Corporate Insights
Analysis and practical guides on corporate.
174 articles, checklists, and guides on corporate law, written by the attorneys at MC Law. Every piece is general information, not legal advice—for a specific matter, contact the firm.
Choice of Entity and the Tax Consequences That Follow: LLC, S Corporation, C Corporation, and Partnership
Entity choice is really two decisions that people collapse into one: what the business is under state law, and how it is taxed under federal law. Since the check-the-box regulations, those questions come apart almost completely, so an LLC may be taxed as a partnership, an S corporation, or a C corporation without changing anything about its governance. This article separates the two decisions and works through the tax consequences that actually drive the answer—self-employment tax and the reasonable compensation problem, basis and loss utilization, the qualified business income deduction, qualified small business stock, and what happens on exit, which is where most of the money is. It closes with the mechanics of getting from one regime to another when the original choice stops fitting, and with the state-level taxes that increasingly override the federal analysis.
SAFE Financing Round Checklist: A Practical Guide
The SAFE is the dominant instrument for raising startup seed capital, but its "simplicity" hides mechanics that routinely surprise founders. This checklist walks through deciding whether a SAFE is even the right instrument, choosing the four levers (valuation cap, discount, MFN, and trigger), understanding the post-money form that fixes investors' percentages and stacks dilution onto founders, modeling conversion and the phantom liquidation preference before signing, complying with the securities laws that govern every SAFE sale, and handling pro-rata side letters and closing mechanics. Each phase pairs the steps with the governing authority—Section 4(a)(2) and Regulation D, Rule 506, Form D, and the anti-fraud rules—and flags the traps, above all the SAFE pileup. It is general information, not legal advice; SAFEs are securities and their treatment varies by jurisdiction and facts.
Converting, Redomesticating, and Merging Entities: A Practical Guide
Changing an entity's state of organization or its legal form is now a routine filing in most states, and the mechanical simplicity conceals a set of consequences that can be expensive if unexamined. A conversion is a single document; the tax treatment, the appraisal rights it may trigger, the contracts whose anti-assignment clauses it may violate, and the licenses that must be reissued are not. This guide covers the four mechanisms available—statutory conversion, domestication, merger, and the older dissolution-and-reformation approach—and explains when each is appropriate. It then works through the approval requirements, the tax analysis for each direction of change, and the long list of downstream items that must be updated. It closes with a sequenced work plan and the errors that recur.
Popular Legal Documents for Startups
Every startup runs on a small library of paperwork, and the difference between a clean fundraise and a stalled one usually comes down to whether that library was assembled correctly from day one. This guide takes a plain-language but rigorous tour of the documents that matter most: the formation and governance papers that bring the company into existence, the founder documents that pin down who owns what (including the famously unforgiving 30-day 83(b) election and its interaction with the qualified-small-business-stock exclusion under Section 1202), the equity machinery of cap tables, option plans, and 409A valuations, the fundraising instruments from SAFEs and convertible notes to the priced-round NVCA suite, and the commercial and employment agreements that keep the business protected. We explain what each document does, when you actually need it, the legal authority behind it, and the expensive mistakes founders make when they skip or fumble it. Worked examples with our recurring hypothetical, Acme Robotics, Inc., show how the pieces fit together. The goal is not to turn you into a corporate lawyer but to make you a far more dangerous client: one who knows what to ask for and why.
Business Tax Planning Toolkit: Entity Choice, Compensation, and Exit
Business tax planning is a small number of decisions made at predictable moments, and the ones that matter most are made when the business is least able to evaluate them. This toolkit sequences them: the entity and classification choice at formation, the compensation architecture that follows from it, the state footprint that accumulates invisibly, the equity incentives that carry their own elections and deadlines, and the exit, where the structure chosen years earlier determines the after-tax proceeds. Each stage identifies the decision, the deadline if there is one, the documentation an examination will request, and the point at which the choice becomes irreversible. The final stages address the exit, where every earlier decision is finally priced and where the difference between an asset sale and a stock sale is measured in real money.
The Complete Guide to Adding New Investors After Your Seed Round
This guide explains the legal and financial mechanics of bringing new investors onto a startup's capitalization table after an initial seed round, with the focus squarely on the first priced equity financing—the Series Seed or Series A—that typically follows. It walks through how SAFEs and convertible notes convert at the priced round, the dilution arithmetic behind pre-money and post-money valuation and the notorious "pre-money option pool shuffle," and presents a fully worked, step-by-step cap-table example for a hypothetical company. It surveys the standardized deal documents (the NVCA model documents and the lighter Series Seed forms) and the core preferred-stock terms a new investor will negotiate—liquidation preferences, dividends and conversion, preemptive and pro-rata rights, rights of first refusal and co-sale, information and registration rights, board seats, protective provisions, drag-along, and anti-dilution protection (broad-based weighted average versus full ratchet). It addresses Regulation D compliance for the new issuance, amending the certificate of incorporation under the DGCL, the Section 409A revaluation, and the practical work of securing existing-investor consents and waivers. A dedicated section examines down rounds and the fiduciary-duty scrutiny insider-led financings draw under Delaware's entire-fairness standard. The article is written so that founders, investors, and their counsel can all follow every moving part of a first priced round.
HSR Premerger Notification: When a Deal Must Be Reported and What Happens Next
Premerger notification is a procedural statute with substantive consequences, and the most common failures are not analytical but administrative: a filing that was required and not made, a document that should have been produced and was not, or conduct between signing and closing that the agencies treat as an unlawful transfer of control. This article explains the mechanics and the review that follows. It covers the two jurisdictional tests, the exemptions that most often excuse a filing, and the valuation rules that make an apparently small transaction reportable. It works through the filing itself, including the Item 4(c) and 4(d) document production that drives most substantive review, the waiting period, and what happens when a second request issues. Later sections address the substantive Clayton Act Section 7 standard and current merger analysis, remedies, gun jumping, interlocking directorates, and non-reportable deals that agencies still challenge, with a worked example, a timeline checklist, and an FAQ.
Nonprofit Formation and Tax-Exempt Status Under Section 501(c)(3)
Forming a nonprofit and obtaining tax-exempt status are two separate projects, and confusing them is the most common early error. Incorporation happens at the state level and creates the entity. Exemption is a federal determination that the entity is organized and operated exclusively for enumerated purposes, and it requires specific language in the articles that a standard incorporation service will not include. This article walks the whole process. It explains the choice of entity and the governance structure directors actually owe duties under, the organizational and operational tests, and the purpose and dissolution language that must appear in the articles. It covers the Form 1023 and 1023-EZ application, what the determination letter does and when exemption is retroactive, and the public charity versus private foundation classification that determines everything about how the organization can operate and fundraise. A long section addresses the ongoing compliance obligations that trip organizations up: private inurement and excess benefit transactions, unrelated business income tax, the Form 990 series and automatic revocation, state charitable solicitation registration, lobbying limits and the 501(h) election, the absolute political campaign prohibition, and the rules governing donor substantiation. It closes with fiscal sponsorship as an alternative, a formation checklist, a worked example, an FAQ, and related reading.
Preparing a Company for Sale: A Two-Year Readiness Guide
Most owners begin preparing to sell about ninety days before they want to close, which is roughly two years too late. The value a buyer will pay is set by what the company can prove about itself, and nearly everything that increases price or reduces risk takes twelve to twenty-four months to fix. This guide organizes the work on that timeline: what to do at twenty-four months, at twelve, at six, and in the ninety days before a process begins. It covers financial readiness and the quality of earnings review, the legal cleanup that diligence will otherwise find, the structural changes that reduce customer and key-person concentration, the tax structuring decisions that must be made years in advance to matter, and how to build a data room that makes a buyer confident rather than nervous.
Crisis Management and Business Continuity Toolkit
Most business continuity programs are documents rather than capabilities, and the difference surfaces at the worst possible moment. The plan describes a structure nobody has rehearsed, the contact list is two years old, the backup has never been restored, and the whole thing lives on the network that is down. This toolkit builds the capability instead: the business impact analysis that determines what must be recovered and how fast, the dependency map that finds single points of failure, the crisis structure that names who decides and with what spending authority, the communications and contractual notice obligations that must be extracted in advance, the technology and facilities and supply chain recovery capability, the insurance that responds and the gaps between policies, and the exercise regime that turns the document into something that works. It closes with the first four hours of a real event and with a note on keeping the program proportionate, because a thirty-person company needs a day of work a year rather than a program office.
Preparing a Business Continuity and Crisis Management Plan
Most business continuity plans are written to satisfy a customer questionnaire and are never tested, which means they fail in exactly the circumstances they were written for. A plan that works is built from a real dependency map, states who decides what without waiting for a meeting, and has been exercised by the people who will have to use it. This guide covers the build in sequence: the business impact analysis that determines what actually must be recovered and how fast, the risk assessment and dependency mapping that identify single points of failure, the crisis management structure and decision authority, the communications plan for employees and customers and regulators, the recovery procedures for technology and facilities and people, the contractual and regulatory obligations that a disruption triggers, the insurance that responds, and the testing regime that makes the difference between a document and a capability. It closes with the first four hours of a real event, the after-action review that converts an incident into a capability, and a note on keeping the program proportionate to the organization.
Startup Formation and Fundraising Toolkit: A Roadmap and Resource Guide
This toolkit is a high-level roadmap for founders and their counsel taking a company from a blank page through its early financing rounds. It walks the full arc—choosing and forming the right entity, papering founder relationships and equity with vesting, assigning intellectual property into the company, raising on SAFEs and convertible notes, closing a priced seed round, maintaining a clean cap table, fitting within securities exemptions, and bringing on later investors. Each stage links to detailed mclaw.io checklists and articles plus the primary authorities founders most often need, including Regulation D and Rule 506, Form D, IRC Section 83(b), and the Section 1202 qualified small business stock benefit. It is a navigation guide, not a substitute for securities or tax counsel on a specific deal.