Questions you should ask yourself

From Vermont Virtual

• What is the initial goal of the company?

You should specify this so that others will know whether they want to join.

• What are the roles that members could play?

This is critical. You should pick a goal that can be better achieved if a group of people contribute in various ways. One of the most important ways you can contribute to a company, as a founder, is to identify the roles that people can play, to make it easier for others to know what they can do to help.

• Will the founder(s) have a special contractual relationship with the company?

One of your prerogatives as a founder could be to cause the company to enter into a contract with you -- for example to repay the amount you advance as a loan to pay the filing fees and startup costs. You could commit to remain involved in exchange for a specified fee, perhaps based on a percentage of gross revenues realized by the virtual company over some stated period of time. Remember, others will evaluate this contract when deciding whether or not to join the company -- so don't be greedy.

• What form of operating agreement will you use?

A template operating agreement is available. But there are various options.

• Will you elect to have a member managed LLC?

This is the form appropriate for vermont virtual companies that use our template operating agreement. Choosing this type of LLC eliminates the need to name a manager.

• Will you establish the LLC for a term (e.g., 50 years)

This is recommended, to avoid the possibility that a member who resigns could demand valuation of his or her contractual interest.

• Is the company you have in mind based on sharing time, attention and effort? Will its business benefit from the contributions of a group of people playing different roles?

That is the type of business for which the template operating agreement is designed.

• Will there be more than one founder? Will the founder(s) establish a contract with the company that provides for repayment of a loan of working capital and/or some special rights (after an initial period) to share in the gross proceeds of the company and/or to exercise some specified rights to make decisions?

You can treat payment of the filing fee and formation fee, and an initial advance of funds to be used to open a bank account, as a gift to the company. Or you can exercise your rights as founder(s) and sole initial voting/rating members of the virtual company to cause the virtual company to enter into a "founder(s) agreement" with you. A template form is available.