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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 117438
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I want to open a startup in Delaware, and I live in

Customer Question

Hi, I want to open a startup in Delaware, and I live in California. I have an angel who is investing. I would like to know what type of company to open to enable the least amount of taxes for the company and the investors
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: I hesitate between a C-Corp and S-Corp. My investor would like 10% shares of the company
Submitted: 9 months ago.
Category: Business Law
Customer: replied 9 months ago.
I also would need guidance to decide how to allocate the shares.
Customer: replied 9 months ago.
10% of preferred shared
Expert:  bkb1956 replied 9 months ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

If you are issuing two classes of stock, you cannot form an S corporation.

The following link contains the pros and cons of C corporation vs. S corporation which you will find helpful in making your decision:

Once you have reviewed the information, please let me know if you have any questions or concerns so I can further assist you.

Thank you and best regards,


Customer: replied 9 months ago.
Thank you, ***** ***** need to fill up the shares numbers in my contract, would you be able to help me?
Customer: replied 9 months ago.
I want to create the C-Corp then with 10,000,000 issues shared
my angel should get 10% of the total amount so that they own 10% of the company
they would like preferred shares
Customer: replied 9 months ago.
The Capitalization I need help with is as follow:
Customer: replied 9 months ago.
(a) The authorized capital of the Company consists, immediately prior to the Initial Closing, of:(i) [__________] shares of common stock, $[____] par value per share (the “Common Stock”), [________] shares of which are issued and outstanding immediately prior to the Initial Closing. All of the outstanding shares of Common Stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. [The Company holds no Common Stock in its treasury.](ii) [__________] shares of Preferred Stock, of which [__________] shares have been designated Series A Preferred Stock, none of which are issued and outstanding immediately prior to the Initial Closing. The rights, privileges and preferences of the Preferred Stock are as stated in the Restated Certificate and as provided by the Delaware General Corporation Law. [The Company holds no Preferred Stock in its treasury.]
(b) The Company has reserved [__0] shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to its [Plan Year] Stock [Option] Plan duly adopted by the Board of Directors and approved by the Company stockholders (the “Stock Plan”). Of such reserved shares of Common Stock, [______0____] shares have been issued pursuant to restricted stock purchase agreements, options to purchase [__________] shares have been granted and are currently outstanding, and [__________] shares of Common Stock remain available for issuance to officers, directors, employees and consultants pursuant to the Stock Plan. The Company has furnished to the Purchasers complete and accurate copies of the Stock Plan and forms of agreements used thereunder.
Customer: replied 9 months ago.
Where I need help to fill up all the blanks
Customer: replied 9 months ago.
could you help me with this?
Expert:  bkb1956 replied 9 months ago.

I will transfer your question to the Legal category. Please do not respond to me because that will delay the transfer.

Best regards,


Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
I am a DIFFERENT CONTRIBUTOR, as your previous contributor left.
We cannot fill in the blanks because you have to set your par value and number of shares. For setting par value, that is up to you and there are some guidelines if you want to read them:
You should set it low, like 1cent per share or less, since in DE that is what your franchise tax is based upon.
As far as the number of shares, if you have 10M shares, he would get 10% of those as his preferred stock.