Formation of a Company

  • 97 views
Uploaded on

Explores the following: …

Explores the following:
- When should I form a company?
- What entity should I use – LLC or corporation?
- Where should I incorporate – Delaware or New York?
- Should I use lawyers or do it myself?

More in: Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
97
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
3
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. WeWork Labs Seminar: Formation Jen Berrent Ian C. Wildgoose Brown October 1, 2013 Attorney Advertising
  • 2. Formation Topics  When should I form a company?  What entity should I use – LLC or corporation?  Where should I incorporate – Delaware or New York?  Should I use lawyers or do it myself? © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 2
  • 3. When should I form a company? Benefits of Incorporation  Limitation of liability  Issuance of equity – Founders – Advisors and consultants  Ownership of intellectual property © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 3
  • 4. What entity should I use? Overview of Structures  Corporate Form – Partnership – Limited Liability Company – Corporation  Tax Treatment – “Pass-through” – No “pass-through” © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 4
  • 5. What entity should I use? Partnership  Tax: “Pass-through” tax treatment  Liability: Not all owners have limited liability  Flexibility: Flexible structuring  Owners: No limit on number or types of owners  Investors: Not an investor-favored form © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 5
  • 6. What entity should I use? Limited Liability Company  Tax: “Pass-through” tax treatment  Liability: All owners have limited liability  Flexibility: Flexible structuring  Owners: No limit on number or types of owners  Investors: Historically, not an investor-favored form © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 6
  • 7. What entity should I use? Subchapter S-Corporation  Tax: “Pass-through” tax treatment  Liability: All owners have limited liability  Flexibility: Extremely rigid structuring (only one class of equity)  Owners: Limit on number or types of owners  Investors: No practical way to take investors © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 7
  • 8. What entity should I use? Subchapter C-Corporation  Tax: No “pass-through” tax treatment  Liability: All owners have limited liability  Flexibility: Rigid structuring  Owners: No limit on number or types of owners  Investors: Investor-favored form © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 8
  • 9. LLC v. Corporation LLC C-Corporation  Best for small number of shareholders where flexibility in structuring is a key benefit  Good for companies with cash flow that will be distributed (e.g., investment funds, service companies)  Good for companies that do not care about retaining net operating  Best for companies looking to raise money and scale quickly  Good for compensating employees, consultants and advisors  Allows for the use of net operating losses  Must be a c-corporation to go public losses © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 9
  • 10. Where should I incorporate? Delaware  Best known corporate law – e.g., few New York lawyers know NY corporate law!  Most reasonable and flexible corporate rules – e.g., NY corporate law requires unanimous consent for stockholder actions not taken at a meeting  Better liability protections for stockholders – e.g., top 10 stockholders in NY corporations are liable for unpaid wages © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 10
  • 11. Should I use lawyers or do it myself? Use lawyers unless you are forming a single-member limited liability company  Need to be careful of many legal regimes – Corporate law – Tax law – Securities law  Lawyers are less expensive and more accessible than you think Wilmer Cutler Pickering Hale and Dorr LLP is a Delaware limited liability partnership. WilmerHale principal law offices: 60 State Street, Boston, Massachusetts 02109, +1 617 526 6000; 1875 Pennsylvania Avenue, NW, Washington, DC 20006, +1 202 663 6000. Our United Kingdom offices are operated under a separate Delaware limited liability partnership of solicitors and registered foreign lawyers authorized and regulated by the Solicitors Regulation Authority (SRA No. 287488). Our professional rules can be found at www.sra.org.uk/solicitors/code-of-conduct.page. A list of partners and their professional qualifications is available for inspection at our UK offices. In Beijing, we are registered to operate as a Foreign Law Firm Representative Office. This material is for general informational purposes only and does not represent our advice as to any particular set of facts; nor does it represent any undertaking to keep recipients advised of all legal developments. Prior results do not guarantee a similar outcome. © 2014 Wilmer Cutler Pickering Hale and Dorr LLP © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 11