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Our federal tax system, the public policy, makes it unnecessarily difficult for private companies to share stock with their employees, contractors, advisors, and other service providers. The problem lies in our tax law. The Problem with Issuing Shares to Workers Why doesn’t your employer bonus your shares? Because the
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We are frequently asked by clients to review Non-Disclosure Agreements (“NDAs”) in various contexts. It goes without saying that you should be careful of what kind of NDA you sign and not be afraid to negotiate any terms you do not like. Nondisclosure or confidentiality agreements come in a wide
Convertible Promissory Notes
Convertible notes, SAFEs, and every other type of convertible equity instrument are to startup financings what bread is to a sandwich, or Ringo is to the Beatles—not the most exciting part, but they’re almost always there, and you’re kinda stuck with them. In our experience, most early-stage
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When you set up your company, you hopefully set up a stock option plan (also known as an equity inventive plan) at the same time so that you have a plan that is properly adopted and ready to be used when you are about to grant options or other equity
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Personally Identifiable Information (“PII”) has become a buzzword in the privacy law world the last few years, and it is heavily protected by rules and regulations around the world, such as the General Data Protection Regulation (GDPR). Companies that fail to comply with regulations such as the GDPR, or that
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The California Consumer Privacy Act (“CCPA”) became effective at the start of 2020. Its purpose is to protect the personal identifiable information (“PII”) of California consumers. The bad news for businesses is that the California Consumer Privacy Act’s legal requirements are murky at best. And, even in its infancy,
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The California Consumer Privacy Act (“CCPA”) has some twisty definitions of who is - and isn’t - considered a California consumer. The text of the CCPA says a business who “alone or in combination, annually buys, receives for the business's commercial purposes, sells, or shares for commercial
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A common question we receive when working with limited liability companies taxed as partnerships under Subchapter K of the federal income tax law (“LLCs”) is, can the company grant stock options to its employees and independent contractors, even though the company isn’t a state law corporation (and is in
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Note: The Paycheck Protection Program (PPP) ended on May 31, 2021. This article remains for historical reference. For updated information on funding options, please visit the SBA’s website. We wrote about the Paycheck Protection Program (“PPP”) component of the CARES Act (“Act”) last week and how it expanded who
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Joe and I wrote a post last year about how to form a Washington corporation, and the importance of doing away with statutory preemptive rights held by shareholders. If a company did not to do this, all of its shareholders would automatically have the opportunity to participate pro rata in
Startup
Congress has passed and President Trump signed into law on March 27 the Phase 3 COVID-19 Relief package commonly known as the “CARES ACT” in an attempt to provide financial relief to American businesses and the American people in response to the COVID-19 pandemic and specifically include relief to small
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In a decision issued on July 15, 2019, Division I of the Court of Appeals of Washington ruled that the 2017 City of Seattle 2.25% tax on high-income residents was unconstitutional because it violated the Washington state constitution’s uniformity requirement (Art. VII, Sect. 1). In striking down the