This FAQ gives startup founders direct, source-checked answers to common legal, fundraising, and tax questions for October 2026. Consulting here means practical guidance a founder can use to make a decision or complete a task. The questions below cover formation, investors, compliance, brand protection, loans, SAFE terms, and founder stock tax. Each answer states the current rule and what to do next.
Table of Contents
- Do I need to file an 83(b) election after getting founder stock?
- Who is allowed to invest in my early round?
- Do domestic startups still file beneficial ownership reports?
- What will a trademark cost and where can early debt fit?
- What do Y Combinator terms and QSBS mean for my structure?
Do I need to file an 83(b) election after getting founder stock?
Founders who buy restricted stock subject to vesting must file an Internal Revenue Code Section 83(b) election with the IRS within 30 days of purchase. That filing taxes the stock at grant value. Miss the deadline and each vesting milestone becomes a separate taxable event on the spread. The election matters most when shares are worth little at formation.
A founder buys low, files quickly, then vests later without new tax as value grows. According to Startup Lawyer, the 30-day window is strict and runs from purchase, not from vesting (Startup Lawyer's guide to the 83(b) election). Practical step: issue founder stock immediately, pay for it, then mail the election and keep proof. Ask counsel to confirm filing method and state filing if needed.
Who is allowed to invest in my early round?
Most unregistered startup securities can be sold only to investors who meet wealth or income tests. An individual qualifies as an accredited investor with net worth over $1 million excluding the primary residence, or income over $200,000 individually or $300,000 jointly in the prior two years with expectation of the same. That standard controls who may buy most early-stage private shares.
For founders, the test shapes whom to approach and what paperwork to use. Check status before accepting money: According to the U.S. Securities and Exchange Commission, these thresholds govern eligibility for most private offerings (SEC accredited investor standards).
- net worth test: over $1 million, home excluded
- income test: $200,000 single or $300,000 joint for two years, plus expected repeat
- entity and license routes also exist, so ask counsel about edge cases
Do domestic startups still file beneficial ownership reports?
U.S. companies and U.S. persons are now exempt from beneficial ownership information reporting. Domestic startups no longer must file BOI reports. Only certain foreign companies registered in the U.S. must report.
That change removes a formation chore for most founders. You can skip BOI filing if your company is domestic. According to the Financial Crimes Enforcement Network, the current rule applies to foreign registrants, not U.S. startups (FinCEN BOI reporting alert). Keep basic ownership records anyway for banks, investors, and taxes. Foreign founders registering to do business in the U.S. should check whether their entity falls in the reporting group.
What will a trademark cost and where can early debt fit?
Budget trademark filing by class, not by brand. Base application fees are $350 per class for Sections 1 and 44 filings, effective February 18, 2025. Add search time and any counsel fees, then verify the current schedule before filing. According to the U.S. Patent and Trademark Office, the per-class fee is the starting point for founders planning protection (USPTO summary of 2025 trademark fee changes).
File in the classes you actually use, such as software plus education or apparel if you sell both. For capital, SBA 7(a) loans cover startup and operating needs up to $5 million. Since May 2026 qualified borrowers may combine up to $5 million of 7(a) plus $5 million of 504 financing for $10 million total SBA-backed capital, according to the U.S. Small Business Administration (SBA notice on combined loan limits). Talk to an SBA lender early about collateral, cash flow, and use of proceeds.
What do Y Combinator terms and QSBS mean for my structure?
Y Combinator's standard deal offers a useful pre-seed template: $500,000 via two SAFEs. The structure is $125,000 for 7% on a post-money SAFE plus $375,000 on an uncapped SAFE with most-favored-nation terms. A SAFE is a Simple Agreement for Future Equity, a contract that converts into shares in a later priced round. Use that split to understand dilution and follow-on fairness. The capped portion sets ownership.
The uncapped MFN portion lets the investor take the best terms you later give another SAFE holder. Model both pieces before signing. Tax affects long-term payoff. For stock acquired after July 4, 2025, federal Section 1202 exclusion is phased by holding period and the cap rises toward $15 million or 10x basis. California taxes the same gain up to 13.3%, which limits the benefit for California founders. Choose entity type and holding plan with tax counsel before a large gain accrues.