3 ms·
Ask HN: Common or Preferred Stock (joining a startup for 25% equity)?
If I was going to join a company for 25% equity, what would be the benefits of going with preferred stock over common stock, or vice versa? Are there legal advantages or disadvantages to either, tax advantages, ability to be screwed over in the future, etc.?
- HockeyPlayer 13y agoFrom that equity share, I'm guessing you are a founder. You won't be offered preferred stock, that will likely be reserved for future investors.
- o0-0o 13y ago1. You want shares that don't dilute. 2. You want to make sure you are a partner on the C-Corp/S-Corp. 3. You don't want to setup an LLC. 4. You want to make sure you are getting a K1 each year. 5. You want this all in writing before accepting your offer for salary, etc. 6. Your title should be Founder / <whatever you do>
- mangeletti 13y agoThanks so much. Would you mind expand on #2 A bit more, why an LLC is not preferable? The company in question is an S Corp, but IIRC it is also an LLC if that's possible. Pertaining #1, how can I ensure my shares are non-dilutable?
- helpful 13y agoFounders and employees get common stock. Investors will get preferred stock. This is not something you'd get to choose for joining