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You and some co-venturers have come up with a business plan and an idea that you want to bring to fruition. How do you decide how much each person will own in the company?
Many entrepreneurs think that each founder should own equal shares. This can be problematic, for many reasons.
Here are a few things to think about when dividing ownership and founders stock.
Equity splitting between founders is very important and can be the source of much business litigation in the future. Remember that the startup equity sharing can also bring control issues and voting issues. You need to be careful who has control and who has voting rights in the company as well.
Also keep in mind that not everyone needs to be an "owner." You don't want too many cooks in the kitchen. See if any of the initial contributors can have a different role, perhaps as a key employee with a different class of stock ownership.
It's always wise to consult with a lawyer prior to starting a company.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
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