I recently got an inquiry for someone with an unusual entity selection question. Here it is: “I am in the process of creating a non-profit. Can you please tell me whether you think a non-profit should be an LLC or Corp… and why?” Now, this person didn’t just pull my name out of a hat;…

I don’t mean third-date awkwardness, or figuring out how to let him know you’re not ready to introduce him to your friends. No, we’re talking about how to handle going from start-up to break-up. Co-founders have complicated relationships: you have usually known the other founder as a co-worker or friend for months or even many…

The HBR recently shared the results of a study showing that an increase in the amount of flattery received by a CEO disproportionately increased the likelihood of the CEO being fired. “You look mahvelous” Flattering the CEO increases chance of getting [him] fired http://t.co/2odFtkwBW3 — rickcolosimo (@rickcolosimo) November 5, 2013 That link is dead: look…

You’ve read my post on the benefits of having a board in your closely held company, and you’re convinced. You’re ready to move forward but stuck at step 2. How do you go about putting a board together? For most companies, major investors push for governance rights and the structure of the board becomes an…

I have seen a number of articles recently talking about splitting the CEO and chairman roles. Here’s one about JPMorgan. Everyone still seems so up in arms about this issue. I would have thought someone would have done a little digging. Here’s my take: All directors have equal power and equal responsibilities. There is no…

Several years ago, I switched my law practice from mass torts (plane crashes and shipwrecks) in New York City to corporate law at a large Silicon Valley law firm. As a result of that experience and clients I worked with in the years following the dotcom bust, I developed a number of simplifying rules about…

“Joint venture” is a sloppy term used to describe a number of different business operations. The important thing to remember is that it is too vague to be meaningful legally. A project that is called a joint venture might legitimately be structured like any of these: a brand new entity with shared ownership a subsidiary…

Fred Wilson of Union Square Ventures wrote about his board meeting and ugly travel schedule some time ago. It’s refreshing to hear him talk about being excited to go to board meetings. I’ve sat in too many where a VC (even a monster big-name guy) ended up talking about the format of financials being presented…

Here’s a question on quasi-nonprofits that I’ve been hearing more often: Do I need to have a nonprofit status to become a social entrepreneurial enterprise? I found this LinkedIn question to be interesting for two reasons: first, it’s very related to a nonprofit question I field all the time, and second, I have a current…

This LinkedIn question asking about reverse mergers is a question I’ve answered for a lot of entrepreneurs who get pitched by these folks and are invariably misled confused about where, how, and whether this deal brings money into the company. “What is a reverse merger or reverse IPO?” Short answer: “reverse merger” is almost always…

Here’s a link to a brief article about crowdsourcing as applied to startups. Grade for this article? Nominally 80% for 4 out of 5 right, but the wrong answer on financing can kill a company. This one gets a #FAIL from me. Hearkening back (or forward, since I don’t know if I’ve posted it yet)…

Here’s another LinkedIn-derived question that merits a better answer. The question was essentially whether the fellow with some IP to build a business on should form an LLC or a corporation. In typical LinkedIn fashion, off-the-cuff answers that are specific end up being wrong. In my mind, if someone is asking this question, they either…

Some time ago, I’d come across a Forbes article (now lost to three or four intervening moves and office clean-outs that discussed the effects on pension plans on executive compensation. One really interesting fact was that (as of June 9, 2003) only a “handful” of companies (including GE and Verizon) had excluded pension “earnings” from…

You’ve probably already seen our Five-minute Lawyer post on How to Form a Nonprofit, but sometimes people are at an earlier stage of the process, where they haven’t figured out what they exactly want to do. This process looks a lot like planning a for-profit business in the early stages, but here are a few…

I regularly answer corporate governance questions on LinkedIn. Where should I incorporate or form my entity? After you’ve decided that it’s in your interest to form an entity of some kind, the next question is where to form that company. Most people know that Delaware is the 800-pound gorilla in this field. Many have also…

I often get questions asking about entity selection when someone is considering incorporating. Here is a summary of some general ownership structure issues. What do all these entities do? This introduction will make it easier for you to come up with questions that will help you select the best alternative for your specific situation. There…

Another LinkedIn user asked about how to structure a startup that would be a typical VC-funded software company. Here’s my edited answer: As someone who’s represented dozens of startups, closed probably 100 venture deals, and cleaned up too many small companies to count, there is in fact a right way and wrong way to do…

Here’s another common question I get: I’m onto a new startup idea. How much would you charge to incorporate? Do you have any advice as to where to incorporate? Here’s my usual answer: I’ve done this sort of work for companies under firm quotes of $2000 + state filing fees for a full incorporation package,…

I regularly find people asking this question: How do I form a nonprofit? What most people mean and want is a charitable organization that satisfies the requirements of IRC 501(c)(3), which gives donors assurance that their donations will be tax-deductible. To set up a charitable organization, you generally run through the following steps: 1. Determine…