2 ms·

"If I pay myself with equity can I create additional shares" If you don't mind the embezzlement/laundering/fraud charges. http://www.inc.com/resources/finance

by iamdave 18y ago

"If I pay myself with equity can I create additional shares" If you don't mind the embezzlement/laundering/fraud charges. http://www.inc.com/resources/finance/articles/20040801/noVC.html http://www.inc.com/resources/finance/articles/20040801/noVC.... Fantastic article for what you're wanting to do, especially when it talks about cash flow, though you'll be cutting it close there.

coglethorpe 18y ago
Thanks, I'd like to avoid jail time if possible. :-) I can still loan personal money to the corporation, right? I need an example of how to go about that. Has anyone here done that? My plan was to seed the company, then loan it some cash a few months in. I'm only talking about 10k here. The Inc. article is good, but it's short on the details I need. Anyone have links to this sort of situation? I can imagine people with tech startups end up in this situation all the time.
- qaexl 18y ago
  You have to document it in board meeting, and spell out the terms of the repayment. If you want to keep liability protection. From what I understand, if the opposing lawyer can successfully argue that you appear to be commingling funds and not operate as two seperate, distinct entities. How this is determined is not so much by a clear set of rules so much as a set of heuristics. They look at the formalities you've done, and other things such as how much you have loaned versus how much the corp was capitalized as (laibility-to-equity ratio) -- you'll want to ask your lawyer what is the best way to go about loaning money to your company, how often and how much you can do so.
tptacek 18y ago
Embezzlement charges? Where is that coming from? If he doesn't have outside shareholders, he can change the structure of the company by fiat 10 times a day from a Rails-scaffolded web-app that generates new company documents, and it's all perfectly fine.
- coglethorpe 18y ago
  "a Rails-scaffolded web-app that generates new company documents" Forget the company. I think I just found my entry for the next YCombinator contest. :-)

by iamdave 18y ago

coglethorpe 18y ago

Thanks, I'd like to avoid jail time if possible. :-) I can still loan personal money to the corporation, right? I need an example of how to go about that. Has anyone here done that? My plan was to seed the company, then loan it some cash a few months in. I'm only talking about 10k here. The Inc. article is good, but it's short on the details I need. Anyone have links to this sort of situation? I can imagine people with tech startups end up in this situation all the time.

qaexl 18y ago
You have to document it in board meeting, and spell out the terms of the repayment. If you want to keep liability protection. From what I understand, if the opposing lawyer can successfully argue that you appear to be commingling funds and not operate as two seperate, distinct entities. How this is determined is not so much by a clear set of rules so much as a set of heuristics. They look at the formalities you've done, and other things such as how much you have loaned versus how much the corp was capitalized as (laibility-to-equity ratio) -- you'll want to ask your lawyer what is the best way to go about loaning money to your company, how often and how much you can do so.

tptacek 18y ago

Embezzlement charges? Where is that coming from? If he doesn't have outside shareholders, he can change the structure of the company by fiat 10 times a day from a Rails-scaffolded web-app that generates new company documents, and it's all perfectly fine.

coglethorpe 18y ago
"a Rails-scaffolded web-app that generates new company documents" Forget the company. I think I just found my entry for the next YCombinator contest. :-)