Ask HN: Bootstrapping with 2 founders

[MuEta]

Hi HN. My partner and I have a Delaware C Corp all formed and are getting ready to do our initial investment. We want to maintain a 50/50 equity split, but I want to put in $1k in a lump sum and he wants to put in $8k in 4 installments over the next three months. What is the best way to arrange all of this investment to lower complication and tax burden? Thanks!

[smt88]

Hire an experienced startup lawyer. I can't stress that enough. I actually think a C Corp is a huge problem related to taxes and that you need to switch to LLC, but I'm not a lawyer or accountant.

Also decide who makes final decisions, since you have equal votes. Decisions should never be made by committee, even if the committee is only 2 people.

[popey456963]

Why do you oppose decisions by committee?

[saluki]

Definitely get a lawyer . . .

y agree with smt88, C corp is prob. overkill and could introduce tax issues go LLC first.

I would just have each of you track what you invest as expenses for the LLC, then get reimbursed once you are profitable and keep your 50/50 ownership split.

The two of you should be able to make decisions together, I expect one of you are handling marketing and one technical anyway so you can probably defer decisions in those areas to each other.

Good luck.