How do I issue stock?
After incorporation and company formation, Gust Launch gives you the ability to issue Common Stock. With our guided workflows, we walk you through the process of granting stock. Answer a few questions about the number of shares you are granting and the vesting schedule and we’ll automatically generate the legal paperwork for you to sign electronically. Then we’ll send it to the stock grantee so that they can also review and sign. They’ll also receive an 83(b) election form so that they can take advantage of potentially favorable tax treatment if they so choose.
Who should I grant Common Stock to?
Common Stock is usually granted to the founding team immediately after the company is formed in order to divide and establish ownership in the company. It can also be granted to early advisors, board members, employees, contractors, accelerators, and strategic partners. Investors are not typically issued Common Stock; instead they are issued Preferred Stock, which has different rights and privileges.
What is an 83(b) election? Should I file one?
An 83(b) election tells the IRS that you will be taxed on the value of granted shares today rather than recognizing income on their value as of the date that they vest. Because vesting can take a long time and your startup’s growth will hopefully increase the value of your shares, this can defer a significant amount of taxes until the date, if ever, that you sell your shares.