Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

83(b) Election and founder stock questions?


We incorporated as a C-corp on Jan 29th through legal zoom. We received a
corporate kit (pretty fun to stamp random stuff with the official seal). In
that package there was a bunch-o-stock so.

1. Where should we store or keep the physical paper? Bank? Home? Under
the mattress?

2. What is the mechanism to "acquire" the stock? Do we own the stock
yet? Do we need to put money somewhere to back the par value?

3. When does the 30-day clock for the 83(b) election start ticking? Is
it based on the date of incorporation or after you formally acquire the
stock?

4. How do we manage share distribution electronically? Is there a
website or repository? Maybe we need to talk to investment banks?


13 Replies

Jean Barmash
0
0
Jean Barmash Entrepreneur
Engineering Program Manager at Tradeshift

83b is after you (as a person) receive the stock.  So say the restricted
stick agreement between the company and you is signed today, feb 10th, you
have until march 12th (or whatever 30 days from now) to send 83b in.

My understanding is that 83b is only applied to restricted stock, not
options (since with options you don't actually own the stock).

The way I understand it, when you incorporate, the corporation is
authorized to issue stock. Then the corporation, by action of
the board, actually have to issue the stock, which you can then sell (very
cheaply, since the company has very little value at this point. )

Jean

Tony Rajakumar
0
0
Tony Rajakumar Entrepreneur
Founder/CEO at SnugBoo

That's right except that 83b can apply to options IF they can be early exercised. In which case you have 30 days from date of exercise to file.

Thanks...
--Tony

Aleksandra Czajka
0
0
Aleksandra Czajka Entrepreneur
Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

That's a really good question, Jack and Jerry.

I will also soon be incorporating on Legal zoom and have all the same
question. One additional one, did you guys incorporate in Delaware? or did
you do NYC. I hear that in NYC you have additional expense of publicizing
the incorporation of your corporation in two local newspapers.

Dominic Coryell
0
0
Dominic Coryell Entrepreneur • Advisor
Helping world's most promising startups grow faster... #500Distro

@Aleksandra - I remember having to pay the NYC publication fees even though
we we formed a delaware LLC, because we were doing business in NY.  That's
what the lawyers told us to do anyway.

Someone from Incorporate.com also gave me this code one time:
"Use jam25 ---it will take $25 off @incorporate.com" -
http://www.filingsmadeeasy.com/lp/llc/form-llc-delaware/
Think I'd use them if I were doing this again.

On Sun, Feb 10, 2013 at 10:17 PM, Aleksandra Czajka
<alekscza...@gmail.com>wrote:

Salar Salahshoor
0
0
Salar Salahshoor Entrepreneur

Why do startups incorporate in Delaware?  It seems the complexity and cost
of doing so outweigh any benefits unless you are ready to raise VC money.
 Even then, when you get to the point of raising serious capital, you can
always restructure, right?

Most good business attorneys will get you set up for about $500 + license
fees.  It's well worth the cost.  If you set up a corporation in Delaware,
you'll still need to file for a foreign corporation in the state you
actually do business in and/or hire employees in.  So if you live in NYC
and plan to do business there, save yourself the money and effort and just
incorporate in the state you live in to avoid the ongoing license fees and
cost of annual tax returns in multiple states. That's my understanding
having employees in three states and consulting attorneys and CPAs about
the best options available.

Also, I would suggest not trying to save a couple bucks on a DYI solution
(i.e. Legal Zoom).  Get some good people involved in helping you early on.
You'll want these relationships when you start making bigger moves, and
it's a small price to pay to get a solid foundation and expert advice for
your business.

Salar

On Sun, Feb 10, 2013 at 9:03 PM, Dominic Coryell <niquecory...@gmail.com>wrote:

Bruce Leban
0
0
Bruce Leban Entrepreneur
Software developer, inventor, innovator

Disclaimer: I am not a lawyer.
See below.

--- Bruce
Latest blog post: Alice's Puzzle Page http://www.vroospeak.com

On Sun, Feb 10, 2013 at 2:27 PM, Gerardo Barroeta <jerry...@media.mit.edu>wrote:

> Hello Hive, some quick questions:****

> ** **

> We incorporated as a C-corp on Jan 29th through legal zoom. We received a
> corporate kit (pretty fun to stamp random stuff with the official seal). In
> that package there was a bunch-o-stock so?****

> ** **

> **1.       **Where should we store or keep the physical paper? Bank?
> Home? Under the mattress?

James Bond
0
0
James Bond Entrepreneur
CTO at SupplyBetter

I, too, am not a lawyer :-)

That said, a few comments on your questions and some of the other answers,
below (marked with >>>)

Jerry B P
1
0
Jerry B P Entrepreneur
NewCo

Thanks all, I think the take home message is simply to get a lawyer.

Follow up question would be: any recommendations?

Sent from my iPhone

On Feb 10, 2013, at 11:46 PM, James B <james.bond.h...@gmail.com> wrote:

Max Avroutski
0
0
Max Avroutski Entrepreneur
eCommerce, Software Developer, Usability, Marketing & Product Creation consulting services.

There are no publication requirements for business corporations, but New York requires newly formed limited partnerships and limited liability companies to publicize their existence to the general public.
Both types of entities are required under the law to publish, within 120 days of their formation, either the business?s Articles of Organization or Certificate of Limited Partnership, as the case may be, or a notice containing substantially the same information in the applicable formation document. The notice must be published once per week for six consecutive weeks in two newspapers in the county where the office of the business is located. The county clerk will designate which newspapers the notices must run in, one of which will be published daily and one published weekly. You will have to pay whatever fees the newspapers charge to publish notices.
You can arrange to publish the notices yourself, or, alternatively, many commercial services will arrange to satisfy this publication requirement for you for an additional fee. When you publish the notices, the newspapers will give you an Affidavit of Publication. You must take the Affidavit of Publication from each newspaper and submit them, together with a Certificate of Publication and a $50 filing fee, to the NYS Department of State within 120 days after formation of the business.?
You may access the Department of State?s form of Certificate of Publication for?limited liability companies athttp://www.dos.ny.gov/forms/corporations/1708.pdfand for limited partnerships athttp://www.dos.ny.gov/forms/corporations/1711.pdf
http://www.dos.ny.gov/corps/pdfs/formingbus.pdf
Max Avroutski
--- On Sun, 2/10/13, Aleksandra Czajka <alekscza...@gmail.com> wrote:

From: Aleksandra Czajka <alekscza...@gmail.com>
Subject: Re: [FD Members] 83(b) Election, founder stock...
To: "Tony Rajakumar" <to...@snugboo.com>
Cc: "Jean Barmash" <jean.barm...@gmail.com>, "Gerardo Barroeta" <jerry...@media.mit.edu>, "[removed to protect privacy]" <[removed to protect privacy]>
Date: Sunday, February 10, 2013, 10:17 PM

That's a really good question, Jack and Jerry.?
I will also soon be incorporating on Legal zoom and have all the same question. One additional one, did you guys incorporate in Delaware? or did you do NYC. I hear that in NYC you have additional expense of publicizing the incorporation of your corporation in two local newspapers.

On Sun, Feb 10, 2013 at 8:45 PM, Tony Rajakumar <to...@snugboo.com> wrote:

O.Shane Balloun
0
0
O.Shane Balloun Advisor
Attorney / Shareholder at Balloun Law Professional Corporation
(Disclaimer: I am a lawyer but not your lawyer for the purposes of this discussion. This is not legal advice.)

In addition to timely filing the 83(b) election within 30 days of the transfer of the restricted stock or options, 26 U.S.C. ? 83(b), the IRS requires the recipient to file a copy of the letter with the tax return for the year in which the transfer happened, Treasury Reg. ? 1.83-2(c).
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?