We are creating a corporation and want to make sure we have the best structure set-up for taxes, business protection, intellectual property and co-founder's rights. What do we need to put in place and what types of documents should we be filing/filling out?
You are already down the wrong path. A multi member LLC would have been a better choice. You need a good tax and business attorney to draft the Operating Agreement and organizational documents.
I hope this helps!
If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.
You sound smart and have good ideas. As to sharing the stock of the company appropriately, it is done by the State corporate law, taking into account tax law. Make sure issuance of corporate shares for service and monetary considerations are handled properly. Be sure the corporate “capitalization” is adequate, accurately reflected in the corporate kits and accounting books alike. Based on my experience, business people who run into deep legal and tax problems, are the ones who did everything themselves, incorporated their businesses online, were misled to believe that they were protected, did their own accounting and taxes because they were good at moth. Do not fall into that type of trap. Good luck. The information presented herein is for general purposes only. It is not intended to, and may not be construed as legal, tax or accounting advice. For specific advice, please consult an attorney in person. Good luck. Zaher Fallahi, Tax Attorney, CPA, MBA, MS.
A lot more information would be needed in order to answer this question. For example, what will you do if one member wants to sell-out or retires or passes away? How will you handle disputes that arise among the members? There are a lot of other questions that need to be answered before the appropriate structure can be determined. Do you intend to keep the company private, or would you eventually want to do an IPO? Meeting with an experienced attorney skilled at business formations and governance will protect you from all of the landmines out there. You should also discuss this with your accountant in order to determine the best tax structure for your business. As a commercial litigator, I see too many people form the companies themselves and then get into big trouble later when they did not think of everything and provide resolutions for it. Good luck to you.
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