Does My Startup Need a Lawyer?
We have all heard stories about a startup that received millions of dollars from an angel investor or a VC firm and then sold their company for even more millions and lived happily ever after, right?
As business lawyers who have decades of experience counseling entrepreneurs, we are here to help you. We are here to make sure you are prepared and protected – to help you deal with the real day-to-day challenges startups face. We are also here to help you reach your goals of making millions of dollars doing what you love.
Unfortunately, so many of our startup clients come to us too late. Some of the smartest people we represent have been proactive by taking the first steps towards starting a business, but they have not been proactive in finding a lawyer to help them do it the right way. Below are three areas we focus on during an initial consultation with a startup.
FORMATION OF YOUR COMPANY
In order to avoid putting your personal assets at risk, you must select the right entity type. For the new entrepreneur this seemingly simple task can be deceptively tricky. Businesses come in many different forms and it is imperative that a company’s founders choose the entity type that best protects them from over taxation and personal liabilities.
However, even if the “right” entity has been chosen and a company has been properly formed a company will not benefit from the protections of being a company unless it also operates as a company. One of the first and simplest steps you, as the founder of your company, can take to protect yourself is opening a company bank account. In addition, you will need an operating/shareholder agreement, the required organizational documents filed with a secretary of state’s office and an FEIN from the IRS in order to do so.
We have seen the smartest entrepreneurs enter into long-term contracts, leases and letters of intent without any legal representation. Understanding that entrepreneurs like to DIY and have a need to stay lean, contracts negotiated without an attorney can be far more expensive in the long run. A seasoned business attorney will be able to help advise and counsel on contract decisions with both your short-term and long-term business goals in mind.
STARTUP PARTNERSHIP AND INVESTOR RELATIONS
For many startups, the end-game is to attract big investors and eventually sell some or all of your company. Defining partnerships and investor roles early on will make your business far more attractive to larger investors and help you avoid future issues with your other equity owners. Creating your own investor documents, or simply downloading them from Legal Zoom without receiving legal advice from experts in corporate formations, puts you and your company at serious risk.
Sounds like an episode of HBO’s Silicon Valley, right? Valuable hours that could have been spent focusing on what you love to do – running your business- is now being spent with your attorney in an effort to fix these mistakes. Contact us today to learn more about how we set our clients up to succeed. Learn more about our startup law services here.