[Update: the Washington legislature updated RCW 23B in 2020. This post, Washington Corporation, is out of date in some respects and was updated here.] Introduction If you are going to form a Washington corporation, you need to exercise care and you probably want to hire a lawyer to help you. The reason for this isContinue reading “How to Form a Washington Corporation”
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How to Obtain a 409a Valuation For Your Company And When To Do It
This post will cover the best way for your company to obtain a 409a valuation, the reason why, and when your company needs to obtain one. If you’ve ever started a company, you know and are probably sick of dealing with the terms “fair market value” (FMV) and “409a”. There is already tons of educationalContinue reading “How to Obtain a 409a Valuation For Your Company And When To Do It”
How To Read Your Founder Documents
Starting your company is an exciting time. The temptation will be to sign all your legal documents as fast as possible so that you can get up and running. We highly suggest you avoid that temptation and take the time to thoroughly review and, if appropriate, negotiate your documents. With that in mind, in thisContinue reading “How To Read Your Founder Documents”
CARES Act: The Affiliation Rules and How They Could Affect Your Eligibility for a PPP Loan
We wrote about the Paycheck Protection Program (“PPP”) component of the CARES Act (“Act”) last week and how it expanded who is eligible for Small Business Administration (“SBA”) loans in response to the COVID-19 pandemic. One of its general qualifications is that the company must have no more than 500 employees. One issue we areContinue reading “CARES Act: The Affiliation Rules and How They Could Affect Your Eligibility for a PPP Loan”
How to Read Convertible Promissory Notes
Legal documents can range from the moderately annoying to the insufferably pedantic. Convertible promissory notes are no exception but are so commonplace, you are going to need at least a basic understanding of how they work. With that in mind, I created a list of common key terms in convertible notes and what they mean.Continue reading “How to Read Convertible Promissory Notes”
Stock Option Plan Administration: A Guide
Stock option plan administration requires regular attention to compliance obligations. Events to Watch Out For There is work to do when: the board of directors approves stock option grants (or stock awards), which can occur either at regularly scheduled board meetings or at any time at special board meetings or actions by unanimous written consent;Continue reading “Stock Option Plan Administration: A Guide”
Incentive Stock Options: The Qualifications and Limitations
In startup land, aside from cash compensation, stock options are the most important part of employee compensation. (This is the case because once a startup is beyond the very early, initial startup phase, no other form of equity compensation–such as restricted stock or RSUs–works very well from a tax point of view for employees.) BecauseContinue reading “Incentive Stock Options: The Qualifications and Limitations”
Nonqualified Stock Options: Tax Withholding on Former Employees
It is well known that a company has to withhold income and employment taxes from an employee exercising nonqualified stock options. What About Former Employees? What is less well known is, what do you do if this person has left the employment of the company? What if they left employment years ago and are notContinue reading “Nonqualified Stock Options: Tax Withholding on Former Employees”
Incentive Stock Options: Post-Termination of Service Exercise Periods
The 90-day post termination of employment exercise period for stock options is under attack. A lot of companies are moving away from 90 days. You can find a list of them in a GitHub repo maintained by Zach Holman. Zach also has written an impassioned post about this issue. Why is the 90-day rule problematic? BecauseContinue reading “Incentive Stock Options: Post-Termination of Service Exercise Periods”
Venture Capital Office Hours with Voyager Capital
UW students and faculty interested in startups can talk monthly, face-to-face, with a venture capital investor and startup attorney. Randall Lucas of Voyager Capital and I hold open office hours the first Wednesday of each month at the University of Washington. Who comes to see us? A wide range, from skateboard-toting sophomores who have codedContinue reading “Venture Capital Office Hours with Voyager Capital”
