Checklist: Key Considerations When Splitting Equity

You can use the checklist below as a starting point to design your own equity-split process (and turn it into a downloadable PDF or resource for your team). For educational purposes only.

Founders’ Equity-Split Checklist

Before you agree on percentages, have you:

1. ☐ Clarified roles and expectations?

   • Who is doing what, and at what level of commitment (hours/week, responsibilities, decision-making)?

2. ☐ Listed all types of contributions?

   • Time and sweat equity

   • Cash investments

   • Unreimbursed expenses

   • Equipment, tools, or space

   • Intellectual property (patents, copyrights, trade secrets)

   • Relationships and business development

3. ☐ Assigned fair market value to each contribution?

   • What would you pay in cash for that role, asset, or service in a normal commercial setting?

   • Are you using a consistent method across the team?

4. ☐ Chosen an equity model that reflects real risk?

   • Fixed split (and you fully accept the risk of unfairness later)?

   • Or a dynamic, contribution-based model where equity adjusts as people actually contribute?

5. ☐ Agreed on how contributions will be tracked?

   • Time (hourly, weekly, monthly?)

   • Expenses (what needs prior approval?)

   • IP and relationships (how do you document them?)

6. ☐ Defined what happens when someone leaves?

   • Fired for good reason

   • Fired for no good reason

   • Resigns for good reason

   • Resigns for no good reason

   • What happens to their unvested and/or earned equity in each scenario?

7. ☐ Addressed control and decision-making?

   • Voting vs. non-voting units or shares

   • Manager-managed vs. member-managed (for LLCs)

   • Board structure and removal/replacement mechanisms

8. ☐ Chosen and documented your entity structure?

   • LLC, C Corp, or something else?

   • Are you planning to convert later when you raise capital?

   • Have you considered tax implications?

9. ☐ Clarified how investors will fit in?

   • Will early investors use SAFEs/convertible notes or purchase equity directly?

   • How will you keep the cap table clean and understandable?

10. ☐ Built in a review cadence?

    • Will you revisit contributions and equity at specific milestones or funding events?

    • Do you have a plan for moving from a dynamic model to a “baked” cap table (e.g., at break-even or Series A)?

11. ☐ Included dispute-resolution mechanisms in your contracts?

    • Mediation or arbitration requirements

    • Jurisdiction and governing law

    • Clear processes for resolving deadlock

12. ☐ Consulted legal and tax professionals?

    • Have you run your planned structure by counsel who understands startups and equity?

    • Have you considered tax treatment for both the company and the founders?