Q: Can I employ people for my startup and give them partial ownership of the company in lieu of cash (for now at least)?
I live in Colorado, one of these people is only 17 (my brother, trained in CAD), and as of now the business is literally just me making prototypes in my room, I havent filed anything with the state in terms of LLC or whatever (yet)
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A:
Yes, you can employ people for your startup and offer them partial ownership of the company instead of cash, but there are some important considerations. First, you should formalize your business structure, such as creating an LLC or a corporation. This protects you and your employees and clarifies ownership stakes and responsibilities.
For your 17-year-old brother, you must comply with child labor laws in Colorado. Minors can work in certain conditions, but there are restrictions on hours and types of work they can do. It's wise to get parental consent and ensure the work doesn't interfere with his education.
Additionally, offering ownership means you'll need clear agreements on what this entails. This often involves creating a vesting schedule, specifying what happens if the person leaves the company, and understanding tax implications. Consulting with a lawyer to draft these agreements can help avoid future disputes and ensure everything is legally sound.
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