Founders of technology startups typically pay for their shares at incorporation by contributing intellectual property (“IP”) they have developed and that relates to the business of the startup.
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You hear a lot of jargon in the world of technology startups and venture capital, and “fully-diluted capitalization” or “on a fully-diluted basis” are some of those terms that get thrown around a lot, but often times are not fully understood.
After a technology startup has been legally formed as a corporation, shares of its capital stock need to be authorized and issued to its founders.
If the shares of stock you acquire in your startup are subject to vesting (or a “substantial risk of forfeiture” as the IRS calls it), then you typically want to make what is called an 83(b) election.
When founders launch their new startup, optimism is typically running rampant. However, it is not uncommon for one or more founders to leave the very startups they launch within the first few years.
The proposed legislation to impose a new capital gains tax in Washington State (House Bill 2224) should have little or no immediate effect upon a typical restaurant operator. This is because restaurant owners usually recognize ordinary income from their restaurant operations, not “capital gain” as defined in the Internal Revenue Code and in this bill.
In this day and age, choosing a corporate name is no easy task. After you think you have identified the perfect name that embodies everything your new startup stands for, your work has just begun.
You’ve had your epiphany moment, and now you’re ready to form your company and build the next white hot technology startup. But which type of entity should you choose?