Sunset Onboarding PDF

Onboarding You wake up and want juice... That juice should be squeezed out of a bag. You’re going to call it Juicer You think this is going to be a HUGE busines And that it’ll require capital to get starte You find a designer for the log And you need to incorporate  There are lot...

Onboarding You wake up and want juice... That juice should be squeezed out of a bag. You’re going to call it Juicer You think this is going to be a HUGE busines And that it’ll require capital to get starte You find a designer for the log And you need to incorporate  There are lots of ways to incorporate a business... Sole Proprietorship C-Corporation Limited Liability Company Partnerships S-Corporation  We want to raise money -- so it’s great that we can have unlimited shareholders (and International folks We’ll be able to issue multiple stock classes (this is important But we’ll want to - we’ll get to it later incorporate as a C-Corp C-Corps establish a clear separation between personal assets (our money, house, etc.) and the business’s assets. This reduction of personal liability is great.  Almost all venture-backed companies are Delaware C- Corp It’s a business-friendly legal And we’ll want to environmen incorporate our C-Corp There are tax advantages (no state corporate income tax in the state of Delaware Investors prefer it due to established legal framework Easy to incorporate there Luckily, because Delaware C- Corps are so common, we can use Stripe Atlas simple tools to help us incorporate like Stripe Atlas or Clerky We’re going to go with Clerky Clerky files a Certificate of Incorporation with Delaware’s Secretary of State. After Delaware reviews, they return the stamp-certified copy As a C-Corp, it’s also required that I have a Board of Directors and elect at least 1 Director to it. This document is often called the Action of Incorporator to create and approve this. As a C-Corp, we’re also going to need issue stock. Today, we’re going to issue common stock to the founders We are going with a standard structure -- that being 10M Authorized share Issue 8M shares to initial founder(s Set a par value that’s low i.e. $0.0000 Reserve the additional 2M shares for future employees/ advisors We then applied and were assigned a unique EIN number with the IRS. This stands for Employer Identification Number. Think of it like a social security number for businesses. This number is necessary to file taxes, hire employees, and to open bank accounts and credit cards Now that we’re incorporated and have an EIN number, we’re going to apply for a bank account/CC As a tech startup, we’ll probably choose Ramp, Brex, or Mercury This business is going to be expensive to operat We’ll need Engineer Designer Op Marketin Sale And a lot of equipment Because of this - we’re going to go raise money. Instead of taking out a bank loan, we’re going to raise money from Angel investor Venture capitalists And we’re going to exchange equity in our company for funds. i.e. not a loan Luckily, especially in the early stages, there are easier ways to raise money than 10+ years ago. For our initial raise, we’re going to look to raise $2M using a SAFE with a $10M post-money valuation cap. This will result in selling 20% of Juicero As the CEO, it’s my job to go and get intros and talk to all of these investors and pitch them on why Juicero is going to be a billion dollar business. I got a lot of no’s -- but I was able to raise the $2M I was looking for. For each investor, I send out a SAFE for signature and then log that in my cap table In it’s simplest form, a cap table is a spreadsheet that lists out all of our investors and stockholders in the business. This makes sure we can keep track of Ownership %’s over tim Investment histor Financial planning We’re going to use Pulley for our cap table manager but Carta is also very popular Now that we have some money in the bank, it’s time to go out and hire the folks we need. We’re going to sign up with an HRIS tool (Human Resources Information System) to manage, pay, and employ these new hires. The main options are Gusto, Rippling, and Justworks for startups like us. Justworks and Rippling are PEO (Professional Employee Benefits Employer Organizations) where Gusto isn’t. Group all employees together to get better rates and benefits for small companies The contract between our business and a PEO distributes the employer responsibilities State Registrations & Complianc in a co-employment relationship. PEOs assist us with meeting employment- related compliance obligations, including The PEO acts as an “employer of record” that payroll and related tax filings, and obtaining will handle payroll admin and related tax filing, workers’ comp and state unemployment and provide HR support and access to insurance benefits. As you can imagine, if we’re going to hire remote employees, this could be helpful Our company retains responsibility for day-to- day operations and management of our employees. 401 As we’re continuing to hire, we might start implementing 401K benefits for our employee For this, we might use a service like guideline or Human Interest Medical, Dental, Visio Using our PEO, we’ll also start offering medical, dental, and vision insurance As we’re starting out, we’re going to hire a mix of contractors and full-time folks. Full-time folks are typically classified as W-2 Employees, as they receive that form annually for tax reporting, are on payroll, receive benefits, receive checks with taxes withheld, and are often covered by labor laws and regulations 1099 Contractors are independent, self employed workers. They’re generally not eligible for company benefits, have limited protections, and they receive a 1099 form annually for taxes.  General Liability Insurance: Covers basic third-party claims for bodily injury, property damage, and personal injury. Directors & Officer Protects the company's executives and board members Now that we’ve raised money and from personal liability in lawsuits alleging mismanagement or breach of fiduciary duty. are employing folks, it’s time for us Workers Compensation Insuranc Mandatory in many states -- covers medical expenses to grab some insurance to protect and lost wages if employees get injured on the job. ourselves. Employment Practices Liability Insurance (EPLI Covers legal costs for employment-related lawsuits such as discrimination, wrongful termination, or harassment. Errors and Omissions (E&O) Insuranc Protects against claims of professional negligence or failure to deliver promised services related to the startup's technology product or service. Cyber Liability Insuranc Covers financial losses and legal fees due to data breaches, cyberattacks, and privacy violations. Crucial for startups handling sensitive data. As we’re increasing headcount, we’ve decided to get an office for the team. To do this, we’ve had to sign a lease. We were able to negotiate one without any personal guarantees Now that we have a team and some money, we’re going to start spending that money to build an MVP Because we’re spending money, we now need to start recording and categorizing our transactions so that we can maintain financial statements (P&L, balance sheet). We’ll use software like QBO or Puzzle and we might hire an external bookkeeper at Pilot or Fondo to help. We’ve started to really cook making our Juice squeezer. Now that we’ve built a product, we want to protect our inventions and our brand. To do this, we’re going to File for a patent that gives us the exclusive right to manufacture, use, and sell our invention for a specific period File for a trademark for our logo and name that will protect from others using it. These are now non-cash assets that our business owns Now that it’s been a year since we’ve started the business, it’s tax season. State-level taxes State Franchise taxes (Delaware State Corporate income taxes Federal Taxe Form 1120 - US Corporate income tax return to report our income, gains, losses, deductions, and credits What might come next Raising additional rounds of capita Hiring more people in more state Financial modeling Acquiring more customers, building more I Purchasing more equipment and software/tools