START-UPS/FORMING A NEW BUSINESS
Overview. So you have a great business idea for a START-UP. You may turn to the Internet for legal help and come across a website or service that contains a form for incorporating a corporation or organizing an LLC. There is so much more to organizing a corporation or LLC, however, than just filing Articles of Incorporation or Organization. If your business has more than one equity holder, a Shareholders’ and Buy-Sell Agreement (in the case of a corporation) or LLC Operating Agreement (in the case of an LLC) is recommended to address issues such as distributions, capital calls, rights of first refusal, and other rights, governance, and equity holder exit events, among many others.
Details. Many details require early and thorough attention. For example, if intellectual or other property is being contributed to the entity in exchange for equity, separate assignment documents are needed to make sure such property is properly contributed. For another example, if stock or equity is being issued partly or entirely in exchange for services, some far-reaching tax consequences can result if not properly structured and time-sensitive IRS filings properly and thoughtfully made.
More Details. If you are in a licensed industry or profession, there are likely state and local license and name requirements that need to be checked prior to creating the entity. Securities laws must also be addressed, particularly if any equity holders reside in a state different from the state of the entity’s place of business and/or organization. Even the state of incorporation or organization has consequences. Startups often choose between Delaware and their state of residence. The ramifications of such choice should be explored. There is much chatter about Delaware corporations, but is that the best choice for you given your goals and circumstances?
IP Protection. If you are manufacturing products or seeking patent protection, a non-disclosure/non-use agreement is essential at the start-up stage. Same goes for a manufacturing agreement that protects, among other things, your IP rights. If you plan to first sell through a website, warranty disclaimers and other legal statements should be included on your site. These can vary by the nature of the product being sold (e.g. website services versus a medical device).
Packages. We have over 60 years of business law experience and can help you get started by tailoring a start-up package to your particular business and current needs. Package pricing and fixed prices or estimates are available. We’d be happy to help with your launch.