This Week in Startups

Avoiding Co-Founder legal disputes & C-Corp vs. LLC with Becki DeGraw | Wilson Sonsini Startup Legal Basics

9 snips
Nov 20, 2020
Becki DeGraw, a Partner at the renowned law firm Wilson Sonsini, shares her expertise on essential startup legal matters. She discusses the pitfalls of using generic legal forms, particularly when choosing between LLCs and C-Corps, highlighting their impact on liability and investment options. Becki emphasizes the necessity of clear agreements among co-founders to avoid disputes, the critical role of IP protection during collaborations, and the importance of documentation in co-founder relationships. Her insights are a must for budding entrepreneurs!
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ADVICE

LLC vs. C-corp

  • If you're unsure about seeking venture capital, start as an LLC.
  • Convert to a C-corp before accepting VC funding to simplify the process.
INSIGHT

VCs and LLCs

  • LLCs offer pass-through taxation, meaning profits and losses are reported on individual tax returns.
  • VCs generally avoid LLCs due to this tax structure, preferring C-corps.
ANECDOTE

Jason's Podcast LLC

  • Jason Calacanis uses an LLC for his podcast, "This Week in Startups," as it's a side hustle with no current plans for outside investment.
  • This structure simplifies his taxes since the podcast generates profit.
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