What’s an 83(b) election, and when is it a good thing to do? Great question, and one every entrepreneur, founder, contractor, or anyone else trading work for equity should know the answer to. In this two-part post, I’ll first explain what the 83(b) election is, then I’ll walk through a situation where making the election makes good sense, and in the second installment I’ll walk through a situation in which making the election wouldn’t make sense (and some other considerations that might prevent you from making it). And with that, off we go.
One of the most common questions I’ve heard from people thinking about incorporating their business is, “Should I incorporate in Delaware? I’ve heard it’s better.” Typically, the individual doesn’t have any information beyond that, “I’ve heard it’s better,” but everyone seems to have heard that. So the question is, what’s the advantage of incorporating in Delaware, and is that a reason for you to do it?
While there are myriad potential advantages to incorporating in Delaware, the big one is probably not what you’d think: The Delaware Court of Chancery. [Read more…]