November 19, 2009
In the continued vein of providing our community with good tips for your new and hot startup, like Startup Wednsdays, we will also be using Thursdays to provide some legal tidbits to help guide you along the way. Obviously we are not lawyers here at TECH cocktail, far from it. We are just like you all trying to make great things happen. That being said, our columns should not be used as “professional” legal advice, rather tips that you may want to look into and possibly discuss with a lawyer as you move forward. We are hopefully working to get some guest legal folks to post there advice and thoughts, so look for that soon as well.
So you have a the next great idea and that is about it … now what do you do?
One of the best investments you will make is to properly set up the legal structure before you get too far into the process, especially if there are more than one founder. There are many reasons for this. You will need to set up a foundation to capture the Intellectual Property of the company. You need to determine structure of the founders, who will make the decisions, reporting, etc. It is much harder after the fact to take care of these details and can only lead to problems that might derail the entire company and you will never get anything off the ground. There are also tax consequences, even though you are probably not earning any tangible income, especially when it comes time for you to get that funding round.
I recently attended the Bootstrap Maryland event at Pillsbury Law in DC and one of the panelists, Paul Singh, had a lot of great ideas and advice on the legal front when setting up a business. One thing I took away form his talk was while this step is very important … keep it simple. not only does it make it easier, but more importantly, cheaper !
So get out there and take over the world .. but not before taking care of a few easy steps that will save you time and money down the road.
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