startup companies

PROCEDURE	RESEARCH
CHECKLIST FOR STARTING A COMPANY(*) INCORPORATING Do you have a company legal formation: Sole Proprietorship Limited or General Partnership "C" Corporation "S" Corporation Limited Liability Company Have you chosen the State of Incorporation Do you have a unique business name and domain name Federal registration may be advised If different from incorporation name, then file ficticious business name and publish in local newspaper Do you have Federal and State Employer ID numbers TIN (tax identification number) from the IRS If subject to withholding or unemployment insurance then file Employer Registration Form (In California form DE-1) Articles of Incorporation The Company exists when filed with the State Brief statement of names, business purpose, agents name and contact, shares of stock Certain provisions, assessments, voting rights, liabilities Have required business licenses Corporate Organization Documents Charter - states objectives, organization, planned operation Bylaws - states the governance, directors and officers responsibilities, shareholders meetings, corporate records, voting rights. Can be amended. Corporate Governance Board of Directors - delegate authority to operate the company, decide corporate policy, election of officers and compensation, issuance of securities, options, dividends. Officers - responsible for day to day operations Stockholders - ownership Liabilities - Board Members and Officers Corporation may provide limited indemnification Board member Liabilities usually in three areas: conflict of interest, careless or willful conduct, and failure to observe corporate law restrictions Officer liabilities usually for doing wrong to the company, failure to pay taxes, wrongful acts done by the officer to third parties in behalf of the corporation Are you going to issue stock Classes of stock Restricted Stock Stock options Federal and State Securities Law Federal securities act of 1933 California securities act of 1968 Other States securities acts Restrictions on shares - shares of early stage companies not usually filed under Federal securities law Do you maintain required documents "Minute Book" for shareholders and Board meetings minutes of shareholders meetings, Board meetings and Board committee meetings List of shares and owners Do you make required annual filings with Federal and State: Initial filing of Articles of incorporation within 90 days Annual filings of Statement of Domestic Stock Corporation Annual Reports not usually needed if less than 100 employees EMPLOYEES Understand employees vs. independent contractors Determine if in a State with "at-will" employment Offer Letters and signed employment agreements Do you have non-competition agreements Do you specify compensation plans Compliance with federal and State employment laws work conditions, union, minimum wage, overtime, worker notification, shutdowns, safety Pregnancy and Medical leave, non-competition Discrimination of race, sex, medical condition Breach of contract On Prominent display Verification of employability - Immigration Reform and Control Act of 1986 - INS form I-9 for all employees Have a procedure of use of email INTELLECTUAL PROPERTY Trade secrets Patents and copyright Trademarks, Service Marks, Domain Names Non-disclosure and non-compete agreement All employees should execute IP agreements FINANCE and FACILITIES Do you have insurance including liability Do you have initial funding and cash-flow control Do you have a bank account and financial system setup Do you have facilities, utilities, communications Do you have fixed assets, computers, software Do you have a benefits and payroll system for employees Employer Payroll withholding taxes for income and Social Security, IRS Circular E "Employer Tax Guide" TAXES Federal (and State) Franchise and Income tax returns must be filed on 15th day of third month following close of corporate tax year. Federal form 1120. Determine if taxed on calendar or fiscal year and choose between cash and accrual method. Determine any State Sales and Use taxes and miscellaneous property taxes If doing business in other States, review labor laws and regulations Maintain a Business plan summary and presentation for prospective investors, employees and partners More more detail across the company, see the other organizational areas listed on companyexam	Incorporating in Delaware Delaware Division of Corporations Incorporating in California Non-disclosure agreements

PROCEDURE

RESEARCH

CHECKLIST FOR STARTING A COMPANY(*)

INCORPORATING
- Do you have a company legal formation:
  - Sole Proprietorship
  - Limited or General Partnership
  - "C" Corporation
  - "S" Corporation
  - Limited Liability Company
- Have you chosen the State of Incorporation
- Do you have a unique business name and domain name
  - Federal registration may be advised
  - If different from incorporation name, then file ficticious business name and publish in local newspaper
- Do you have Federal and State Employer ID numbers
  - TIN (tax identification number) from the IRS
  - If subject to withholding or unemployment insurance then file Employer Registration Form (In California form DE-1)
- Articles of Incorporation
  - The Company exists when filed with the State
  - Brief statement of names, business purpose, agents name and contact, shares of stock
  - Certain provisions, assessments, voting rights, liabilities
- Have required business licenses
Corporate Organization Documents
- Charter - states objectives, organization, planned operation
- Bylaws - states the governance, directors and officers responsibilities, shareholders meetings, corporate records, voting rights. Can be amended.
Corporate Governance
- Board of Directors - delegate authority to operate the company, decide corporate policy, election of officers and compensation, issuance of securities, options, dividends.
- Officers - responsible for day to day operations
- Stockholders - ownership
- Liabilities - Board Members and Officers
  - Corporation may provide limited indemnification
  - Board member Liabilities usually in three areas: conflict of interest, careless or willful conduct, and failure to observe corporate law restrictions
  - Officer liabilities usually for doing wrong to the company, failure to pay taxes, wrongful acts done by the officer to third parties in behalf of the corporation
Are you going to issue stock
- Classes of stock
- Restricted Stock
- Stock options
- Federal and State Securities Law
  - Federal securities act of 1933
  - California securities act of 1968
  - Other States securities acts
- Restrictions on shares - shares of early stage companies not usually filed under Federal securities law
Do you maintain required documents
- "Minute Book" for shareholders and Board meetings
  - minutes of shareholders meetings, Board meetings and Board committee meetings
- List of shares and owners
Do you make required annual filings with Federal and State:
- Initial filing of Articles of incorporation within 90 days
- Annual filings of Statement of Domestic Stock Corporation
- Annual Reports not usually needed if less than 100 employees
EMPLOYEES
- Understand employees vs. independent contractors
- Determine if in a State with "at-will" employment
- Offer Letters and signed employment agreements
- Do you have non-competition agreements
- Do you specify compensation plans
- Compliance with federal and State employment laws
  - work conditions, union, minimum wage, overtime, worker notification, shutdowns, safety
  - Pregnancy and Medical leave, non-competition
  - Discrimination of race, sex, medical condition
  - Breach of contract
  - On Prominent display
- Verification of employability - Immigration Reform and Control Act of 1986 - INS form I-9 for all employees
- Have a procedure of use of email
INTELLECTUAL PROPERTY
- Trade secrets
- Patents and copyright
- Trademarks, Service Marks, Domain Names
- Non-disclosure and non-compete agreement
- All employees should execute IP agreements
FINANCE and FACILITIES
- Do you have insurance including liability
- Do you have initial funding and cash-flow control
- Do you have a bank account and financial system setup
- Do you have facilities, utilities, communications
- Do you have fixed assets, computers, software
- Do you have a benefits and payroll system for employees
- Employer Payroll withholding taxes for income and Social Security, IRS Circular E "Employer Tax Guide"
- TAXES
  - Federal (and State) Franchise and Income tax returns must be filed on 15th day of third month following close of corporate tax year. Federal form 1120.
  - Determine if taxed on calendar or fiscal year and choose between cash and accrual method.
  - Determine any State Sales and Use taxes and miscellaneous property taxes
If doing business in other States, review labor laws and regulations
Maintain a Business plan summary and presentation for prospective investors, employees and partners
More more detail across the company, see the other organizational areas listed on companyexam

* - (Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a professional if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.)

STARTUP PROCEDURES | home | about |