Question
We are two co-founders and would like to incorporate our company. We were just accepted into an accelerator program and that leads to some time limitations, basically we have a week to get the legal side done. My co-founder says that, for time's sake, he wants to be the sole owner of our company. A lawyer would then set up an agreement on our shares and vesting. I would get my 40% in shares and the role of director. Supposedly, that would in the end be the same as a regular co-founder. What is the problem with this setup? I feel somewhat nervous about making him the sole owner of the company. In our limited time, is there anything else we can do? Or is this the usual way to go?
Answers: 1 public & 0 private
It would not take any extra time to also identify you as an equity owner of the enterprise. Getting Articles of Organization (e.g., for a LLC) or Articles of Incorporation (e.g., for a corporation) is not the long pole in the tent. Completing the required forms takes only a few minutes. Many jurisdictions allow them to be filed online, or at least filed in paper-format with same-day or 24 hour service. Obtaining an EIN from IRS.gov takes about five minutes. It makes no sense to file incorporating documents only to just after need to file (and pay for!) amended versions to identify your equity ownership. Engaging an attorney to prepare a company charter (e.g., Operating Agreement for a LLC, Shareholder Agreement / By-Laws for a corporation) is a good idea, but again your involvement will not appreciably protract the effort. Your first step should be to reach out to a local commercial attorney to get filing papers in order including both you and your co-founder as owners identified in the filing papers.
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