Champaign Startup Attorneys & Lawyers

What is Equity?

Equity can mean a variety of things, but it generally means how much of something you own after you have paid off any money that you owe to others (debt). In accounting terms, equity is represented with the equation:

Equity = Assets - Liabilities

However, in the startup world, equity usually refers to two specific things:

Venture Capital Financing – giving a company a piece of your company in exchange for getting money from them today.

Equity compensation – to get better workers, a startup may offer stock options as a source of additional income. These options may be used at a later date and the worker gets cash.

Why is Equity Important?

Equity is important because it has value. Think about equity like a pizza. If you have a pizz

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Staggered Board: What are They?

A staggered board is a board made up of different classes of directors that serve different term lengths and are elected at different times of the year. A staggered board is an effective defense against a hostile takeoverdue to the staggered style of the elections.

A staggered board, also known as a classified board, is comprised of directors placed into different classes. They play an important role in the modern corporate landscape by preventing takeover by a hostile bidder. It's been found that companies that have a staggered board remain independent of undue influence. They also help guide the company towards profitability and prevent activist sharehol

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What are Class B Shares?

Class B shares are:

• Common stocks
• Preferred stocks offering fewer advantages than Class A

Mutual funds can be divided into more than one type, and each type reveals the interest, portfolio, fees, and costs, in addition to the commission the sales representative of those stocks will receive in turn. Generally, class B shares are a kind of stock that offers a variable amount of voting shares when compared to class A.

What is the Difference Between Common and Preferred Stock?

Preferred stock is a type of security that gives people priority dividend amounts. This helps the owner's priority dividend payments and boosts the company in cases of liquidation or bankruptcy.

On the other hand,

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What Are Cumulative Dividends?

If a dividend is sharing company profits to shareholders, then a cumulative dividend is a distribution made to the holders of special "preferred" shares regularly. It is unrelated to company profits.

Regular or "noncumulative" dividends are voluntary. This means the Board of Directors has the option of awarding them. This usually depends on how the company has performed each year.

However, paying cumulative dividends is mandatory. If the company can't pay out a cumulative dividend in any given fiscal year, the amount for that year is carried forward. It must always be paid out before any payments to common shareholders.

Not all "preferred shares" have the right to receive cumulative dividends. Some cumulative preferred shares carry limitations. For example, the company may only have to pay cumulative

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LLCs and Corporations: What are They?

Corporations and limited liability companies (LLCs) are two legal entity structures available in the U.S.  If you're involved in a startup, these are two of the entity structures you can choose from.  They operate differently and are taxed differently, but both provide protection for your personal assets if the company faces financial difficulty and both can add increased credibility with customers.

Other company entity options include forming as a

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