Founder stock, vesting and the 83(b) election

Northwind's certificate of incorporation authorizesEntity & complianceAuthorized sharesThe number of shares a corporation's certificate of incorporation permits it to issue — the ceiling, not what anyone holds. Issued shares are those actually sold or granted; the authorized shares method of the Delaware franchise tax counts the ceiling 10,000,000 shares of common stockEquity & financingCommon stockThe residual class of shares — founders', employees' and option holders' — paid after creditors and after any preferred stock's preference. The class a 409A valuation prices with a par valueEquity & financingPar valueThe nominal value per share a charter assigns — often a fraction of a cent. Delaware lets stock be issued for any consideration not less than par; on the books, shares × par goes to the stock account and the rest of the price to additional paid-in capital of $0.00001. On September 1, 2026 the board issued 8,000,000 of them, 4,000,000 to each founder, at $0.0075 a share — $30,000 each, the $60,000 the accounting track posts as JE-1. The other 2,000,000 stay authorized and unissued, for the option pool and the rounds to come.

Delaware lets stock with a par value be issued for any consideration not less than par. A par of $0.00001 means the floor on 8,000,000 shares is $80: the founders paid more, and on a ledger with an APICEquity & financingAPICWhat shareholders paid for stock above its par value, plus the credit side of stock-based compensation — part of contributed capital within equity account the $60,000 splits into $80 of common stock at par and $59,920 of additional paid-in capital. The franchise tax lessonCompliance & tax · Lesson 2 of 10Delaware franchise tax, worked both waysHow is Delaware franchise tax calculated, and why is my bill so high?Northwind's charter through both methods: $85,165 on authorized shares, $400 on assumed par value capital, and why the notice shows the first.7 min · 2 pages shows why a low par and a large authorized count still produce a small tax.

Each founder's shares are restricted stockEquity & financingRestricted stockShares bought or received outright but subject to a vesting schedule: if the holder leaves early, the company may repurchase the unvested shares on the agreement's terms. Taxed under §83 as it vests, unless an 83(b) election is filed within 30 days under a stock purchase agreement that lets Northwind buy back unvested shares if the founder leaves. They vestEquity & financingVestingEarning equity over time, so a holder who leaves keeps only what has vested. The common schedule is four years with a one-year cliff: nothing for twelve months, a quarter on the first anniversary, then monthly to month 48 over 48 months with a one-year cliffEquity & financingVesting cliffThe waiting period before any of a grant vests; on the cliff date the whole period's share vests at once. Leave a day before a one-year cliff and nothing has vested: nothing until September 1, 2027, then 1,000,000 at once, then about 83,333 a month until September 1, 2030. Vesting protects each founder from the other: a co-founder who walks away in month six doesn't keep half the company.

Restricted stock is taxed under §83 when it vests, at its value then. Filed within 30 days of the purchase, an 83(b) electionEquity & financing83(b) electionAn election, filed with the IRS within 30 days of receiving restricted stock, to be taxed on its value at grant rather than as it vests — at a founder's purchase price, usually no tax at all, and the capital gain holding period starts at once taxes it at purchase instead — and a founder who paid fair value has $0 of income. Northwind's founders bought on September 1, 2026, so the deadline was October 1, 2026. Without it, the cliff alone would have been $52,500 of ordinary income each at the value Northwind's November appraisal puts on the stock. How to file itCap tables & raising · In Founder stock, vesting and the 83(b) electionThe 83(b) election, step by stepHow do I file an 83(b) election, and what happens if I miss the deadline?Thirty days from the transfer, by mail or online, with a copy to the company: what the 83(b) election saves a founder, and how to file it.7 min is its own page.

"We each own half" in an email, shares never issued, no vesting, no election.

Board consent issues 4,000,000 shares each at $0.0075; founders pay $30,000 each; 83(b) filed by October 1, 2026.

In this lesson: how to file the 83(b) election, and what single- and double-trigger acceleration do to unvested shares at a sale.