Episode 15: Post Incorporation Action Items

February 25, 2021

We get a lot of recurring questions on what to do post-incorporation. While the work we do to set up our businesses and incorporate them is extremely important, there is still much to do afterward. For those of you who are confused or lost in this area, today’s episode will be very helpful. 

In this episode, I speak with one of our corporate counsel here at CGL, Danielle Simmons. Her practice focuses on general corporate governance, venture financing, and mergers and acquisitions. In our conversation, we address all of the post-incorporation action items founders need to take into consideration and put into practice.

If you have ever sent us a question on this topic or even wondered what must be done post-incorporation in your business, tune in to learn all about it today. 

In this episode, you will hear:

  • A bit of context on what the incorporation process entails.
  • The legal side of post-incorporation action items.
  • Tax considerations during the post-incorporation process.
  • How to navigate everything that goes into employee identification numbers, insurance, and other general corporate governance items.
  • Why it is so important to open a separate business bank account. 
  • How founders should think about consultants post-incorporation.
  • The benefits of creating business contracts and commercial agreements right from the beginning.
  • How to best generate your business forms.
  • Why you should bring someone onto your team who is sophisticated in finance and tax and who understands your business as early as possible.

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Transcript from Episode 15:

 

SUMMARY KEYWORDS

founders, attorneys, business, company, shares, incorporation, people, form, stock, investors, generators, important, clients, Danielle, agreements, state, corporation, understand, liabilities, California

 

00:02

Welcome to the CGL podcast. I’m your host, Hannah.

 

00:05

I’m Tom, and I’m one of the founding partners of CGL. What if you could speak with top business leaders and CEOs about their professional insights and personal journeys. Each week we share authentic discussions with business leaders, where they flesh out substantive issues while also getting deeper into their authentic stories. Our goal is to bring you conversations on the fusion of business and humanity, success and authenticity, and the challenges of balancing life and work. Thank you for joining us. Welcome to another episode of conversations with CGL. Today, we are speaking with Danielle Simmons. Danielle is one of our corporate counsel here at CGL. And her practice focuses on general corporate governance, venture financing and mergers and acquisitions. I’m really excited about today’s episode because it’s covering a topic that we get a lot of recurring questions on. So I’m hopeful that this will be helpful for our audience, we are going to discuss some of the common action items and considerations for a founder post-incorporation. So we did discuss kind of the incorporation process in prior podcast episode, I think it was episode three. And while you go through a kind of all of the work of setting up your company and getting Incorporated, you know, there’s a bunch of stuff that you have to do after that. So that’s what we’re gonna address today. But, Danielle, if you could help us kind of go into a brief primer about the incorporation process. So if people haven’t listened to Episode Three, kind of they have a little bit of context in terms of what we’re talking about.

 

01:44

Yes. And Hi, Hannah. So excited. To be honest, this is my first time being on the CBl podcast, so I’m excited. So in terms of the incorporation process, there’s three common legal entities that most people choose when starting a company. And so that’s a partnership, a limited liability company, or a corporation, the incorporation process, quote, unquote, is what we use to describe forming a corporation, the entity you choose of the three typically is a tax decision and how you want to invest in your entity and any liabilities you want to avoid. So I won’t go deep into that. But when forming an actual Corporation, the legal process mainly involves filing the articles of incorporation with your state or Commonwealth depending on where you live. And that is actually a public facing document. So whatever goes in those articles, people can find those by going online to the Secretary of State website, and they can see that your entity exists. And they can see whatever you put in your articles for Certificate of Incorporation after that a lot of the documentation and steps are really internal. But you still want to make sure you keep that internal paper trail, because investors will want to see that. And also, if you end up having any legal issues, you want to make sure you have that. So those internal documents are appointing the initial board members, electing your initial officers adopting your bylaws and approving your initial stock and equity issuances. And so that’s for specifically for a corporation.

 

03:25

Yeah, and we go. So that’s I think that’s helpful for like, really high-level kind of context. But again, we have another podcast episode that goes into detail of a lot of these considerations. There’s a lot of pieces to think about when you’re forming your company and getting set up. So be sure that you’re kind of aware of those things. But for purposes of this episode, we’re talking about what happens after that. Okay, so a company has gone through this process, you know, the initial incorporation process is done, what are some of the next steps that Corporation should take? Because we’re kind of focusing on a corporation for this discussion?

 

03:59

Yeah. So the next step I find with our clients, especially those of our clients that are using an online legal generator to do the incorporation process is that they haven’t issued the actual shares of founder stock. So at this point, you have all your documents and probably received like a nice package, and you’re ready to start operating. But technically, you don’t have any owners of the company yet. And that’s a technical issue. But there’s also a tax implication there. Because when you first incorporate your company, it’s likely that your company has a very low valuation, and you want to issue your shares. And again, I’m not a tax professional. So talk to your tax professional. I just want to highlight that but generally, you want to issue your initial shares, you want to purchase them at a very low value. So if you do it right, when you form the company, you generally can issue them at par value and pay par value, a very nominal amount for your shares if you start waiting to issue your shares as you start operating your business, the most ideal situation is that your FMV, the value of your business is going to go up. And if you issue shares at that time, you are going to have to pay the difference for that amount.

 

05:14

That’s one of the most important things I would say that I’ve noticed clients haven’t done, especially if they’re using the online legal generators, right, definitely. And we’ve seen situations with clients that don’t do any of the formal Corporation work first. And then they kind of are moving things along, setting up their business, and they have an investor come in, who believes in the company and wants to put money into the company. And now the founders are in a challenging situation, because they’re unable to get kind of that initial stock, like what a lot of people casually call founders stock. That’s like one of the perks of setting up a corporation as you can get that stock for basically kind of nothing at the beginning. Because the assumption is the company is really worth nothing at the beginning. But once you have an investor who comes in says, Hey, this company is worth something, it’s hard for, you know, founders to get ownership of that stock at kind of that lower price or par value. So in terms of this and kind of setting up we understand now kind of equity and why that’s so important. What does that process actually look like from a legal perspective?

 

06:16

So it’s mostly honestly documentation. So it’s really about having a paper trail of the issuance itself, the fact that you as the founder or the owner, and how much you actually paid for it. So first thing you want to make sure is that the board has actually approved the issuance and that you have the correct amount of authorized stock, I have seen issuances to founders that are more than the actual authorized stock they have. And that authorized stock amount should be in the certificate or articles of incorporation. So you should have made that decision in the incorporation phase. So you just want to make sure you have enough stock to actually issue to the founders, and you pop the Board approve that issuance. So after you have the board approval, the next step, which is market, but not necessary, but most people expect it and especially investors in Silicon Valley, investors expect to see this is an actual stock purchase agreement. So the founder enters into an agreement to buy the stock from the company. And so this document will say the amount of shares the founders getting, how much you’re paying for it often par value, or if you’re doing an exchange for services, or tech that will be included. And they also often include any transfer restrictions around the stock. So you have that agreement, make sure you execute it, I have seen those agreements not executed. And I understand why it may feel kind of weird to execute it as the founder receiving the shares, and then also executing it as the CEO of the company, you’re like signing the same document. But again, these are corporate formalities, you should do this, then the next step, after you have agreed to pay for the shares is actually paying for the shares. So you want to make sure the company has its own bank account. And I’ll get into this later why that’s important. But you want to make sure the company has its own bank account, and you have a receipt of you as the founder actually paying for those shares if you’re going to pay for them in cash consideration. And then you should receive either a stock certificate or in the case of Delaware, they also allow you to do a notice of your stock ownership. And that should also include any transfer restrictions to note that you’re exempt from securities laws. This is a state-specific thing. I’m just mentioning Delaware because a lot of our clients incorporate in Delaware. But these are the types of things you want to work on with your attorney, especially if you’re in a jurisdiction outside of Delaware. But when all said and done, what you should have is board resolutions issuing the stock, a stock purchase agreement showing you purchase the stock acknowledgment that you paid for the stock and an actual certificate or notice evidence that you own the stock.

 

09:02

All like really important for maladies that commonly are not addressed. You know this is a major piece of cleanup. I think that we as corporate attorneys see often and it gets messed when you know, you’re in the early stage of trying to set up your company. And this is why it’s very helpful to have a lawyer kind of walk you through this part of the process. Okay, so once the founder of the company and kind of like these incidences issued their shares, they’ve evidenced them accordingly. What is like one of the next steps in this post-incorporation process?

 

09:31

Yeah, so this next step is actually a tax consideration step. So again, talk to your tax professional, but the next step is if you have stopped that’s vesting as a founder and you paid a nominal amount for these shares, which you almost all the time want to do is follow an 83 b election. So in the incorporation process, you should have thought through how many shares you want to authorize how many shares you want to issue, and if they should be subject to vesting So a lot of times, some founders Don’t think about having their own shares best, they only really associate that with employees or consultants. But the benefits of having your shares vest as a founder are twofold. Oftentimes investors want to see that they want to know you have skin in the game, they want to know that you have a reason to stick around and increase the profitability of the company. And often common vesting schedule is a quarter over a four-year period. And then the second reason this is kind of a personal reason if you’re in a situation where you have a co-founder or multiple founders if you issue all of the stock at once, and for whatever reason, you have a disagreement with that person, and that person leaves the company, there’s a good chance, they’re still likely a significant owner, and may even have a significant say over the direction of the company, even though they’re not actually contributing to the company’s growth. So those are reasons you might want to consider vesting your shares, even though you’re a founder. So if you’re doing that the reason you want to have the 83 b election and again, talk to a tax person, I am in no way a tax person is that you want to write to your tax authority that you want to be taxed on your shares when they are granted, not when you actually receive the share. So this could be over a four-year period, and you may not receive your last amount of shares in four years from the date they were granted. And those are tax implications that you want to do.

 

11:33

Yeah, it’s kind of like a benefit, again, going off of the ideology that the company isn’t really worth anything when it’s set up. Sometimes founders take offense to that. But they’re actually like great legal corporate benefits that founders can receive based on that assumption initially, and one of them is like 83 b election and allowing them to kind of pre-pay tax on these shares at a time when the shares are kind of not really deemed to be worth anything.

 

12:07

Again, I’m speaking very loosely about it, not attached or not hear anything, if your shares are subject to vesting file, your 83 b election, the reason why that one comes up as well as there’s a really strict deadline on it. And if you miss the window to file your 83 b election, you’re done. That’s like one of the things in the world of corporate law, a lot of stuff is fixable, but that one is not typically fixable.

 

12:26

Yeah, it’s 30 days from the time of the actual issuance, and it’s not 30 business days, just 30 calendar days. And we all know how quickly that can go by totally. So you want to kind of be in place to do it. And there’s 83 b Election Form that you’ve been finding, you can just fill out since the IRS again, consult with your tax person to see if there are reasons why you may not want to make an 83 b election. So especially if the shares aren’t of nominal value. So again, you want to talk to your tax expert on that. But for the average founder, they’re going to want to make an 83 b election, their shares are subject to vesting.

 

13:02

Yeah. Okay, now moving out of the realm of the kind of filing the 83 b election and founder stock, what comes next in terms of post-incorporation action items?

 

13:15

Yeah, so now we’re just starting to get into just corporate business operation. So you want to get your employee i dignification, number e i n or FBI again, and that’s pretty simple. It’s something you can do on the IRS website, you want to consider getting insurance for your operations, liabilities workers comp, if you’re starting out with a very sophisticated board already, you might need to consider getting director and officers and insurance or DNO insurance and want to file any of your state and local registrations or licenses, depending on your business operations. This is something again, you want to get an attorney for. Like I said before, you’d open a bank account, start bringing in outside consultants, such as accounting, payroll, attorneys, if you haven’t brought in attorneys yet, it might be a good time to start bringing them in at this stage. And a lot of times companies don’t do this on the early end, but you want to consider putting some general corporate governance type things in place. Okay, so I’m putting myself and the founder’s shoes right now. And my immediate reaction.

 

14:20

Whoa, this is a lot. How do I kind of navigate all of this? Like maybe we should kind of break it up a little bit and go into like some of these in a little bit more detail and give some examples?

 

14:30

Yes. So let’s start with often the very next thing you probably should be doing but you might not be doing which is registering in whatever locality you’re in. So at the state, local, municipal city, wherever you are level, oftentimes they’ll require you to register to do business. So let’s take California for example because that’s a place a lot of our clients do business in. So California is a state were they have a very broad definition of what it means to do business in their state. And basically, what they’re saying is you need to pay the taxes to do business. So this can like raise a lot of triggers for people because this is another expense that maybe they weren’t considering, especially if in their minds, they incorporated in Delaware, as many companies incorporate Delaware because it’s thought to be more business-friendly, the laws are very well understood from a corporate perspective. So you’re incorporated in Delaware. But if you’re doing business in California, you will also need to pay California franchise tax laws. And if you don’t, and they find you, you’ll have to pay back taxes here. Just to give you an example, because some of our listeners probably are in this situation, California defines quote-unquote, doing business, they have a test, and you can meet any one of these three things. If you engage in any transaction for the purpose of financial gain within California, they consider that doing business if you’re organized or commercially dominant siloed in California, so what that means commercially domiciled is, let’s say you’re organized in the state of Delaware, but your headquarters are in California, that’s something they’ll consider doing business. If you have sales property, or payroll that exceeds certain thresholds that you can find on the California Franchise Tax boards website, they consider that doing business. So if you’re in that situation, what you need to do is file what is known as a foreign qualification and provide yearly statements to the state of California and most importantly, pay the California franchise tax. And each state has a different version of this. So again, this is something you want to have an attorney assessed because not all states are as broad as California when qualifying for doing business. And then additionally to that there’s also depending on what your business model is, especially if you’re a heavy regulated industry, you might need to get licenses to even operate your business no matter where you are. And again, that’s something you should discuss with your attorney.

 

17:05

Right. And that’s for you know, businesses that are maybe you’re dealing with food and food kind of handling operations,

 

17:11

environmental, mental cannabis,

 

17:13

if you’re in California, or a state where cannabis is legal, and there’s a lot of regulatory issues to navigate. And so that’s a really important piece. Okay, so another one that you touched on briefly, and we hear, you know, a lot of questions about whether this is necessary is the company bank account, you know, sometimes when there’s one founder, and they’re the only person at the company, we get questions of is it necessary for them to open up a separate bank account? It seems straightforward, but as attorneys, we know that this is incredibly important. So can you kind of talk a little bit about that, and why this is so necessary.

 

17:48

Yes, there are many things to take away from this podcast. But if you are listening and have not opened a company bank account, go open a bank account, oftentimes, you need your Certificate of Incorporation, or LLC agreement or whatever evidence to prove that the entity exists, but open a bank account in the company’s name. And the reason you want to do this is one of the big benefits of having a company or an LLC, a corporation is a protection from liability. So under the eyes of the law, your company is considered a separate person. And the benefit of that is that you do not have to share in the company’s losses or liabilities outside of your investment. But to keep that protection, that’s not just a promise to you, you have to do certain things to keep that protection. And if you’ve done things like engaged in fraud, or legally, they consider that you haven’t really separated yourself, you’re not two separate entities, you’re really just one person and you’re using the business as an extension of yourself. These are ways that you can what we call them the legal practice of piercing the corporate veil, where debtors can go after you as a founder, personally for the liabilities of the corporation. And one of the considerations people look at when they’re trying to prove that you are not a distinct entity from your company is that you’re commingling your funds, you’re commingling your personal funds with the company’s funds. And an easy way to not do that is have a company bank account. So I know it can be hard for founders to think about it like that. But you should really treat the company has its own separate entity, which is why you also need to engage in contracts with the company which may mean you’re signing the same document you’re signing as yourself and you’re signing it as the CEO or whatever of x company. It’s very important. That seems like a very simple step and maybe not necessary because it’s really just paperwork and moving money around. But it’s really important to show that your company is not extension of yourself. It’s its own entity.

 

19:56

Yeah, I feel like this is such an important topic. is often overlooked because it’s so simple. I mean, maybe we do like a podcast episode at some time on this or something just because it’s one of the defining pieces that’s like used to determine whether the corporate veil has been pierced, you know. And so it’s such an important thing. And I think we often see people overlook at, okay, so another one that comes up a lot is like your founder, you’re starting your company, you’re trying to outsource where you can, you’re kind of doing everything, a topic that we talk a lot about as consultants, like, how do you work with them founders don’t know when they should bring on consultants. There’s a lot of rules, especially in California, about consultants, can we talk a little bit about kind of how founders should think about consultants post-incorporation?

 

20:44

Yeah, and I’ll table the conversation of what is a consultant and what is an employee, because that’s a whole separate conversation, and we should bring in labor and employment specialists to discuss that. But when thinking about what are the types of people from a corporate business perspective, you should bring in to protect yourself from liability. And also to further your business to attract the type of investors you want, I would say the most common are one, some sort of accounting person, someone who has experience either in finance or accounting, it could be that you’re that person. And if you are, and you have the time to do it, great. If you do not outsource it, if you can’t outsource it to like a major firm, for cost reasons, there’s a lot of different platforms out there now that can handle your accounting needs. Another thing is payroll. And the reason these two things are important are, you’re not only legally liable for things like this, you’re also immediately taking a financial hit, if you mess it up. If someone comes after you, they’re gonna come after you for back taxes, right. And those people are the taxing authorities. And they’re often pretty good at going, that’s their whole job, you know. So it’s not just a legal risk, it’s a financial risk. So payroll is another important one, if you don’t have a background in outsource that, again, there are different price points out there, you can do a payroll management database that a lot of people use that. And that’s if you’re going to have employees, and the same thing, attorneys. There’s a lot of legal online resources out there. But there are just certain things and I’m sure you can even tell from this call, there are just certain details that you can’t really get online that are specific to your entity, and you want someone doing that. So whether it’s you hire a person that you just work with every once in a while, or you bring them in house, you need someone you can trust to understand the legal aspects as well, I think we’re in a really exciting time in that there’s starting to be diversification in those places to where there are different price points, there’s different ways to meet this at the stages your company is at. So we’re not in that space, where you just have to go with these, like really big, large, very expensive entities to manage these things for you. That really excites me.

 

23:07

Yeah, definitely, I think you see a lot of push from the market of like more efficient ways for either these services, whether it’s attorneys and like law firms being more efficient, or you know, technology has been such a huge help in automating a lot of these things. I know that you know, CGL, we’re huge fans of technology, and where there is an opportunity to use technology to automate certain parts of the job that frees us up to use, you know, our skills for pieces that can’t be automated. So I think it’s Yeah, it’s just like a response to where the times are. But certainly, I think these types of services are becoming more accessible for founders and businesses, which is great.

 

23:45

Yeah. And another point I want to make, I just realized, when you’re thinking about bringing stuff in the house, something that I think is really simple that you can bring in house if you’re not at a point yet, where you can afford to have an attorney do it is just some very simple corporate governance mechanisms. And again, I’ve talked to founders who this seems like a very taxing thing for them because it’s just a lot of paperwork really. And I can understand why it might seem silly, but down the line, the reason you want to have a good paper trail is one of the issue we talked about before about piercing the corporate veil, if you’re not adhering to corporate formalities, that’s another reason people can pierce the corporate veil and come after you personally for your company’s liabilities. Also, when you’re starting to try to attract sophisticated investors, they really want to see that you’re managing your corporation in a way that’s professional, they want to see all the legal documentation at the outset. And you want to just have that ready to give it over to them. So other things that you can think about when you’re doing that is things like a cap table who’s managing your cap table, that’s something you can do in-house if you’re sophisticated, or you’re going to have a platform like car to do that for you. So I just want to touch that’s another The important thing you need to consider when you’re thinking about outsourcing or keeping things in the house that you need to do, definitely, it

 

25:06

raises a good point that I feel like I’ve spoken to so many different clients about is, you know, you’re going to usually pay for these things at some point or another. So whether you’re not investing in them and kind of the onset of setting up the company, if a sophisticated investor or a buyer or partner comes in down the road, usually they’re going to look for these types of things in your company. And, you know, we always advise companies, it’s a lot more efficient and usually affordable to take care of these things from the beginning, then once like, for example, building out a cap table when your cap table has now expanded, and you’ve got to kind of go through that process, it’s a lot easier to do it from the beginning, but it’s hard. I know as a, as an entrepreneur, myself, it’s hard to figure out like where you allocate resources and kind of when you’re setting things up, where you invest these things that you know, are important, but aren’t really tied to kind of the bottom line. You know, as attorneys were trained to know what we’re just like trained to understand how risky that type of thing can be. One of the things that I think is a good kind of piece to raises, you touched on that about commercial contracts and forms. And on that, I think is like a hot topic that people would be interested to hear about is like online form generators, like anybody, can kind of go into Google and download a form, how does that affect your company? What are kind of the risks and just kind of let’s talk about that piece?

 

26:27

a little bit? Yeah, I’d love to talk about that piece, I’ll touch the contract piece, the commercial forms piece first, and then I’ll move into the online generic, because I think that’s just a very exciting, like, we were talking about how technology is streamlining things and making things easier for businesses. But in terms of having your own forms, and what I’m talking about what I’m saying this, and this is definitely dependent on your business model of what industry you’re in. But you may want to have a set of form contracts you can have on hand. And these would be nondisclosure agreements, sales agreements, license agreements, independent contractor agreements, things like that, depending on how often you do that, enter into those contracts for your business. So the reason you would want to, you know, invest some time at the outset in having these forms. And I would honestly recommend you have an attorney draft these for you. And I’ll explain why. But there are two benefits to having these forms at the outset. It’s one cost into consistency. So for the cost point, it’s generally more time-consuming. If you’re constantly entering into let’s say, NDA, or sales agreements, it’s generally more time-consuming to edit someone else’s. So if you have, you know, 20 different MBAs from different people, and you’re trying to make the consistent, and I’ve never seen the form before. And if you’re actually outsourcing that to attorneys, you’re starting to spend a lot of money on doing that, when you could spend a lot less just creating a form and sending them out. And oftentimes, when you send out your form, and what I like to have clients do is the minute you’re having a discussion with someone just attach to the form, because you’ll find when you set the stage that way, oftentimes people will just sign it. So that’s saving time and money. And then the consistency point, you want to have all the terms that you’re agreeing to because I think a lot of times when you sign an agreement, you just kind of sign it and move on to doing the actual work the reason you started the business in the first place, but you have obligations in that agreement, and you’re agreeing to do certain things, and you want to make that consistent across the board. So you are promising different people different things. And if you have all these different terms and all these different promises to different people, you’re opening yourself up for a huge legal liability. The best-case scenario is you just have this headache, or you promise all these people different things. And you don’t remember who you promised what so you really want to get forms in place at the outset. You can hire attorneys, we do these all the time. It’s just we’ll create a form for you. We’ll tailor it to your business. And I’ve actually found being on the other side when I wasn’t an attorney and I was actually working at startups that the process of actually going developing forms and operations and things like that with consultants and lawyers, it actually helped me think through the business model more. And it actually also helped me be prepared for very common pitfalls. Because I think sometimes when you’re working with attorneys, especially attorneys out a business savvy, you’re like, gosh, they’re always bringing up problems, you know, but if you have a business-savvy attorney, they’re bringing up problems that you’re more than likely going to have it very soon. And so if you’ve already thought through that you’ve actually saved money down the line, because when that problem hits, you already thought through it and you have something and you can just push that aside instead of it literally putting a wrench in your business operations, which happens a lot when a problem hits early on, it can slow everything down. So that’s some of the benefits of that. Yeah,

 

30:06

we see that a lot. Actually, we have the benefit, I think, with a number of our clients of getting really involved in a lot of their commercial agreements. And as we get in as lawyers, you know, we kind of start poking like, well, how does this work for commercial agreements, you have to understand everything about the business really to kind of draft these and we start kind of poking. And so many times we’ve had conversations from our CEOs or clients saying, Hey, I didn’t think about that, Oh, that’s a good point. Hold on, we’ve got to revise some things and different parts of the business, you know, and they’re grateful for that, because that kind of helps them anticipate issues that could have come up that, like you said, kind of like cost dollars down the line. So

 

30:45

you can’t see me, but I’m like vigorously nodding. That is definitely such a huge thing. And then, you know, the second point is, though, you brought up with online legal generators, and I know a lot of attorneys are like, really anti visa, some of it is because it’s let’s be honest, it’s taking business away. But some of it is also because it’s oversimplifying something that might actually be complicated. But I’m pretty agnostic towards these, I think it’s really dependent on the online generator you’re using, and how sophisticated you actually are in the legal world as a founder. And I don’t think you have to be highly sophisticated. If you have a good online generator, I saw online generators, where you’re just like, What is this, I hate to tell you, but you don’t really have anything here. And then I’ve seen online generators, where you can tell they have attorneys, keeping up with market terms, being thoughtful, and updating the forms, and making sure you have everything you need. So that’s like a huge span. And that’s just like anything in life, if there’s a marketplace, you’re going to have really good offerings and bad ones. So if you’re getting a good online generator offering, and you have, I don’t even think you need to be highly sophisticated legally. But if you’re even mildly sophisticated, legally, you can probably get away with using an online generator, especially for like your incorporation stuff, even with clients that are I would say, pretty savvy, and use really good online generators that are still mistakes I catch when it gets to our level. And so you can’t fully replace having an attorney who is tailoring things to you and thinking about just you as a client. And so if you can find a business-savvy attorney, and I’ve said that a few times that word, but I understand how attorneys can frustrate the process. So if you can find a business-savvy attorney that can work with you and be a thought partner with you early on, they might even tell you to use online generators for some of this stuff and be like, let me look it over. That’ll be cheaper. You know, if you can get someone who’s cost-sensitive like that, and thoughtful around those things, I would say it’s always better to have an attorney sooner rather than later.

 

32:56

Yeah, we’ve had clients where, you know, for clients that wanted to go that route or were really cost-conscious, but you know, we’re interested in at least a little support from our firm, what we’ve done as we’d like, help them go. So a lot of these generators have like a bunch of questions that they ask. And some of the terms are legal terms. So if you’re not a lawyer, you might not even understand what the questions asking. And so we’ve come up with like a cheat sheet for how you answer kind of some of those generator questions so that the clients at least have a little bit more kind of like knowledge and information as they go into it. So yeah, definitely kind of finding the right support there for how you use these tools is so crucial. This has been great. I feel like this has been a lot of information and answering a lot of the repeated kind of questions we get. So, Danielle, you have been so awesome. And I so appreciate you going into detail with all of this before we close this episode. Is there anything else that you’d like to flag for our listeners?

 

33:53

Yeah, I would, especially for those of our listeners who are founders, I think one thing I would recommend, and I know this can be hard when you’re building out your team, and your real goal is getting whatever your product is out to the market and getting investors however you plan on doing that. But one thing I would recommend is if you can find someone whether that’s you, or one of the first few people you have on the team who is really sophisticated in finance and tax that understands your business, I would bring that person on earlier rather than later. Even if that’s someone who you can only do like you outsource that CFO type of situation. I would do that early rather than later. And I’m coming from most of my career I’ve been representing, you know, investors and then much later stage private equity funds and they know the numbers so well. And that’s really where their focus is. And if you don’t have someone on your side who understands the numbers in your business, that is where I’ve seen a lot of founders lose out on value. So This needs to be the right person. Because similar to attorneys finance people can frustrate the process to I think two founders when they’re like, we need to just get this business going. But if you have the right person who can be a partner and a thought partner with you and really understand your numbers, and really understands where your value is sitting numerically, the earlier you bring that person on, the better in my experience because it not only improves the financial health of your organization, but it also leads to much more sophisticated negotiations with investors. And when and if you intend to exit, your exit opportunities start looking much different as well. So if you could start putting out feelers for that person now, because it might take a while to find the right fit for that person, I would definitely suggest doing that. Yeah, definitely. I

 

35:52

could not agree more. Well, Danielle, thank you so much. Again, this has been wonderful. As always, we’d love to take questions from our listeners. And we do our best to answer those here in the podcast or kind of making posts on social media where we can so if you have any questions, feel free to send us an email at info at CGL dash llp.com you’re also welcome to check out our website and anything else that may be useful. But thank you again, Danielle. And thank you everyone for joining us today and we will talk with you next time.

 

36:26

Thank you

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