Resources

Shares/Stock Vesting Periods Explained:

Founder shares vesting means that after a specified time period or event, a company founder may keep all or a certain percentage of his or her stock shares even after leaving the company. Shares that are not vested may be repurchased by the corporation, often at a lower value than would be commanded on the open market. Typically, vesting is on a four-year schedule, and the shares vest in equal increments monthly over those four years. Assuming the person vesting continues to work for the entire period, in the final (48th month) they will receive their final 1/48th of the total shares subject to vesting.
 

What is a vesting cliff:

A typical options vesting package spans four years with a one year cliff. A one year cliff means that you will not get any shares vested until the first anniversary of your start date. At the one year anniversary, you will have 25% of your shares vested. You are then past the cliff and then vesting monthly thereafter.

What are the requirements to form an S-Corporation (or S-Corp)

To qualify for S corporation status, the corporation must meet the following requirements:

  • Be a domestic corporation
  • Have only allowable shareholders
    • May be individuals, certain trusts, and estates and
    • May not be partnerships, corporations or non-resident alien shareholders
  • Have no more than 100 shareholders
  • Have only one class of stock
  • Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

What are S-Corporations (S-Corps)

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

Great Article from Jonathan on Friend and Family Fundraising for Startups:

https://jonathanhung.com/seed-funding-from-friends-and-family/

 

More Blog and other resources coming soon.