When and how should equity splits between co-founders be formallized?

When it comes to equity division, you definitely want to get something in writing.

Often times, co-founders are acquaintances, friends, and sometimes even family. However, no matter how informal your relationship may be, when it comes to business you definitely want to be as formal as possible. The means signing contracts. That means legal services. That means making it official.

A few additional tips:

  • Everybody gets hung up on the amount (which is important, no doubt), but make sure equity clearly includes the role that person has and what their duties consist of.
  • Don’t put off the agreement. If it makes you uncomfortable, then maybe you aren’t ready for a business.
  • Think bigger than right now. Founders leave for professional and personal reasons. Make sure you include worst-case scenarios in your agreement to protect the founders, and ultimately the business.

If you need some help getting your equity agreement drawn up, then please reach out to us. LawTrades is happy to connect you with a seasoned attorney. We offer fast, direct communication and affordable prices. Let us know if we can help!

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