Startup Legal Mechanics

Levy recommends forming a separate legal entity early, typically a Delaware corporation, and using startup-focused services such as Clerky or Stripe Atlas. After incorporation, founders should complete post-incorporation steps, including buying their shares, appointing directors and officers, adopting bylaws, and opening a company bank account.

Levy advises teams to allocate founder stock with future work and execution in mind, and says founder shares should generally vest over four years. Founders and employees should sign confidentiality and invention assignment agreements so the company owns work created for it. She also stresses keeping a cap table, handling payroll when possible, and filing required tax returns.

Levy recommends incorporating sooner rather than later to protect founders, hold company intellectual property, and make fundraising and contracting practical. She warns against skipping vesting, signing documents without understanding them, paying employees only in stock, and delaying action on founder breakups. Keep company and personal finances separate, preserve signed documents, and consider expert advice for employment, immigration, or other specialized issues.

Jason Kwon explains that founders generally have 30 calendar days from purchasing restricted stock to file an 83(b) election, and Levy urges founders to keep dated copies. The panel recommends legal counsel for significant fundraising and employee stock grants, and specialist advice for immigration, foreign employment, and complex privacy or patent questions. Jon Levy and Kwon also counsel founders to keep company structures simple and choose an entity based on their business and market.

The panel says employee equity pools often fall around 10 to 20 percent, though the right amount depends on hiring plans. Kwon advises against unpaid interns in most cases, while Levy cautions that contractor classification and stock compensation require care. On co-founder conflict, the panel recommends addressing a failing working relationship promptly rather than letting it harm the company and friendship.