Should Your Startup Be an LLC or Corporation?

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Search Google for the best legal entity for your new startup, and you will get different opinions. Startup advisors and CPAs will probably recommend a limited liability company (LLC). That’s because an LLC isn’t subject to double taxation and is easier to set up.

On the other hand, many startup lawyers will recommend the C-Corporation structure (typically a Delaware C-Corp) because corporate law is typically more “stable,” equity (stock) ownership is passive, and the entity is more structured.

How you choose to incorporate your startup business will have massive implications down the road. This blog explores the basic advantages and disadvantages of each option.

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3 Common Mistakes in Equity Incentive Plans

equity incentive plans

For most startups and/or small businesses, large sums of cash are not always readily available. Stock options or equity awards are a creative way for companies to incentivize employees or service providers with non-cash compensation. Often, these awards are known as stock option plans, equity incentive plans, or phantom equity. They are provided through a written agreement indicating how many shares the recipient is to receive, and when. Most plans require the recipient to be employed with or providing services to the business for a certain length.

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How to Protect Your Company When Relying on Investors

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Capital for your startup typically comes from one of three places: self-funding, debt financing, or equity financing. If you’ve chosen to raise capital through equity financing that means you are most likely relying on investors. Money is never free; even Uncle Sam gets his share if you win the lottery. Investors expect a certain amount of return and/or equity in your company when they invest. Yet, you still need to protect your interests and not give away the farm. Protecting your stake in your startup requires clear and formal documentation to solidify any agreement you make with investors.

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Do I Need a Certificate of Authority to Do Business in NYC?

Certificate of Authority. A close up of startup employees reviewing figures and paperwork with a tablet and laptop.

New York State’s Department of Taxation and Finance issues Certificates of Authority to businesses which authorize them to collect sales tax from customers. This also allows them to honor the tax-exempt status of non-profit agencies with whom they do business. You might be wondering when and if you need a Certificate of Authority for your startup or business to do business in New York City; especially if you are a foreign (whether U.S. or international) entity.

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