Building a strong cap table starts with clear steps and timely actions. This guide distills the core reminders for issuing equity in a US company, including legal considerations, founder signatures, and the critical 83B election form. Follow these pointers to protect your valuation, ensure compliance, and set founders up for success.
What key reminders guide your equity issuance process?
Issuing equity hinges on a few high-impact decisions. Focus on legal alignment, timing, complete documentation, and tax-related actions. These choices reduce risk and keep your cap table clean.
Why consult an attorney if you are outside the United States?
- If you live outside the US, consult an attorney before issuing stock.
- Purpose: confirm no tax repercussions arise in your home country.
- Support: the team can help you find an attorney if needed.
When should you issue stock to founders?
- Issue stock soon after forming your business in the US.
- Do it before any change in valuation to avoid complications.
- Best practice: issue as soon as possible after company creation.
How do you complete stock issuance documents correctly?
- Documents are not complete until everyone has signed.
- Confirm all founders have signed the stock issuance documents sent by email.
- A founder’s spouse may need to sign; support is provided to route documents to spouses.
What steps must you complete yourself for equity issuance?
Two steps are founder-owned and must be handled directly. Completing both ensures proper records and optimal tax treatment of your shares.
- Purchase the stock from your company and save a record of the transaction.
- Mail the 83B election form to the IRS. The form helps ensure optimal tax treatment of the shares you purchased.
- Important detail: you must physically mail the letter. Support is provided to generate the letter as part of your stock issuance process with Stripe Atlas.
How does Stripe Atlas support this process?
- Generates the 83B letter for mailing.
- Helps coordinate spouse signatures when required.
- Provides guidance and a reference equity guide for deeper learning.
Where can you learn more and what comes next?
You can learn more in the official guide available via Plazi’s resources: stripe.com/atlus/guides/equity. After covering these equity steps, the next topic is taxes.
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