
Corporate Entities - alexandros
http://www.avc.com/a_vc/2010/02/corporate-entity.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AVc+%28A+VC%29&utm_content=Google+Reader
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grellas
A nice piece that will stimulate thinking on when and how to set up your
entity.

With a tech startup, an equally important goal is to have an entity to which
all IP is assigned as it is created, as opposed to being severally owned by a
group of founders working loosely together without a company structure.
Founders can (and often do) choose to kick the company setup down the road
assuming they can later clean up IP issues, and this can work just fine as
long as no issues or disagreements arise before the setup. If a founder
departs from the team while owning IP separately, however, this can create due
diligence problems for the startup when it goes for funding or is acquired.
Thus, it is not normally good to leave the IP issues loose (at least if IP is
important to the company), and this should prompt founders to set up their
entity sooner rather than later as they begin to develop anything of value in
their pre-incorporation stage.

Other good reasons to incorporate earlier rather than later in most cases are
found in the top comment in this recent thread
(<http://news.ycombinator.com/item?id=1126785>), where various HN'ers took
issue with the idea that incorporation should be deferred until the time of
funding.

I personally think the corporate form tends to fit better for most early-stage
startups than does the LLC form but that is an issue for another day. (I
discuss some of the factors here, for anyone interested:
<http://grellas.com/faq_business_startup_005.html> \- see point 2, "Normally
go with a corporation instead of an LLC").

