Legal Question in Business Law in California

Right, so, without realizing it you have answered your own question. The fact that you are here asking this should tell you that you will want to receive proper legal advice that you can actually rely upon and which you cannot receive from some DIY web platform.

Next, unless you are granting equity to very unsophisticated parties, which in itself is ill-advised, who would invest in a company that has not received any proper legal attention? One of the first questions my investor clients will ask a target is who handled legal? If they say, "oh we took care of everything ourselves," they are out of there. Doesn't that make clear sense in your mind? And if your retort is, "we just can't afford a lawyer," I would ask how many you have discussed this with and received cost estimates from? If none, then you just haven't done your homework. And if you really can't afford even the most modest legal budget, then you are not ready to be taking this step. I hope you appreciate my transparency and bluntness.

Once you walk down the incorporated entity avenue, things will get rather complicated rather quickly. You will require the conversion, which DE allows for in most cases or an asset dump (merger) will need to occur. All the documentation will need to be created and in the incorporated context there is more to deal with (founder's K, shareholder K, bylaws, stock purchase or subscription Ks, etc.).

I would really urge you to reach out to a few lawyers and discuss all these needs over before you jump in. It certainly can't hurt to get some good insights. If you would like to discuss further over a free phone consult, feel free to contact me anytime that is convenient.

Our firm is now referred by the American Bar Association (see under the New York section):

http://www.americanbar.org/groups/delivery_legal_services/resources/programs_to_help_those_with_moderate_income.html

Kind regards,

Frank

www.LanternLegal.com

866-871-8655

[email protected]

DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.

If you do surgery on yourself you may well survive, and there are reports of rare cases where people have had perfectly acceptable results. Far more often, however, you will develop an infection or serious complications, and they may kill you, or at best you won't do it right and a doctor will have to fix it. In the law we call the infections and serious complications "ugly protracted litigation," death = bankruptcy, and just fixing what you screwed up is just that, and equally or more expensive than having a doctor fix your mistake. If you do things wrong in granting equity you may not only wind up bankrupt, you could face criminal securities charges. Just because you incorporate in Delaware doesn't mean you aren't subject to other states securities solicitation laws. Bet you didn't know that. Call a lawyer.