Considerations in Business Formation – Part II (Initial Capitalization)

October 1, 2012 By

I’ve been covering the steps involved in the Business Formation process. To recap, the steps are:

  • Planning
  • Entity selection
  • Filing
  • Initial governance matters
  • Initial capitalization matters
  • Initial agreements among stakeholders

My last post covered the Planning, Entity Selection and Filing steps, which takes us to the point where the state has returned stamped documents establishing a new entity. Now we are at a complex stage: establishing how the business will be managed, initial capitalization, and what the rights of all stakeholders will be going forward.

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Considerations in Business Formation – Part I

September 27, 2012 By

In keeping with my promise to start at the beginning, my next few posts will be on business formation and subsequent posts will be on the different business entity types. Today I will focus on a few basic questions surrounding business formation, and the first few steps in business formation.

What does business formation mean in the legal context?

In a legal context, business formation is the process of planning and documenting the initial formal relationships among stakeholders that will govern the ownership and management of the business as it moves forward.  It encompasses planning and executing choices regarding entity structure, governance, capitalization, and tax strategies for the business as well as its founders and investors.

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