Good questionsare a good start.

The choice depends on ownership, financing plans, tax considerations, and operations. Evaluate both structures with legal and tax advisers before forming or converting an entity.

The structure can accommodate preferred stock, equity compensation, and familiar governance arrangements. Investor expectations are a consideration, but they do not replace an analysis of your company’s needs.

Discuss roles, contributions, ownership, departures, and decision making early—ideally before significant work, equity issuances, or outside capital complicate the relationship.

Vesting ties ownership rights to time or other conditions. Depending on the documents, the company may have a right to repurchase unvested shares if a founder leaves.

An election under section 83(b) can change the timing of taxation for certain transferred property subject to vesting. The filing window is generally 30 days after the transfer. Prompt individualized tax advice is important; making the election is not always beneficial.

A capitalization table records the company’s ownership and may model outstanding options and convertible instruments. It should reconcile with signed documents, approvals, and issuance records.

An option pool is equity reserved for grants under a company plan. Its size and treatment in a financing can affect dilution. A hiring plan is a useful starting point for discussion.

A simple agreement for future equity provides contractual rights tied to future events. Common YC forms have no interest or maturity date. Conversion and payout rights depend on the actual agreement.

A convertible note is generally debt with principal, interest, and a maturity date that may convert into equity when specified conditions are met.

The debt features are a key distinction. Both may have valuation caps or discounts, but their conversion, repayment, and other rights must be reviewed in the specific documents.

Common requests include formation documents, board approvals, equity issuances, a cap table, IP assignments, material contracts, employment records, and earlier financing documents. The scope varies by transaction.

Ownership depends on authorship, employment, prior agreements, and other facts. Incorporation alone does not transfer earlier code; identify the rights and document an appropriate assignment or license.

Payment alone does not necessarily transfer copyright. Work-made-for-hire rules are limited. Review a written assignment, licenses, and any pre-existing or third-party code.

Consider access rights, fees, acceptable use, service commitments, data handling, IP, confidentiality, liability, and termination. The agreement should match the product and the customer relationship.

A useful time is before a consequential commitment: issuing equity, accepting investment, hiring, transferring IP, or signing a material contract. The scope should reflect the company’s stage and needs.

Organize formation documents, approvals, stock records, the cap table, IP assignments, material contracts, and outstanding financing instruments. Identify gaps before promising a closing date.