How does joining an incubator affect incorporation?
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When should I use a lawyer?
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DISCLAIMER: This startup legal guide ("the guide") has been prepared for general informational purposes only and does not constitute legal advice. By using the startup legal guide, you waive any rights or claims you may have against the publisher of this guide in connection therewith. The information contained in this startup legal guide is provided only as general information and may not reflect the most current market and legal developments and may not address all relevant business or legal i
You will need to form a legal entity before you can legally distribute equity or receive investment funds to your Company. However, many companies still in the "working-in-a-garage-with-friends" phase haven't formally incorporated yet, and simply have a handshake agreement on how equity will be distributed between the different founders. You will not be able to open a Company bank account before you have incorporated.
Regardless, it is recommended that you form a legal entity when the foundin
Most startups incorporate as a Delaware C corporation, even though they have no actual presence in or relationship to Delaware. Delaware is a common choice for a variety of reasons, including investor familiarity with Delaware law, certain legal protections afforded the Company and its officers and directors, procedural efficiencies (such as filing Charter amendments) and a well-developed body of corporate law that can lead to fair and predictable outcomes.
However, there can be benefits to i
To form a Delaware corporation, you will need to file a Certificate of Incorporation (or "Charter") with the State of Delaware. In addition, startups need to fill out other standard legal paperwork to divide equity to founders, assign inventions, etc. These steps will be explained in detail on the "Incorporation Checklist" tab. The relative costs for each are as follows.
INCORPORATION:
Incorporation requires filing the Charter with the State of Delaware. Most startups will use a registered
Startups may join an incubator or accelerator program to help guide them through the process of developing their business, improving their core intellectual property, and connecting the founders to investors. Many incubators request an equity stake in the Company and/or convertible securities in exchange for participation in their program.
Certain incubators prefer that you do not incorporate before joining their program, as they would like to take their equity at the same time as the founder
There are three options for incorporating your Company: (1) incorporating without any legal assistance, (2) using an automated legal service, or (3) engaging a startup attorney.
Though the formation documents are sometimes similar, mistakes can be made easily and are often costly (or impossible) to later remedy. I strongly recommend consulting with a startup attorney to provide guidance throughout the process and review important documents before you finalize them, even if you wish to file most
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DISCLAIMER: This startup legal guide ("the guide") has been prepared for general informational purposes only and does not constitute legal advice. By using the startup legal guide, you waive any rights or claims you may have against the publisher of this guide in connection therewith. The information contained in this startup legal guide is provided only as general information and may not reflect the most current market and legal developments and may not address all relevant business or legal issues; accordingly, information in the startup legal guide is not promised or guaranteed to be correct or complete. Further, the publisher of this guide does not necessarily endorse, and is not responsible for, any third-party content that may be accessed through the startup legal guide.
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