Adding a CTO, technical co-founder, or equity partner? Get the complete document bundle—Founders Agreement, Stock Purchase with 83(b), IP Assignment, vesting schedules—everything to protect both parties.
If you or your co-founder live in California, you need additional filings: 83(b) state copy, spousal consent, securities exemption. See CA requirements →
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Miss the 83(b) deadline and you could owe taxes on stock worth millions
Every document you need when bringing on a co-founder
Interactive tools to plan and visualize your equity structure
Compare different equity splits and vesting scenarios side by side
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Key considerations based on where you incorporate or where founders reside
Annual franchise tax due March 1st. Use Authorized Shares method (often cheaper) or Assumed Par Value method. Minimum $175/year for startups.
File annual report with DE Secretary of State. $50 filing fee. Due same date as franchise tax.
Must maintain registered agent in Delaware. Typically $50-300/year through services like CT Corp or CSC.
Texas has NO state income tax but has margin tax (franchise tax). Report due May 15th. No tax if revenue under $1.23M.
Texas Securities Act exemptions available. Rule 139.16 for small offerings. Federal Reg D often sufficient.
Non-competes ARE enforceable in Texas (unlike California) if reasonable in scope, geography, and duration.
LLCs must publish formation notice in 2 newspapers for 6 weeks. Can cost $500-2,000 depending on county.
File biennial statement with NY DOS every 2 years. $9 filing fee. Failure results in dissolution.
NYC has additional corporate tax (8.85%) and unincorporated business tax. Consider if operating in NYC.
Quick answers to common co-founder equity questions
Key terms you'll encounter in co-founder agreements
The process by which equity is "earned" over time. Unvested shares can be repurchased by the company if you leave.
A period before any equity vests. Typically 1 year. If you leave before the cliff, you get nothing.
Total shares including all outstanding shares, options, warrants, and reserved option pool—the "true" ownership picture.
Shares reserved for future employees. Typically 10-20% of fully diluted shares. Dilutes existing shareholders.
Company's right to buy shares before you can sell them to someone else. Prevents unwanted third-party shareholders.
Majority shareholders can force minority to sell in an acquisition. Prevents holdouts from blocking deals.
If founders sell, investors can sell too on the same terms. Protects minority investors from being left behind.
Independent appraisal of company value for tax purposes. Required to set option exercise prices. Valid for 12 months.
Current value of company stock. Options must be priced at FMV or higher to avoid tax penalties.
Investors get paid first (usually their investment back) before common shareholders get anything in a sale.
Protects investors from price decreases in future rounds. They get more shares if company raises at lower valuation.
Acquisition, merger, or sale of substantially all assets. Often triggers acceleration or liquidation preferences.
Learn from others' errors—these mistakes can be catastrophic
You have exactly 30 days from receiving stock to file. Miss it and you could owe taxes on millions of dollars of gains. Set a calendar reminder, send certified mail, keep proof of mailing.
If a co-founder leaves after 3 months with 40% of the company, you're in trouble. Always have vesting. Even for yourself if you're the original founder—investors will require it anyway.
If your CTO leaves and claims they own the code because there was no PIIA, your company could be worthless. Get IP assignment signed BEFORE work begins.
"We agreed I'd get 30%" means nothing without paperwork. Get signed documents: stock purchase agreement, founders agreement, board resolutions. Verbal agreements lead to lawsuits.
Equal ownership sounds fair, but what happens when you disagree? Without a tie-breaker mechanism, the company can become paralyzed. Include mediation, shotgun clauses, or advisory votes.
If your co-founder is married and lives in California, their spouse may have a claim to half their equity. Get spousal consent to avoid nasty surprises in a divorce or acquisition.
What's typical? Here's what we see most often.
Email me your situation—company state, founder locations, equity split. I'll send a custom checklist and quote within 24 hours.