What to do the week before you incorporate

Incorporating feels like the moment a company becomes real. It is also the moment a lot of founders lock in decisions they never actually made on purpose. We have helped enough founders form companies to know that the filing itself is the easy part. The week before it is where the real work lives.

Here is what we walk through with every founder before anyone files anything.

First, decide if you even need to yet

Incorporating early can feel productive, but a brand new entity comes with filing fees, a registered agent, a bank account, and a tax return whether or not you have revenue. Form the company when you are about to do something that requires one: take money, sign a real contract, bring on a co-founder or employee, or raise.

Get ownership in writing before it gets awkward

The single most expensive mistake we see is a 50/50 handshake split that nobody wrote down. Equity is easy to agree on when everyone is excited and the company is worth nothing. It gets very hard the first time someone leaves. Decide the split, and just as importantly, decide what happens when a founder walks away early.

• Who owns what percentage, and why
• Vesting, so equity is earned over time and not gone the day someone quits
• What happens to a founder who leaves in year one
• Who has the final call when the two of you disagree

The five decisions to make before you file

When a founder sits down with us the week before formation, these are the five things we make sure are settled.

1. 1Entity type. An LLC for simple and bootstrapped, a C-corp if you intend to raise venture money or grant options.
2. 2State. Your home state is fine for most businesses; Delaware is the default if institutional investors are in your future.
3. 3Ownership and vesting, written down and signed by every founder.
4. 4Intellectual property assignment, so the code, brand, and product belong to the company and not to a person or a past employer.
5. 5A clean company name you can actually use, with a matching domain and no trademark already sitting on it.

Get the boring foundations right

Once the entity exists, three small things save you real pain later: an EIN from the IRS, a business bank account that keeps your money separate from your personal money, and a simple system to track what you spend. Mixing personal and company finances is the fastest way to lose the legal protection you just paid to set up.

None of this is glamorous. All of it is the kind of work we take off your plate so you can stay on the product and your customers.