process of changing your business from one entity type to another, such as from an LLC to a C-Corporation, without dissolving and starting over.
What happens if I fail to qualify in a state?
You may face fines, be barred from bringing lawsuits in that state, and raise red flags with investors during due diligence.
How does the Wayfair decision affect startups?
It allows states to require sales tax collection from businesses with no physical presence, if sales exceed state-specific thresholds.
Do remote employees trigger foreign qualification?
Yes. Even one employee working from another state may create a tax or registration obligation in that state.
What does “foreign qualification” mean for a startup?
It means registering your company to legally operate in a state other than your state of incorporation.
How long does it take to get an EIN?
Online applications are processed immediately. If you file by mail, it may take up to four weeks.
Can I apply for an EIN before incorporation?
You should incorporate first. The IRS requires your legal entity details from your incorporation certificate to process your EIN application.
What happens if we skip some of these documents?
Failing to complete essential post-incorporation documents can create legal disputes, ownership confusion, and tax complications. It may also discourage investors who expect proper documentation to be in place.
Do all employees need to sign a CIIAA?
Yes. Employees, contractors, and consultants who contribute to product development or intellectual property should sign a CIIAA to ensure the company owns all IP rights.
Why is the 83(b) election so important for startup founders?
The 83(b) election allows founders to pay taxes on stock at the time of grant, which can save significant money if the company’s valuation increases in the future.
What is the most important document after incorporating a C-Corp?
Bylaws are critical because they establish how the corporation is governed and how decisions are made. However, other documents like stock purchase agreements and the 83(b) election are equally important for founder protection.
Do I need a registered agent in every state I operate?
Yes. If your startup is registered to do business in multiple states, you must appoint a registered agent in each jurisdiction.