SPA & 83(b) Election
This section covers things to know about signing a Stock Purchase Agreement and filing an 83(b) election.
While the Stack team is happy to assist with the 83(b) election process, it is ultimately your responsibility to ensure that the 83(b) election is filed within the 30-day window. Please follow up with the Stack team directly if you have not received a certified mail receipt after the period of time described here.
🛣 Education
Why should I purchase shares and sign an 83(b) election?
The process here is time-sensitive. It's important to do things in the right order. Please read the instructions carefully and reach out with any questions.
You incorporated a company, and you want to make sure that you reap the benefits of what you build. Similar to other investors, you need to purchase the stock you'll own as a founder. Most founders want to purchase their shares while their company is at the lowest possible valuation, which is immediately after incorporation.
It is important to take care of your stock purchase before your raise money from external investors at a new valuation.
To do this, you need to:
Pay the company for the stock.
Sign a Stock Purchase Agreement (SPA).
File an 83(b) election, which lets the IRS know that you want to be taxed on your stock starting from your purchase, and not when the stock vests. While an 83(b) election is not strictly required, it can provide important tax benefits. From the day you sign your stock purchase, there is a 30-day window to file an 83(b) election.
While the Stack team is happy to assist with this process, it is ultimately your responsibility to ensure that the 83(b) election is filed within the 30-day window.
What is an 83(b) election?
The 83(b) election applies to stock that is subject to vesting. All standard Stack incorporation documents include vesting for founders' stock. You can read about this in your SPA under the "Right of Repurchase" section.
The election informs the IRS that the stockholder elects to pay taxes on the fair market value of their stock from the time that the stock is granted, rather than when it begins vesting.
Since stock generally vests over a long period—usually a one-year cliff followed by monthly vesting over three years—electing to be taxed at the time of granting, rather than the time of vesting, has benefits.
As the stock price increases, so do the taxes that must be paid for it. The 83(b) election gives the stockholder the option to pay taxes on the equity upfront, at its lowest valuation. Over the vesting period, the founder won’t pay any additional tax, even as the value grows.
If the shares are sold for a profit, a capital gains tax will be applied.
How do I buy my shares?
To make sure we get everything done within the 30-day window, follow these steps in order:
Send the purchase amount listed in your SPA to your company Stack bank account. These funds should come directly from your personal bank account to provide a clear record of the payment for your stock. Do not purchase your shares from a corporate account or another person’s account.
Sign your SPA by clicking on the "Sign your SPA" link in the banner. Once you pay for your stock on Stack, you'll be able to sign a SPA directly on-platform. Once your SPA has been completed by all necessary parties, you'll get an email confirming so.
File an 83(b) election. Stack helps you file 83(b) elections. Once your SPA is signed by all parties, a draft 83(b) election filing will be made for you and accessible through the Next Steps banner. Please note: If your SPA is completed less than seven days before the 83(b) election is due, or if you fund and sign your SPA offline, or if you do not submit an 83(b) filing request through the Stack platform, Stack cannot assist with your 83(b) election.
AngelList Stack provides access to software, document templates, and other materials, but does not provide legal advice, tax advice, or advice of any other kind. For legal or tax advice specific to your company and situation, please seek the assistance of an attorney or tax advisor. AngelList Venture is not your attorney or tax advisor, nor are its employees.
💶 Funding
Where do I find the bank details to fund my SPA?
You can pay your company for the stock either through an ACH payment link or by following ACH/Wire instructions. You can find these details by going to Banking > Accounts and selecting the account you'd like to fund.
Can my company use the funds I used to purchase my stock?
The funds used to purchase your stock belong to the company, and they can be used for any company purposes. You do not need to save these funds.
Are there any ways for me to purchase stock without sending funds to the company bank account?
If you have a personal US bank account with a checkbook, you can write a US check to the company, date it, and tender it to an officer of the company (including yourself). That will count for purposes of purchasing your stock. You can then cash that check.
What methods can I use to pay the company for stock?
You can send funds to the company by wire, ACH, or check. If you don't want to use the Plaid rails, you can read more about how to send an ACH or wire here.
🖊 Stock Purchase Agreement
Where do I find my SPA?
A draft SPA is included in the Final Docs folder attached to your Welcome email. Once you've paid for your shares, you'll be able to see and sign your SPA directly on the Stack platform.
How do I sign my SPA on the platform?
Follow the purple dots below to see the process.
Who needs to sign my SPA?
Each founder needs to sign their own SPA. If you are not the CEO of the company, your company CEO must also sign the SPA. If you are married, we recommend that your spouse sign as well. See more in Spousal Signatures.
Each co-founder will have their own, unique link to sign their SPA.
👥 Spousal Signatures
Should my spouse sign my SPA?
The Stock Purchase Agreement delineates the rights that come with the stock you are acquiring: the company’s right to repurchase it, how the stock would act upon a public offering, and more. It also covers transfer rights — to whom you may or may not transfer your stock.
If you live in a state with community property laws (Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin), marital property is owned equally by both spouses by virtue of being married. This means that even if you don’t transfer your stock to your spouse, by virtue of you owning the stock, your spouse owns part of it as well.
By signing the SPA, your spouse acknowledges that they have read and understood the SPA, and are bound by the terms thereof.
Even if you don’t live in a community property state right now, if you move to one at any point over the course of your marriage, community property laws would take hold without you actively transferring any shares.
The best way to protect your company is to ensure your spouse has agreed to the terms of the SPA from the time you purchase your shares.
Can I choose to not include my spouse on my SPA?
Spouses are included in the SPA signing to reduce the risk that a spouse (or ex-spouse) might attempt to claim an interest in the shares and interfere with the terms of their issuance, which could cause difficulties for the company. We recommend for founders to check with their legal counsel first before deciding to not include their spouse's signature on their SPA.
Will my spouse receive the SPA?
Yup! After you sign, our system will automatically send the SPA to everyone who needs to sign it, including your spouse or CEO.
What happens after all parties sign my SPA?
Once all parties have signed, you'll get an email letting you know your SPA is fully executed. Your shares, which were formerly in Draft mode, will automatically be pushed to Active.
🗳 83(b) Filing Process
While the Stack team is happy to assist with the 83(b) election process, it is ultimately your responsibility to ensure that the 83(b) election is filed within the 30-day window. Please follow up with the Stack team directly if you have not received a certified mail receipt after the period described here.
How do I submit a request for my 83(b) to be filed?
Under Legal, go to 83(b) Filings and click File a new 83(b) election. You'll be prompted to upload the executed 83(b) election and a cover letter. Stack also provides a template cover letter.
If you signed an SPA on the Stack platform, you'll have a draft (including your 83(b) election and pre-filled cover letter) waiting for you. All you need to do is submit!
When does the 30-day window for 83(b) election filing begin?
Once you sign your SPA, a 30-day window opens in which you can file your 83(b) election. The clock starts ticking when you sign your SPA, not when your company is incorporated. 30 days after you sign your SPA, the window will close and the IRS will not accept your 83(b) election.
Can Stack expedite the filing process for me?
Due to the number of incoming 83(b)s, Stack cannot expedite the filing process. If you need a faster filing than the schedule described below, you should make the filing independently.
Can I file my 83(b) election myself?
Definitely! Follow the instructions below.
When will my 83(b) election be mailed to the IRS?
Once you submit your 83(b) election filing request on Stack, it should be mailed to the IRS within a week. Please follow up with the Stack team if you don't receive an email confirmation of filing within 10 days of submission.
How will I know if my 83(b) election has been mailed to the IRS?
Stack will send your 83(b) election to the IRS via certified mail. Once the election is mailed, Stack will send you an email confirmation. You'll be able to view your certified mail receipt in the product by clicking on the filing request (Legal > 83(b) Filings).
If you have not received an email confirmation of filing within 10 days of submission, do not assume that your 83(b) election has been mailed. Follow up with the Stack team to check on the filing.
What does the IRS do with my 83(b) election?
The IRS will review your election, keep one copy, and send a second copy back to the home address associated with your Stack profile.
You can check the home address associated with your account from your dashboard. Go to Cap Table > Shareholders > and select yourself. Your address will be displayed on the table of information.
If I signed my SPA offline, will Stack mail my 83(b) election to the IRS?
Stack can only mail your 83(b) election to the IRS if we have the election. If you signed your SPA offline and did not email your executed SPA to the Stack team, we cannot mail it to the IRS. You must email the executed SPA to the Stack team and directly ask that the 83(b) election is filed.
🧮 Tracking on Stack
I signed my SPA. Why are my shares still inactive?
If you signed your SPA off of the Stack platform (through DocuSign or another alternative), you still need to activate your shares on Stack for them to show as "active." To activate your shares, follow the instructions below.
Where do I upload my SPA after signing? How do I activate my shares?
If you signed your SPA on the Stack platform, there's no need to upload your SPA—it will be automatically done for you. If you signed it offline, you need to upload the PDF to each of your share certificates.
The SPA should be uploaded to both your Common share certificate and Founders Preferred share certificate.
How can I adjust my vesting commencement date?
Changing terms on the Stack dashboard does not change the terms listed in the underlying legal documents. To change the vesting schedule in your SPA, you will need to speak with a lawyer.
The vesting commencement on your SPA can be backdated to the date of incorporation. The vesting commencement date of any share certificate on Stack should match the vesting commencement date in the associated SPA.
To adjust the vesting commencement date of the share certificate, follow the purple dots below.
💠 Miscellaneous
Can I handle the SPA through my own legal counsel?
Yes, you’re more than welcome to do so. Just let us know!
I'm a non-US founder. Should I fill out an 83(b) election?
There are many opinions about how a non-US founder should treat their 83(b) election. For the best advice, you should speak to a tax advisor who understands your personal situation.
If a non-US resident files the 83(b) election without an SSN or ITIN, they should keep proof of the mailing date, which may be lost or discarded by the IRS. Once the non-US resident obtains an SSN/ITIN, they should re-file the 83(b) election.
The safest method is to get an ITIN before filing an 83(b) election. Stack does not assist with attaining ITINs or other individual tax situations.
To bypass the SSN validation on a DocuSign, input 111-11-1111.
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