Choice of EntityLLC or Corporation for the Tech StartupHuan Le                           512.799.5049 | huan@quozlaw.com
Choosing the Entity  Additional Issues &     Documents     Considered      Do it YourselfAgendaHuan Le                 512...
DiCentral Corporation          General Counsel & CAO (2007 – present)                                                     ...
CHOOSING THE ENTITYThe hardest and Easiest Thing You’ll DoHuan Le                           512.799.5049 | huan@quozlaw.com
• No entity (sole proprietorship)                     • General Partnership   Lots of Choices   • Assumed Name (dba)      ...
Corporation              versus             LLCHuan Le                512.799.5049 | huan@quozlaw.com
Corporation                    LLC• C-Corp or S-Corp             • Can be taxed as• Owners vote for Board of       partner...
Corporation                   LLC• Multiple classes of stock   • Very flexible ownership• Easy to add and subtract      & ...
Corporation                     LLC• You intend to raise capital   • You don’t intend to raise  in 1-2 years              ...
• Side business for a  programmer• Two friends who  want to do something  fun and interesting• 2 friends, wanting to  laun...
ADDITIONAL ISSUES &DOCUMENTS CONSIDEREDThings you may encounter as you buildHuan Le                           512.799.5049...
• The double-taxation              bogey-man            • TX, DE or NV            • What if my partners and I             ...
• Preferred Stock• Buy-Sell  Agreement• Convertible Note• Pre-money  valuation• Series A, B and  Early Investors• Lifestyl...
DO IT YOURSELF LAWResources for you to useHuan Le                    512.799.5049 | huan@quozlaw.com
Texas Sec. of State                  Third Parties• http://www.sos.state.tx.us/corp/   • http://www.legalzoom.com/  sosda/...
Huan Le    512.799.5049 huan@quozlaw.comThank you.Huan Le             512.799.5049 | huan@quozlaw.com
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Choice of Entity for Startups by Huan Le

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Choice of Entity for Startups by Huan Le

  1. 1. Choice of EntityLLC or Corporation for the Tech StartupHuan Le 512.799.5049 | huan@quozlaw.com
  2. 2. Choosing the Entity Additional Issues & Documents Considered Do it YourselfAgendaHuan Le 512.799.5049 | huan@quozlaw.com
  3. 3. DiCentral Corporation General Counsel & CAO (2007 – present) BA – University of Southern California (1997) JD - University of Texas School of Law (2000) Medifr, Inc CEO (2012 – present) Healix, Inc. Corporate Counsel (2003-2007) Zeleskey, Cornelius, Hallmark Roper & Hicks Associate, Corporate Section (2000-2007) Yellow Thunder Media Legal Advisor (2010 – present) Caphin, Inc. Advisor & Founder (2012 – present)Huan Le – where I’ve beenHuan Le 512.799.5049 | huan@quozlaw.com
  4. 4. CHOOSING THE ENTITYThe hardest and Easiest Thing You’ll DoHuan Le 512.799.5049 | huan@quozlaw.com
  5. 5. • No entity (sole proprietorship) • General Partnership Lots of Choices • Assumed Name (dba) • Limited Partnership • Limited Liability Partnership • Professional Corporation • Limited Liability Corporation • Corporation (S-Corp or C-Corp)Huan Le 512.799.5049 | huan@quozlaw.com
  6. 6. Corporation versus LLCHuan Le 512.799.5049 | huan@quozlaw.com
  7. 7. Corporation LLC• C-Corp or S-Corp • Can be taxed as• Owners vote for Board of partnership or corporation Directors, who choose • Member-managed or managers manager-managed• Articles of Incorporation, Bylaws, and shareholder • Operating Agreement is agreements are the controlling Document controlling Documents • Basically it’s a formal• Corporate Formalities partnership with limited need to be followed liability characteristicsGeneral CharacteristicsHuan Le 512.799.5049 | huan@quozlaw.com
  8. 8. Corporation LLC• Multiple classes of stock • Very flexible ownership• Easy to add and subtract & capital structure (BUT more complex structures stockholders increase cost)• Stock Options • Pass-through taxation is• Easy to understand possible without ownership restrictions of an S-CorporationAdvantages of EachHuan Le 512.799.5049 | huan@quozlaw.com
  9. 9. Corporation LLC• You intend to raise capital • You don’t intend to raise in 1-2 years capital from others soon• You want to issue equity • You’re the only owner to employees, but restrict and want simple the ability of the paperwork employees to be treated • You want to be taxed as a as partners partnership• You want to reinvest profits in growthWhich one to pickHuan Le 512.799.5049 | huan@quozlaw.com
  10. 10. • Side business for a programmer• Two friends who want to do something fun and interesting• 2 friends, wanting to launch a new game app and bring in a developer.• One friend, one investor, looking to launch a media company. No additional investors• Friends trying to raise money for a new Biotech businessSome Case StudiesHuan Le 512.799.5049 | huan@quozlaw.com
  11. 11. ADDITIONAL ISSUES &DOCUMENTS CONSIDEREDThings you may encounter as you buildHuan Le 512.799.5049 | huan@quozlaw.com
  12. 12. • The double-taxation bogey-man • TX, DE or NV • What if my partners and I disagree? • What if my partner dies or gets a divorce? • Do I really need to raise money? • Insurance • Accountant/QBConsider These ThingsHuan Le 512.799.5049 | huan@quozlaw.com
  13. 13. • Preferred Stock• Buy-Sell Agreement• Convertible Note• Pre-money valuation• Series A, B and Early Investors• Lifestyle Business• Private Placement MemorandumSome TerminologyHuan Le 512.799.5049 | huan@quozlaw.com
  14. 14. DO IT YOURSELF LAWResources for you to useHuan Le 512.799.5049 | huan@quozlaw.com
  15. 15. Texas Sec. of State Third Parties• http://www.sos.state.tx.us/corp/ • http://www.legalzoom.com/ sosda/index.shtml • http://www.incorp.com/incorpo• Registered Agent ration-formation-• No par value registration.aspx• 1,000,000 shares • A law firm• Directors & officersResources for your filingHuan Le 512.799.5049 | huan@quozlaw.com
  16. 16. Huan Le 512.799.5049 huan@quozlaw.comThank you.Huan Le 512.799.5049 | huan@quozlaw.com

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