# The entity behind a Startup

URL: /systems/legal-and-corporate/entity · Id: `page:systems/legal-and-corporate/entity`

> Every Startup sits in exactly one Company, its owner of record, which sells, signs, holds the money, and answers for the legal floor.

Every [Startup](/business/nouns/startup) sits in exactly one [Company](/business/nouns/company) at a time, and that Company is its owner of record. The Company sells, signs, holds the money, and answers for the [legal floor](/systems/legal-and-corporate/floor); the Startup is the business it runs.

## Startup and Company
A Startup is the unit of work: its [Products](/business/nouns/product), [Offers](/business/nouns/offer), [Customers](/business/nouns/customer), and profit and loss. A Company is the legal entity that owns it. Equity, authority, and profit rights live only on the Company.

The two separate on purpose. One Company holds many Startups, and a Startup moves between Companies without losing a record. A Company holds other Companies too, each on a held-by link with a share and a degree: wholly owned, co-owned, acquired, or sponsored.

Running a Startup never follows the legal tree. A director of the Company signs and reads its books, but runs a Startup only through a [Role](/business/nouns/role) in it. The [Agents](/business/nouns/agent) that run the Startup own nothing.

## Two ways to hold a Startup
Every Startup starts with an owner of record on its first day. Which one depends on where it was created.

| Created in | Owner of record | Who signs for the Company | Identity checks |
| --- | --- | --- | --- |
| A [Studio](/business/nouns/studio) | The Studio's holding Company | The officer desk | Done once, for the holding Company |
| [startups.new](/start/startups-new) or `npm create startups` | The holder of its Stripe connected account | That holder, or the officers they name | Stripe onboarding |

A Studio Startup sells, signs, and files from creation inside the Studio-held entity. At startups.studio the holding Company is Longtail Holdings LLC. A Studio holds as many Startups as it builds, so a founder with an idea at breakfast has a lawful seller by lunch.

A self-serve founder brings their own entity. Stripe onboarding verifies the person and the business, and the account holder becomes the owner of record.

An Agent can build the whole Startup in the [test environment](/code/platform/environments). A human sponsor then [claims](/business/nouns/startup/claim) it and turns on every [Verb](/business/nouns/verb) that moves money.

## Seller of record and money
The owner of record is the seller of record on every [Order](/business/nouns/order). Each Startup sells on a payments account of its own, opened at its first paid Offer through the [Merchant account](/systems/finance/merchant-account) capability. Money moves only through Stripe connected accounts, from the buyer to the owner's bank.

One account per Startup keeps the books clean inside a shared Company. Charges, refunds, disputes, and payouts land on the Startup's own ledger. Tax, filings, and [Suppression](/business/nouns/suppression) are held by the Company for every Startup in it.

## Graduation
A Startup leaves the Studio-held entity for a Company of its own at one of four events:

1. A cofounder is seated.
2. It raises outside capital.
3. It is sold.
4. Its traction warrants its own entity, starting the clock on founder tax benefits.

Graduation runs [Company formation](/systems/legal-and-corporate/entity-formation), then Startup transfer, which assigns every [Agreement](/business/nouns/agreement), [Domain](/business/nouns/domain), account, mark, and record to the new Company. Customers see no change. Signing passes from the officer desk to the cofounders, and the Studio keeps its share on the held-by link.

## When a Company ends
A Startup never ends; it goes Dormant or is sold. A Company merges, is acquired, or dissolves, and each transition is a floor act signed under [Governance](/systems/legal-and-corporate/floor/governance). [Company dissolution](/systems/legal-and-corporate/entity-dissolution) first moves every live Startup to another Company, so no Customer loses the business they bought from.

## Next
- [Who signs](/systems/legal-and-corporate/who-signs): each act and the person or Agent that signs it.
- [Ownership and lifecycle](/business/record/ownership-and-lifecycle): how ownership and [Lifecycle](/business/nouns/lifecycle) state stay separate.
- [Payments](/systems/finance/payments): the money path from Order to payout.