How Many Shares Should My Startup Authorize when Forming?

How Many Shares Should My Startup Authorize when Forming?

Business Formation, Corporations, Start-Up, Stock Options
Historical Stock Securities by pictavio via Pixabay As a Phoenix attorney that has represented a number of local and out of state startups, I can tell you that one of the Top 10 questions I get is some variation of, “How many shares should the startup company authorize at formation?” How many shares is my Startup required to authorize? First off, at least here in Arizona where I practice at least, there is no law or regulation that requires a startup to have a minimum or maximum number of shares that need to be authorized or to founders or set aside in an equity incentive program. With that said, there are practical and operational limits, which we explore in this post. Typically, with technology-oriented startups at least, I recommend that…
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Why Your Startup Needs Bylaws

Why Your Startup Needs Bylaws

Business Formation, Corporations, Entity Formation
To help your startup succeed with as few internal complications as possible, founders should make having a set of robust corporate Bylaws a priority from the beginning. In this post, we take a look at what Bylaws are, what they do, and why your startup needs to have them in place (hint: it's the law in Arizona). What are Bylaws? While it's tempting to believe that corporate Bylaws are only for large, faceless, mega-corporations, as opposed to your lean, development-stage startup, nothing could be further from the truth. Any company (of whatever size) that chooses the corporate form through which to conduct its business should really have a well-crafted set of Bylaws in place. In a nutshell, a corporation's Bylaws are the internal guidelines that deal with how your corporation…
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My Business Name Changed. How Do I Notify The IRS?

My Business Name Changed. How Do I Notify The IRS?

Business Formation, Entity Formation, Start-Up, Trademark
While rare, it is not uncommon for startups and even more established business to change their name. When this occurs, how does your business notify the IRS of a change in its business name? Recently, a startup client which had incorporated under a prior name before hiring our Phoenix law firm ended up deciding to re-brand themselves under a new name. Turns out the old name was either used by (and even Federally registered as a trademark by other parties) and, as such, didn't stand the best chance of being registrable or, at a minimum, carried a good amount of legal risk with it. So they changed their name and decided to re-brand. Problem was, they already had a Federal Employer Identification Number (EIN) assigned to them in connection with…
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Do I Need to Register My Out-of-State Corporation?

Do I Need to Register My Out-of-State Corporation?

Business Formation, Corporations, Entity Formation, Foreign Corporation
If you're an Arizona-based startup that is actually incorporated in another State (for example, Delaware), do you have to register your foreign corporation in order to transact business here in Arizona? This question is more common than you might think in my Phoenix technology startup law practice. Earlier this month, I met with a cloud middleware outfit that had originally formed as a corporation in a state back east. Their U.S., Canada, and Mexico operations had been relocated here to the metro Phoenix area for several months. During our meeting, I asked the client's officer if they had registered to transact business here in Arizona. After a puzzled look amongst themselves, they admitted to me that they hadn't. Like I said before, this occurs more often than I like to…
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Where Can I Get My Arizona Business License?

Where Can I Get My Arizona Business License?

Business Formation, Corporations, Licensing
There are occasions when I'll get a call from a new (or aspiring) business owner who calls or e-mails me saying, "I need to get an Arizona business license". This statement is normally followed up by some variation of, "Can your firm help us with this?" These questions are based largely on a number of (understandable, yet incorrect) assumptions: First, that their business even requires a license to begin with; second, that such a license is given out by some central licensing authority here in Arizona, and, lastly, that there is a one-size-fits-all business license for every type of business out there. While one or more of these assumptions might be true in other 49 States, this is not the case here in Arizona. Generally speaking, Arizona handles business licensing…
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