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ROFR and Co-Sale Agreement: Managing Share Transfers While Preserving Cap Table Control
In venture-backed startups, control of the cap table is critical. The Right of First Refusal and Co-Sale Agreement (ROFR/Co-Sale) helps founders and investors maintain that control by regulating how shares are transferred - particularly when founders, early employees, or other major holders want to sell.
Voting Agreement: Aligning Shareholder Power in Key Company Decisions
While founders often assume they’ll control their company post-funding, the Voting Agreement tells a more nuanced story. This document outlines how shareholders agree to vote their shares on critical company matters, including board elections and future financing approvals.
FAQs
Open allHow are taxes filed for a Multi-Member LLC?
Multi-Member LLCs must file IRS Form 1065 (partnership tax return) and provide Schedule K-1 forms to each member. Each member then reports profits or losses on their personal tax return.
Do I need an operating agreement for a Multi-Member LLC?
Yes. Even if your state does not legally require it, a written operating agreement is essential for outlining ownership, voting rights, profit distribution, and dispute resolution.
What is the difference between a Single-Member LLC and a Multi-Member LLC?
A Single-Member LLC has only one owner and is taxed as a disregarded entity by default, while a Multi-Member LLC has two or more owners and is taxed as a partnership unless corporate tax treatment is elected.
Can a Single Member LLC be converted to an S Corp?
Yes. You can elect S Corporation status for tax purposes by filing Form 2553 with the IRS.
Can I pay myself a salary from my Single Member LLC?
As an SMLLC taxed as a disregarded entity, you generally take owner’s draws instead of a salary. If you elect corporate tax treatment, you can pay yourself a salary.
Do I need an Operating Agreement for a Single Member LLC?
It’s not always required, but it’s strongly recommended to show business formalities and strengthen liability protection.
Is a Single Member LLC the same as a sole proprietorship?
No. While both are owned by one person, an SMLLC offers limited liability protection, unlike a sole proprietorship.
What is the difference between a PBC and a traditional C-Corp?
A PBC operates like a C-Corp but has a legal obligation to consider social and environmental impact alongside shareholder returns.
Can I convert my LLC to a C-Corp later?
Yes. Many startups begin as LLCs for simplicity and later convert to C-Corps to raise capital. However, conversions carry legal and tax implications. It’s usually easier and cheaper to start as a C-Corp if you know you’ll need it, but conversion is always an option.
What is the most flexible business structure for a small startup?
An LLC is often the most flexible option for early-stage businesses, offering pass-through taxation and fewer compliance requirements.
How much does @VC Monthly Subscription cost?
Our Subscription Tiers range from $1,000 to $10,000/mo depending on your company's size, needs, stage, etc. Click here to compare all our Subscription Tiers.
How do I know which subscription level to choose?
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How does @VC Monthly Subscription work?
@VC Monthly Subscriptions include a defined set of deliverables specified under your selected Subscription Tier, which constitutes the Scope of Work, with the following key terms:
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- Contract Redline / Negotiation: Limited per month based on your selected Subscription Tier, up to 20 pages per contract (e.g., a 21-40 page contract redline counts as two (2) contract redlines). Out-of-scope monthly contract redlines are eligible for a 20% discount. Unused monthly contract redlines do not rollover. Contract redlines apply to all contracts, whether we drafted or a third party drafted.
What level of contact will I have with my attorney if I’m a @VirtualCounsel subscriber?
You have on-demand access to your attorney POC and the entire team via scheduled phone/video consultations, email, and Slack messages.
How does the subscription cost stack up against hourly?
On average our clients pay about half of the cost if they were paying by the hour. We know, it’s a bit hard to believe, but what happens in our relationships with clients is that - since you’re not being charged for every email and every minute on the phone, you end up communicating with us way more - that’s the point!