The High-touch Legal Services® Blog…for Startups!

© 2009-2015 Dana H. Shultz, Attorney at Law

What Does an Incorporator Do?

Logo for Quora, where Dana Shultz answered a question about the role of an incorporator in corporate formationThis post discusses the role of the incorporator when a corporation is formed and is based on a Quora answer that I provided. Please see When a third party files Articles of Incorporation as the incorporator for a company, what are the necessary steps to ensure that the company is legally released to the directors?

When I form a corporation for a client, most of the time the client is the incorporator (i.e., signs the Articles / Certificate of Incorporation).

May a Minor Form an LLC?

Photo of cheering children, symbolizing "May a minor form an LLC?This post – asking “May a minor form an LLC?” – is a companion to May a Minor Form a Corporation?

I have been wanting to write this post for more than two years, ever  since writing the corporation post referenced above. However, as  explained further below, I felt uncomfortable doing so because I was  somewhat unsure of the answer. (more…)

How Do We Issue LLC Membership Interests?

Logo for Quora where Dana Shultz answered a question about LLC membership interestsWhen one forms a limited liability company (LLC) without a lawyer, there is a high likelihood that LLC membership interests will not be issued properly. This post describes how to issue LLC membership interests. It is adapted from a Quora question about LLC membership vesting that I answered.

Properly-Issued LLC Membership Interests

If LLC membership interests are issued properly, one would expect to see several things. (more…)

Vator Splash Oakland – May 6-7 – Special Discounts Available

Logo for Vator Splash OaklandVator Splash Oakland – a two-day startup competition and educational event – will take place May 6-7, 2014 at Jack London Square.

Readers of this blog are entitled to a 35% discount on all tickets except Scrappy Observer and Afterparty, which already are greatly reduced. Use discount code Schulz5. (more…)

How Can I Move My Corporation to Another State?

Logo for Quora, where Dana Shultz answered a question about moving a corporation to another stateThis post addresses how one may move an existing corporation to another state. It is based on a question that I answered on Quora (What state is best to incorporate an S-corp if you plan on moving away?).

I find that for most entrepreneurs, it makes sense to incorporate in the state where the entrepreneur resides. As I wrote in In which State should My Startup Incorporate?

Incorporate in the state in which you are doing business, unless there is a good reason to do otherwise [in which case the other state chosen probably will be Delaware]. (more…)

Virtual Office Choices when You Need a Physical Address

Logo of Investopedia, which provides a definition of virtual officeMany of my startup clients begin with a virtual office, rather than a physical facility. They do this for convenience and to save money – or because the client is located outside the U.S. Sometimes, however, a physical address is required. This post discusses commonly-used physical address alternatives.

Definition of Virtual Office

The term virtual office can have different meanings in different contexts.


When Is It OK to Incorporate Online?

Ads for "incorporate online"Many entrepreneurs need to control expenses – including legal fees. One way to do that is to incorporate online rather than work with a lawyer. Occasionally I am asked, “When is it OK to incorporate online?

My greatest concern when entrepreneurs incorporate online is that they have no way to know whether the process has been completed properly. This is particularly true with respect to issuing shares – a critical task.

In answering this question, I look for activities that increase the likelihood of a dispute or a lawsuit. I ask:

Future Services Can’t Buy Shares in CA but *Can* Buy LLC Membership

Label saying "100% free", symbolizing buying an equity interest by future services rather than cashFuture services seem like a great no-cost way to buy equity in a startup. In California, however, whether you legally can buy equity with future services depends on whether the startup is a corporation or a limited liability company (LLC).

Corporations Code Section 409(a)(1) specifies the types of “consideration” that can be paid for corporate shares. These include, for example, “money paid; labor done; [and] services actually rendered to the corporation or for its benefit or in its formation or reorganization”.

However, “neither promissory notes of the purchaser [subject to certain exceptions] nor future services shall constitute payment or part payment for shares of the corporation“. So a California corporation cannot grant shares in exchange for future services.


Social Media and Investors – WSJ Explains How

Logo of, which published an article about social media and investorsIn an article published today, the Wall Street Journal discusses how social media and investors can come together for the benefit of startup entrepreneurs. (If You Look Good on Twitter, VCs May Take Notice)

According to the article, more “venture capitalists are taking social media into consideration before they decide to pour millions of dollars into a startup” [emphasis added].

The article includes the following eight tips [emphasis added] for how to bring a startup’s social media and investors together most effectively.

  1. (more…)

Section 25102 (f) – Securities Law Compliance if You Incorporate in California

Banner for California Department of Business Oversight, where Section 25102 (f) notices are filedWhen startups incorporate, they typically want to avoid the expense, delay and effort associated with registering the sale of their shares. In California, the most common exemption from registration is found in Corporations Code Section 25102 (f).

Section 25102 (f) says that a corporation need not register the sale of its shares if all of the following requirements are met:

  • The shares are sold to no more than 35 shareholders.
  • All purchasers have a preexisting relationship with the corporation or its officers, directors or controlling persons.
  • Each purchaser is buying shares for the purchaser’s own account and not for resale.
  • The offer and sale of the shares is not accompanied by the publication of any advertisement.