Is it worth formalizing shares in a startup when there is no product yet?

Question

Startups

Candidates for partners (co-founders) are interested in how their shares in a startup will be legally registered? In words, the founder of the project offers the co-founder a certain share, no LLC is registered.
How to formalize this moment and is it worth legalizing it?
There is no product, not a line of code has been written, the quality of the code is unknown, the adequacy of a person is not clear.
Addendum:
Would you not formalize the relationship at this stage?
If so, at what stage would you start formalizing the relationship between partners?

Answer 1

An LLC is needed to conduct business activities, that is, to make a profit. If there is no product, where will the profit come from? Shares in an LLC are needed in order to pay dividends. If there is no profit, where will the dividends come from?
On the other hand, if among the founders there is no trust in each other, where will a good product come from? I would suggest thinking not about the legal side of the issue, but about how you will evaluate the contribution of each of the participants to the future product, commensurate with their future share.

Answer 2

An LLC by itself does not guarantee anything.
As long as this LLC does not have patents or a domain is not registered for it, etc.

Answer 3

Created an LLC a few years ago with a friend, 50/50. The campaign did not work, but the reports and costs are still hanging around.
IP at the end of the year you need to pay 30,000 taxes, okay, at least for LLC you can submit zero reporting and limit yourself to this)
In any case, make an "agreement" or something similar at the start, lawyers will help you!

Answer 4

These are at least 2 different questions.
First:
If you or the partner(s) want to fix the agreements, you can draw up a letter of intent or a partnership agreement, which will describe who owes what, who gets what and when.
It is rather pointless to go to court with such a paper, but an LLC with prescribed shares also does little to protect the parties from a kidnap at this stage. But such a paper will certainly be a weighty argument for those who want to invest / buy a project in the future.
Second:
If in doubt, you can write in the paper from question 1 that the party receives a share when doing so-and-so. You will have to be very confused to describe these conditions clearly and understandably, but there is no other option.

Answer 5

If a

human adequacy is not clear

then you need to work for money for the first few projects
Until the moment you understand how a person behaves in good and bad situations - it is not worth entering into a share.
Entering into a share always leads to management problems and problems.
And after the collapse, also to problems in dividing the balances

Answer 6

At the very beginning, while everything is done at your own expense, no.
When the real expenses begin - yes, of course.