Hypothetical Scenario: My startup called SnapSms got traction and I am about to c-corp it. Is Snapchat going to have a problem with this name?

Yes you should be reporting the capital contributions. Under the old Form 5472 rules, it's true that only items that impacted taxable income would be reportable transactions. So, a capital contribution by you to the corporation would not be reportable, unless the equity contribution was somehow below or above a fair value contribution in exchange for services that you might provide for the corporation - essentially an imputed reportable transactions. When the IRS changed the Form 5472 rules to require non-U.S. owned single member LLC's, they expanded the reportable transaction definition to include virtually everything. The term “transaction” is defined in Treas. Regs. Section 1.482-1(i)(7) to include any sale, assignment, lease, license, loan, advance, contribution or other transfer of any interest in or a right to use any property or money, as well as the performance of any services for the benefit of, or on behalf of, another taxpayer. So, for example, contributions and distributions would be considered reportable transactions with respect to such entities. These amounts can be reported on Lines 12 and 25 with an explanatory footnote that clarities the amounts are capital contributions and not amounts that impact taxable income.

There is quite a bit of information available online about eCommerce conversions rates. According to a ton of sources, average visitor-to-sale conversion rates vary from 1-3%. This does not mean the Furniture conversions will be the same. The bigger problem is that visitor-to-sale conversions are not a good data point to use to measure or tune your eCommerce business. All business have some unique friction factors that will affect your final conversion rate. It's very important to understand each of these factors and how to overcome them. The best way to measure and optimize is to take a conversion funnel approach. Once you have defined your funnel you can optimize each conversion rate to better the total effect. For example: Top of the funnel: - All web site visitors, 100,000 / month First conversion: View a product page, 50% of all visitors Second Conversion: Add to Cart, 10% of people who view products Final Conversion: Complete Checkout, 80% of people who put items in a cart In this example we see that only 10% of people who actually view products put them in to a cart, but 80% of those people purchase. If you can figure out why visitors are not adding items to their cart and fix the issue to increase the conversion rate, revenue should increase significantly because of the high checkout rate. You can use free tools like Google Analytics to give you a wealth of information about your site visitor and their behavior or there are some great paid tools as well.

It all depends on what one decides to be a definition of a "success story." For some entrepreneurs, it might be getting acqui-hired, for some -- a $10M exit, for some -- a $200M exit, and for others -- an IPO. Based on the numbers I have anecdotally heard in conversations over the last decade or so, VCs fund about 1 in 350 ventures they see, and of all of these funded ventures, only about 1 in 10 become really successful (i.e. have a big exit or a successful IPO.) So you are looking at a 1 in 3500 chance of eventual venture success among all of the companies that try to get VC funding. (To put this number in perspective, US VCs invest in about 3000-3500 companies every year.) In addition, there might be a few others (say, maybe another 1-2 in every 10 companies that get VC investments) that get "decent" exits along the way, and hence could be categorized as somewhat successful depending on, again, how one chooses to define what qualifies as a "success story." Finally, there might also be companies that may never need or get around to seeking VC funding. One can, of course, find holes in the simplifying assumptions I have made here, but it doesn't really matter if that number instead is 1 in 1000 or 1 in 10000. The basic point being made here is just that the odds are heavily stacked against new ventures being successful. But that's also one of the distinguishing characteristics of entrepreneurs -- to go ahead and try to bring their idea to life despite the heavy odds. Sources of some of the numbers: http://www.nvca.org/ http://en.wikipedia.org/wiki/Ven... https://www.pwcmoneytree.com/MTP... http://paulgraham.com/future.html Here are others' calculations of the odds that lead to a similar conclusion: 1.Dear Entrepreneurs: Here's How Bad Your Odds Of Success Are http://www.businessinsider.com/startup-odds-of-success-2013-5 2.Why 99.997% Of Entrepreneurs May Want To Postpone Or Avoid VC -- Even If You Can Get It http://www.forbes.com/sites/dileeprao/2013/07/29/why-99-997-of-entrepreneurs-may-want-to-postpone-or-avoid-vc-even-if-you-can-get-it/

As you may suspect, there really isn't a hard and fast answer. You can review averages to see that a CEO typically becomes a major shareholder in a startup, but your role and renumeration will be based on the perceived value you bring to the organization. You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). Another reason is when the company doesn't have salary money available but the potential is very strong. In this situation you should be especially diligent in your analysis because you will realize that even the best laid plans sometimes fall completely short. So to get the best mix, you have to be very real about the company's long-term growth potential, your role in achieving it, and the current liquidity necessary to run the operations. It should also be realized that equity needs to be distributed. You cannot distribute 110% and having your cap table recalculated such that your 5% turns into 1% in order to make room for the newly hired head of technology is rather demotivating for the team. Equity should be used to entice a valuable person to join, stay, and contribute. It should not be used in leu of salary that allows an employee to pay their bills. So, like a lot of questions, the answer is really, it depends. Analyzing the true picture of your long-term potential will allow you to more easily determine the correct mix.

One word: Royalties This means you generate the idea and develop it enough to look interesting to a larger company who would be willing to pay you a royalty for your idea. This happens all the time. Rock stars, authors and scientists routinely license their creative ideas to other companies who pay them a royalty. Anyone can do it. Your business, therefore, would be a think tank. You (and your team, if you have one) would consider the world's problems, see what kinds of companies are trying to solve those problems, and then develop compelling solutions that they can license from you. You have to be able to sell your idea and develop a nice presentation, a little market research and an understanding of basic trademark and patent law. The nice thing about doing this is that if you develop enough cool ideas you will have royalties coming in from a lot of different sources, this creates a stable, passive revenue stream that requires little or no work to maintain. Start in your spare time and plan on the process taking 3-5 years. Set a goal to have a few products in the market that provide enough revenue (royalties) to cover your basic living expenses. Then you can quit your day job and dedicate more time and increase the momentum. A good idea business should have dozens, if not hundreds of license contracts generating royalties. It's possible to pull this off. And it is a fun job (I'm speaking from experience).