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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
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
4. How do we manage share distribution electronically? Is there a
website or repository? Maybe we need to talk to investment banks?
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. )
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.
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.
@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" -
Think I'd use them if I were doing this again.
On Sun, Feb 10, 2013 at 10:17 PM, Aleksandra Czajka
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
On Sun, Feb 10, 2013 at 9:03 PM, Dominic Coryell <niquecory...@gmail.com>wrote:
Disclaimer: I am not a lawyer.
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:
> ** **
> 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?
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
--- 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.
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