Running a Business Mashed Report

Is that Business Card Trash or a Treasure?

How many business cards do we receive a week? A year? Which one could hold the key to our dreams or even survival? For example, suppose you are at a party and just chatting about some bothersome symptoms you have been experiencing to a Doctor who is there. That Doctor hands you a business card. Now, even if he isn't...

By Karen Kanefsky | Beware - One quick exchange can change your life

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Video Resume, The Future of Employment?

Forbes.com, MSNBC, Time.com and the Daily Show all hail that the video resume will become the wave of the future. In a search on YouTube, there are 4,590 search results under the keyword, "video resume" with video views ranging anywhere between 50 and 93,000 views. However, controversy is on all...

By darringrella | Partner / The Interview Gurus

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Should founders stock be subject to vesting before a venture financing?

Generally yes. Even though the founders stock is issued and outstanding, the company can have the right to repurchase the shares. The right of the company to repurchase the shares will lapse over time or upon certain events, similar to vesting of options. There are two primary reasons for subjecting...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What should the vesting terms of founder stock be before a venture financing?

I think that founders stock before a venture financing should be subject to the same general vesting terms as one would expect after a venture financing. A typical vesting schedule is four year vesting with a one year cliff. This means that 25% of the shares will vest one year...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What is Series FF stock?

I've been asked by a few people about the Series FF stock that has been advocated by the Founders Fund. Matt Marshall of Venture Beat reported on this invention in December 2006. See here for an Inc.com report in March 2007. Michael Martin blogs about economic incentives associated with the...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What is an 83(b) election?

Failing to make a timely 83(b) election with the IRS is something that could lead to disastrous tax consequences for a startup company founder or employee.Founders typically purchase stock pursuant to restricted stock purchase agreements that allow the company to repurchase "unvested" stock upon termination of employment. Similarly, employees may...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What is qualified small business stock?

Under Internal Revenue Code Section 1202 , a taxpayer (other than a corporation) that recognizes gain from the sale or exchange of "qualified small business stock" held for more than five years may exclude 50% of such gain from gross income for regular income tax purposes. The amount of gain...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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Should founders pay for their stock in cash or contribute intellectual property?

If a founder owns intellectual property that he or she plans on contributing to a company, the founder may want to pay for founder stock by assigning the intellectual property rather than paying cash. Even though founders typically purchase stock for $0.01 or $0.001 per share, the aggregate purchase price...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What is Class F common stock?

Extremely founder-friendly provisions in the certificate of incorporation for companies. These provisions include a special class of super-voting common stock, called "Class F" common stock, which is named for "Founders." * Voting. The COI includes Class A common stock, which has one vote per share, and Class F common stock,...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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How many shares should be authorized in the certificate of incorporation?

I usually advise companies to authorize around 10 to 15 million shares of common stock. Around 8 or 9 million shares are issued to founders with a 1 million to 2 million share option pool, for a fully-diluted base of around 10 million shares. The remaining authorized but unissued shares...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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How do you calculate Delaware franchise taxes?

A corporation's Delaware Annual Franchise Tax Report is prepared by Delaware calculating the corporation's annual tax obligation using the "authorized shares" method, reflecting a very large annual franchise tax obligation for most corporations. However, use of the optional "assumed par value capital" method of tax calculation will typically result in...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What inspection and information rights does a stockholder have?

Most states allow stockholders to demand access to a corporation's books and records, and a stockholder list, as long as the stockholder has a proper purpose and meets certain procedural requirements.Delaware General Corporation Law Section 220(b) provides that "Any stockholder, in person or by attorney or other agent, shall, upon...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What trademark and other legal issues are involved in selecting a company name?

[The following post is courtesy of John Slafsky and Aaron Hendelman in WSGR's Trademarks and Advertising Practices Group.]Among the most important tasks in the founding of a new company are the development and clearance of a company name. There are two very different sets of legal issues, and a host...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What is par value?

Par value is the minimum price per share that shares must be issued for in order to be fully paid. I typically recommend that par value be set at $0.001 or $0.0001 per share. Thus, if a founder purchases 8,000,000 shares of common stock, the minimum price that the founder...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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What does fully-diluted capitalization mean?

"Fully-diluted" capitalization typically includes (1) all outstanding common stock, (2) all outstanding preferred stock (on a converted to common basis), (3) outstanding warrants (on an as exercised and as converted to common basis), (4) outstanding options, (5) options reserved for future grant, and (6) any other convertible securities on an...

By Yoichiro (“Yokum”) Taku | Corporate & Securities Partner at Wilson Sonsini Goodrich & Rosati

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