Lawgorithm  Advisors

Clerky is solid for getting a Delaware C-corp on paper quickly, but it's recommended you have a lawyer review it or supervise you. Many people we see forming themselves make mistakes, which can be costlier to clean up than if you had just gone to a law firm in the first place. Also, it doesn't replace a lawyer for anything custom: founder preferred stock, founder splits with side terms, IP assignments from prior work, anything non-standard.

If you plan to raise venture capital or go public, default to a Delaware C-corp. VCs generally won't invest in LLCs, and converting later is messy and expensive. LLCs make sense for businesses that will stay closely held or want pass-through tax treatment.

When you receive stock that vests over time, the IRS's default is to tax you on the value of each tranche as it vests. An 83(b) election flips that: you elect to be taxed on the full value at grant instead. At formation, that value is usually nothing, so the tax bill is likely zero, and you start the long-term capital gains clock immediately. You have 30 days from the grant date to file. If you miss it, you can't fix it.

The National Venture Capital Association publishes a set of model documents for venture financings: Stock Purchase Agreement, Investor Rights Agreement, Voting Agreement, Right of First Refusal/Co-Sale, and Certificate of Incorporation. They're the industry's standard starting point, designed to be roughly neutral between company and investor. Most priced rounds start from these.

Delaware charges every Delaware corporation an annual franchise tax. There are two ways to calculate it. The default (authorized shares method) bills you based on how many shares you authorized in your charter, which can be expensive if you authorized a lot. The alternative (assumed par value method) bills you based on issued shares, par value, and gross assets, and is usually cheaper for early-stage startups. You file an annual report along with the tax.

Per Carta data, most startups stick to SAFEs if the round is under $2 to $3M. Above that, priced equity. SAFEs are faster and cheaper but stack up dilution that bites at the priced round. Priced rounds are more work upfront but give you a clean cap table and committed investors with board rights. Be careful not to raise too much on SAFEs, as it can dilute you heavily.