• ISOs (Incentive Stock Options): Employees only, potential tax advantages, subject to holding rules and limits.
• NSOs (Non-Qualified Stock Options): Broader eligibility (contractors, advisors, board members), taxed as ordinary income at exercise. Both give the right to buy stock at a set price, but their tax treatment differs significantly.

Both give the right to buy stock at a set price, but their tax treatment differs significantly.

You retain only the shares that are vested at the time of departure. Unvested shares are usually repurchased or forfeited by the company. If you hold stock options, you may need to exercise them within a set window (often 90 days). Some companies extend this window, but it must be negotiated.

Yes, but in small amounts. Typical advisor grants range from 0.1% to 0.5%, usually subject to a vesting schedule of one to two years. Be cautious about over-granting equity to advisors - their contributions are rarely equivalent to those of full-time employees.

Early employees typically receive between 0.25% and 2% depending on their role, experience, and timing. Senior executives may receive more, while junior hires may receive less. Always tie grants to role benchmarks and company stage rather than giving away arbitrary percentages.

There’s no single formula. Many accelerators recommend equal splits to avoid resentment, since the majority of value creation lies ahead. Others prefer contribution-based allocations that reflect past input. What matters most is alignment and trust - and making sure all founder equity vests over time.

A board advisor provides strategic or industry expertise but does not carry legal authority. General counsel, by contrast, ensures compliance, manages legal risks, and protects the company from liability. Both roles are valuable, but they serve different purposes.

Most startups rely on outside counsel in the early stages. Hiring a full-time GC typically makes sense once the company has raised a significant round (Series B or later), has 50+ employees, or is managing complex contracts and regulatory issues. Until then, fractional or outside GCs can provide cost-effective support.

Yes. Recordkeeping is critical. You should maintain bylaws or operating agreements, stock records, board meeting minutes, financial statements, and compliance filings. These documents protect your liability shield and will be scrutinized by investors, lenders, or acquirers.

You can convert your company from one entity type to another (for example, from LLC to C-Corp), but the process may have tax and legal consequences. Conversions are common as businesses grow, but they require careful planning and professional guidance.

An 83(b) election is a filing with the IRS that allows you to pay taxes on stock at the time it is granted rather than as it vests. For founders, filing an 83(b) locks in a low tax basis early, potentially saving thousands in future taxes. Missing the 30-day filing deadline can create serious tax consequences.

You are not legally required to hire a lawyer to incorporate, and many states allow you to file online. However, legal guidance is highly recommended, especially if you have multiple founders, plan to raise capital, or need to issue equity. Mistakes at this stage can be costly to fix later.

Yes. Your entity type determines how your business is taxed. LLCs and S-Corps typically use pass-through taxation, where income flows to your personal return. C-Corps pay taxes at the corporate level, and shareholders are taxed again on dividends. Each structure has pros and cons depending on your income, growth goals, and fundraising plans.

At a minimum, you’ll need:

• Articles of Incorporation (or Certificate of Formation)
  
• Bylaws (corporation) or Operating Agreement (LLC)
  
• Board resolutions and organizational meeting minutes
  
• Restricted stock purchase agreements and vesting schedules
  
• 83(b) elections for founders receiving restricted stock
  
• Intellectual property assignment agreements
• Annual compliance filings and reports

Most states process incorporation filings within a few business days. In some cases, you can pay for expedited service and receive approval within 24 hours. Applying for an EIN online usually takes less than 10 minutes.

Without incorporation, you are personally liable for all debts, contracts, and lawsuits related to the business. You also lack formal ownership agreements, making disputes with partners more likely. Banks and investors are unlikely to take your business seriously without a formal entity.

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.

Yes. Accepting investments before incorporation can create serious legal and tax problems. Incorporation ensures you can issue equity properly, protect personal assets, and provide investors with legitimate ownership records.

Yes. Accepting investments before incorporation can create serious legal and tax problems. Incorporation ensures you can issue equity properly, protect personal assets, and provide investors with legitimate ownership records.

C-Corps allow multiple classes of stock, an unlimited number of shareholders, and provide a clear framework for equity compensation. Venture capitalists are familiar with Delaware C-Corp law, which gives them confidence that governance and shareholder rights will be handled consistently.

It depends on your goals. If you are self-funded and want flexibility with minimal compliance, an LLC is often the best choice. If you plan to raise venture capital or scale nationally, a Delaware C-Corporation is the standard. For mission-driven ventures, a Public Benefit Corporation or non-profit may be more appropriate.