What paperwork does an advisor need to sign?
HiringAdvisorsCompliance
One document: an advisor agreement. It sets out the services, the expected time commitment, confidentiality, an assignment to the company of anything the advisor creates for it, the compensation if any, and a statement that the advisor is an independent contractor and not an employee. If the compensation is equity, the grant documents follow once the board approves the grant. There is no W-4, no I-9 and no payroll, because an advisor is not an employee. If the advisor is paid cash, collect a W-9 for the 1099-NEC.
What the agreement covers
- The services, described specifically enough that both sides know what was promised
- The time commitment, even if it is a monthly call and introductions on request
- Term, and how either side ends it
- Confidentiality, and disclosure of conflicts with other companies the advisor works with
- Assignment to the company of intellectual property the advisor creates for it
- Compensation: equity described precisely, cash if any, and expenses
- Independent contractor status, no benefits, and no authority to bind the company
Advisors are not employees
An advisor who joins a monthly call and makes introductions has none of the marks of employment: no direction over how they work, no set hours, no benefits, and work that is not the company's core business. That is what keeps the relationship outside employment law. The agreement should say so, and the company should not then treat the advisor like staff. An advisor working thirty hours a week on the product is a part-time employee with a misleading title.
Equity
If the agreement promises equity, describe the grant precisely and say it is subject to board approval and the plan: the number of shares, the vesting schedule, and whether it is an option or restricted stock. The board consent and the grant documents are separate steps, and the advisor should understand that the agreement alone does not make them a stockholder.
Arabella has two advisor agreements, one drafted for a Delaware corporation and one written around equity compensation, each filled by questionnaire and sent to sign in the app.
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Written by the lawyers who built Arabella. This is legal information, not legal advice for your situation, and reading it does not make us your lawyers. For a real dispute or a high-stakes decision, talk to a licensed attorney. More questions.