What Should Par Value for My Startup’s Shares Be Set At?

What Should Par Value for My Startup’s Shares Be Set At?

Business Formation, Corporations, Entity Formation, Start-Up
Not that kind of Par. Founders who are incorporating their startup initially are usually faced with the question of what to set the “par” value of the business’ stock. This is a question I'm regularly asked about as a Phoenix Startup attorney. In this post, we look at what par value is, why it remains important, and what you might want to set it at initially. What's a Stock's Par Value? While most of us who golf (or try to anyway) are familiar with the concept of "par" on the golf course, when it comes to corporations, par has a very different meaning. It is a common misconception of startup founders is that par equates to market value. Although this can be true, it usually is not. Put simply, par…
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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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What Is My Liability as Startup Co-Founder?

What Is My Liability as Startup Co-Founder?

Contracts, Corporations, Start-Up
The forming and launching of a new startup company is an exciting, possibly life altering event.  But if you and your fellow co-founders ignore or fail to take certain precautions, being a co-founder has potential to be life altering in a negative way.   So just what is your liability as a co-founder of a startup? Ways Your Startup Could Be Liable When I talk to startup clients about their liability concerns, I find it helps to break the universe of potential liability into two main camps: tort and contractual.   Note: I will save a potentially large---but no less serious---third (or fourth, if you count regulatory) category of corporate tax, payroll tax, and pension liabilities for another day/blog post. In its most basic terms, tort liability is where you,…
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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 totally uncommon for our startup and even more established business clients to change their name. When this occurs, how does your business notify the IRS of a change in its business name? Ben here: Thank you for viewing one of our more popular posts but understand that it is only for general informational purposes. To be totally clear, I am not a tax attorney or CPA, and this is NOT tax advice. Our Phoenix law firm focuses on startup businesses, e-commerce, and software and technology transactions. You should always consult with your CPA or qualified tax advisor with regard to any matters of taxation, tax planning, and tax liability as they apply to your specific situation. Why would a company change its name? Recently, a…
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Is My Idea Still Secret if I Tell My Lawyer?

Is My Idea Still Secret if I Tell My Lawyer?

Client Consultation, Confidentiality, Start-Up
It's Not a Secret If More Than One Person Knows It--Or Is It? Every so often, I'll have someone reach out to me on our contact form or by phone and be vague about their legal situation or what they are looking for help with. Many startup owners don't actually know what legal help they need, so this lack of detail can be understandable. However, sometimes it is out of a concern that another person (i.e., basically a complete stranger over whom they have no real control) will have knowledge of their new business, invention, or idea. Duty of Confidentiality First off, it's important to understand that actual attorneys who are licensed with a state Bar almost always owe clients what is known as a duty of confidentiality. This duty…
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