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Should the sole founder of a startup bother issuing stock?
3 points by slfounder on Sept 4, 2009 | hide | past | favorite | 2 comments
I am going it alone and plan on setting up probably a Delaware S-Corp (unless someone can give me good reasons to skip the S-Corp and go straight to the C-Corp), as I don't plan on seeking any outside investment for a while (and if/when I need to, I've heard it's trivial to convert an S-Corp to a C-Corp), but I am sort of betting on selling the company as an exit strategy.

With that in mind, does it make sense for me, all by myself, to issue stock to myself (possibly even on some sort of vesting schedule) and make an 83(b) election?




http://grellas.com/faq_business_startup_005.html.

If you set up the entity, issue the stock (usually for nominal cash plus IP assignment if you have IP already developed). It starts your tax holding period and prevents tax complications later when you raise money. Vesting should not be necessary (it can always be added later if your investors insist on it and there are no tax complications arising from a later reconfiguration of your stock).


Thank you.




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