What is Vesting Schedule? Definition, requirements, and how it applies to your business formation. Learn everything about vesting schedule for LLCs and corporations.
# Vesting Schedule
A vesting schedule is a timeline that determines when a founder or employee earns full ownership of their equity. The standard startup vesting schedule is 4 years with a 1-year cliff — meaning no equity vests during the first year, then 25% vests at the 1-year mark, with the remainder vesting monthly over the next 36 months.
Vesting protects companies and co-founders from a scenario where someone leaves early but retains a large equity stake. Investors almost universally require founder vesting, and the 83(b) election should be filed at the start of the vesting period to optimize tax treatment.
Lovie's C-Corp formation includes vesting schedule setup for founders, with automatic 83(b) election reminders to ensure the 30-day filing window isn't missed.