Ask HN: Bootstrapping with 2 founders
Hi HN. My partner and I have a Delaware C Corp all formed and are getting ready to do our initial investment. We want to maintain a 50/50 equity split, but I want to put in $1k in a lump sum and he wants to put in $8k in 4 installments over the next three months. What is the best way to arrange all of this investment to lower complication and tax burden? Thanks!
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CATEGORY Bootstrapping & MRR →
HISTORICAL ERA Cloud & Mobile Era (2014–2019)
COMMUNITY SCORE ★ 7 points
TOTAL DISCUSSIONS 5 comments
Definitely get a lawyer . . .
y agree with smt88, C corp is prob. overkill and could introduce tax issues go LLC first.
I would just have each of you track what you invest as expenses for the LLC, then get reimbursed once you are profitable and keep your 50/50 ownership split.
The two of you should be able to make decisions together, I expect one of you are handling marketing and one technical anyway so you can probably defer decisions in those areas to each other.
Good luck.
Hire an experienced startup lawyer. I can't stress that enough. I actually think a C Corp is a huge problem related to taxes and that you need to switch to LLC, but I'm not a lawyer or accountant.
Also decide who makes final decisions, since you have equal votes. Decisions should never be made by committee, even if the committee is only 2 people.