How to Start a Startup Company, From Day Zero to Day 90

Fri, 06 Nov 2026 15:28:00 +0000

A startup company, in the sense this publication uses, is a corporation built to raise venture capital and grow fast enough to need it. That narrows the first 90 days to a short list of documents, a few filings with hard deadlines, and one or two decisions that are expensive to undo later.

Most of the work is paperwork. The product matters more, but the paperwork is where the permanent mistakes happen: a missed tax election, founder shares with no vesting, code that the company does not actually own. None of those show up on day one. They show up in diligence before a seed round, when fixing them costs legal fees and negotiating position.

This is general information, not legal or tax advice. Every filing below has an official source linked at the point it comes up, and those sources control over any summary.

The 90-day map

Window	What gets done	Document or filing	Hard deadline?
Days 0 to 7	Founding team, split, entity choice	Founder term sheet (informal)	No
Days 7 to 14	Incorporate	Certificate of incorporation	No
Days 7 to 14	Board organizes the company	Bylaws, initial board consent	No
Days 7 to 14	Founders buy their stock	Restricted stock purchase agreements	Starts the 83(b) clock
Days 7 to 14	Company owns the IP	IP assignment agreements	No, but do it at issuance
By day 44	Tax election on founder stock	IRS Form 15620 or written statement	30 days after transfer
Days 14 to 30	Tax ID	EIN from the IRS	No
Days 30 to 60	Equity plan and first grants	Stock plan, 409A valuation	Valuation within 12 months of grants
Days 60 to 90	First outside money	SAFE, Form D	Form D within 15 days of first sale
Every March 1	Delaware annual report and tax	Annual franchise tax report	Yes

The rest of this guide walks through each row.

Days 0 to 7: decide who the founders are

The founding team is the first decision and the hardest one to change. Adding a co-founder later means issuing new stock at a higher value. Removing one without vesting in place means that person keeps the shares.

Three questions settle most of it:

Who is building the product? A company selling software with no one who can write it is a company that will spend its first raise on contractors. Founders without a technical partner should read the guide on how to find a technical cofounder before incorporating, because the split conversation is easier before shares exist.
How is equity split? Y Combinator partner Michael Seibel has argued for equal splits among co-founders on the grounds that nearly all the work is ahead of the team. Unequal splits are legal too; what matters is that the reasoning survives a conversation with a future investor.
Is everyone full time? Part-time founders with full founder equity are a diligence question. It is better answered now than in a partner meeting.

Write the answers down in a one-page founder term sheet. It is not the legal agreement. It is the record of what everyone agreed before lawyers turned it into documents.

Days 7 to 14: incorporate the right entity

Venture investors buy preferred stock. Preferred stock is issued by corporations. That is the short version of why venture-backed companies are C corporations, and why so many of them are formed in Delaware.

The Delaware Division of Corporations says on its annual report statistics page that nearly 70% of US-based IPOs in 2025 chose Delaware as their corporate home. The practical reasons for an early-stage company are narrower: investors and their counsel know the Delaware statute, the Court of Chancery has a long body of case law on corporate disputes, and the model financing documents published by the National Venture Capital Association are drafted with a Delaware corporation in mind.

Other structures exist and suit other businesses. A company that plans to stay profitable and owner-run is not the reader this playbook is written for.

What the certificate of incorporation sets

The certificate of incorporation is filed with Delaware and is short. The founder decisions inside it:

Authorized shares. How many shares the company may issue. A figure in the millions, with founders issued most but not all of them, leaves room for an option pool without amending the charter.
Par value. A nominal figure per share. A very low par value keeps the price founders pay for their stock tiny and, as shown below, matters for Delaware franchise tax.
Classes of stock. At formation, usually common stock only. Preferred stock gets added when the first priced round closes.

The organizing documents

After filing, the incorporator hands control to the board. The board then adopts bylaws, appoints officers, approves the sale of founder stock, and adopts the form of IP assignment. A single written board consent usually covers all of it.

Day of issuance: founder stock, vesting and the IP

Founders buy their shares under a restricted stock purchase agreement. Two clauses in it matter more than the rest.

The repurchase right. The company can buy back unvested shares at the price the founder paid if the founder leaves. That repurchase right is what vesting means for founder stock. YC’s essay on splitting equity describes four years with a one-year cliff as a typical setup in the Valley. The full mechanics, including acceleration, get their own article later on this site.

The IP assignment. Each founder assigns to the company any code, designs, domain names and other work made for the business, including work done before incorporation. Investors check this. A founder who wrote the first version of the product before the company existed and never assigned it still owns it.

A worked example of the purchase:

Assumptions
- Two founders, equal split
- 10,000,000 shares of common stock authorized
- Par value $0.00001 per share
- Each founder buys 4,500,000 shares at $0.00001 per share
- 1,000,000 authorized shares left unissued for a future option pool

Price paid per founder: 4,500,000 x $0.00001 = $45.00
Shares issued: 9,000,000 of 10,000,000 authorized (90%)

Paying a real price, even $45, matters for the next step: it lets the fair market value and the purchase price match on the day of transfer.

By day 44: the 83(b) election

Restricted stock that vests over time is, for tax purposes, not fully owned until it vests. Without an election, the founder recognizes ordinary income each time a tranche vests, measured at the stock’s value on that date. If the company has raised money in the meantime, that value can be large, and the tax comes due with no cash to pay it.

Section 83(b) lets the founder elect to recognize the income at the time of transfer instead. With the purchase price equal to fair market value, the income recognized is zero.

The deadline is fixed. IRS Form 15620 instructions say the election must be filed no later than 30 days after the date the property was transferred. If the 30th day falls on a weekend or legal holiday, a postmark on the next business day counts as timely. The regulations at 26 CFR 1.83-2 also require a copy to go to the company.

Filing methods, as of November 5, 2026:

Online. The IRS lists Form 15620 on its mobile-friendly forms page as requiring an IRS Online Account. After filling it in, the filer can submit it online or download a copy for mailing. Online submission returns a confirmation.
Mail. The signed form, or a written statement that meets the regulation, goes to the IRS office where the founder files a return. Certified mail with a return receipt gives proof of the postmark.

The election cannot be revoked without IRS consent, and there is no general extension for a late one. Put the deadline on the calendar the day the stock purchase agreement is signed.

Days 14 to 30: the EIN and the company’s own accounts

The IRS issues an employer identification number free and online, and the page warns against sites that charge for one. The online tool requires a US principal place of business and a responsible party with a Social Security number or ITIN. Companies that do not meet those conditions apply by phone, fax or mail.

With an EIN, the company can open accounts in its own name. Founder money and company money should never mix, because the cap table, the books and any later diligence all assume the corporation paid its own bills.

One filing that older checklists still list is no longer required. FinCEN’s beneficial ownership page states that, under its final rule, US companies are exempt from BOI reporting and are no longer required to file BOI reports.

Every March 1: Delaware franchise tax

Delaware corporations file an annual report and pay franchise tax by March 1. The Division’s tax calculation page describes two methods: the Authorized Shares method (minimum $175) and the Assumed Par Value Capital method (minimum $400). The corporation pays the lesser. The annual report filing fee is $50, and the annual report instructions list a $200 penalty plus 1.5% monthly interest for failing to file and pay.

The same page says the annual assessment is based on authorized shares, which is why the first notice a startup sees can look alarming.

Assumptions
- 10,000,000 shares authorized, par $0.00001
- 9,000,000 shares issued
- Total gross assets $500,000 (from the federal return, Form 1120 Schedule L)

Authorized Shares method
 First 10,000 shares: $250
 Remaining 9,990,000 shares / 10,000 = 999 units x $85 = $84,915
 Total: $85,165

Assumed Par Value Capital method
 Assumed par = $500,000 / 9,000,000 = $0.055556
 All authorized shares have par below assumed par:
 APVC = $0.055556 x 10,000,000 = $555,560
 Tax = $555,560 / $1,000,000 x $400 = $222.22, below the minimum
 Total: $400

Owed: $400 tax + $50 annual report fee = $450

The second method needs the issued share count and gross assets, so it only works if the company files with real numbers.

Days 30 to 60: an option pool and a 409A valuation

Early hires and advisors get equity through a stock plan approved by the board and the stockholders. The 1,000,000 unissued shares in the example above are the room for that pool.

Options must be granted at or above the fair market value of the common stock to avoid problems under Section 409A of the tax code. The regulations at 26 CFR 1.409A-1 presume a valuation is reasonable if it comes from an independent appraisal dated no more than 12 months before the grant. The same regulation includes a separate method for illiquid stock of a start-up corporation, based on a written report prepared in good faith. A company that wants the presumption buys an independent appraisal before the first option grant and refreshes it within 12 months, or sooner after a priced round.

Days 60 to 90: the first outside money

The first check usually comes in on a SAFE. Y Combinator’s SAFE page lists three post-money versions for US companies: valuation cap with no discount, discount with no cap, and an uncapped MFN version, plus an optional pro rata side letter. YC says the post-money SAFE has been its standard since 2018.

The post-money cap makes ownership simple to calculate:

Assumptions
- One SAFE, post-money valuation cap
- Investment: $500,000
- Post-money valuation cap: $8,000,000
- No other SAFEs outstanding

Ownership on conversion (before the priced round's new money and pool increase):
 $500,000 / $8,000,000 = 6.25%

The money is a securities sale, so securities law applies. A SAFE round sold privately to a handful of investors can rely on Rule 506(b) of Regulation D. The SEC’s 506(b) page says the company cannot use general solicitation, can sell to up to 35 non-accredited investors in any 90-day period (each of whom triggers disclosure duties), and must file Form D within 15 days after the first sale. States can still require notice filings and fees.

For individual investors, the SEC’s accredited investor page lists the tests: net worth over $1 million excluding a primary residence, or income over $200,000 (or $300,000 with a spouse or partner) in each of the prior two years with the same expected this year, or a Series 7, 65 or 82 license in good standing. Raising only from accredited investors keeps a first round simple.

What day 90 should look like

A founder who has done the above can answer every early diligence question with a document:

Certificate of incorporation, bylaws and the initial board consent
Signed stock purchase agreements with vesting, plus proof of each founder’s 83(b) filing
Signed IP assignments from every founder and contractor
EIN confirmation letter
A cap table that matches the share certificates or ledger
Board and stockholder approval of the stock plan, and a 409A report if options were granted
Signed SAFEs, the Form D filing and any state notice filings
A calendar entry for March 1

Questions founders ask in the first 90 days

Can the 83(b) election be filed before the stock is issued? The regulation says the election may be filed before the date of transfer. In practice, founders file once the purchase agreement is signed and the transfer date is known, because the form asks for it.

Does the company need a lawyer to incorporate? The certificate itself is a short filing. The documents around it (purchase agreements, IP assignments, the stock plan) are where errors cost money, and investors’ counsel will read every one of them.

Do founders need vesting if there is only one founder? Priced-round investors can make it a condition of closing. Starting with vesting avoids renegotiating it under term-sheet pressure.

When should the company switch from SAFEs to a priced round? When an investor wants board seats, protective provisions or other rights that come with preferred stock, or when the amount raised on SAFEs makes the eventual dilution hard to manage. That decision is the subject of later articles on this site.

83b Election on Stack & Scale Journal