Hello,
I’m about to incorporate a new Delaware C Corp for a SaaS product, and was hoping to get some advice on stock assignment and 83b election. I have a cofounder and we’re doing a 55/45 split to start with, which will obviously get diluted as we get investors and more team members.
My questions are:
- Do we need to assign stocks to the cofounders immediately after incorporation? Or can we wait for 2-3 months till we get some customers and perhaps investors?
- If we should do the stock assignment right away, then should we divide the entire 20 millions stocks or do it partially and reserve the rest for investors?
- If we get investors, then there will likely be a vesting schedule that we will have to follow - can we do the stock assignment and 83b election then?
- Without doing the stock assignment, is it okay to accept payments into the company bank account?
Thanks in advance for the help!
Re # 2. Is the 20M your total authorized share count? Having shares available to issue vs those that are outstanding makes a difference.
Or do you have 20M shares o/s? If o/s, assign per your ownership %, and then effect pro-rata transfers when you get investors.
Probably best to authorize more shares when you’re ready to issue to advisors or take on money.
Investors will want preferred stock rather than the founder’s common and, more importantly, investors can’t take advantage of QSBS when receiving their shares from the founder instead of the company.
20M is going to be the total number of authorized stocks after the company has been incorporated - nothing has been assigned yet.
So if we assign to ourselves after incorporation, perhaps that would not require 83b election?
Then in the future, we get investors and issue fresh stock, vesting schedules will kick in - is that when we should file for 83b election?