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- Protect personal assets – Form an LLC to avoid a lawsuit being the end of not only your business but also your personal financial security.
- Skimping out on worker’s comp could seriously backfire and cost you dearly.
- General liability insurance keeps you safe from generic claims of wrongdoing, or if one of your products is defective and harms the user.
- Register your name with US Patent and Trademark Office.
- Apply for an Employer Identification Number online via a holding company, which will allow the U.S. government to differentiate between your business and others when collecting what it’s owed.
- Check if you need Business License in order to operate in the city of your office.
- Articles of Incorporation : Put proper business structure in place. Startups with multiple shareholders should form a C Corp. To lower the fees and tax obligations, LLC is an option.
- Intellectual Property (IP) Assignment Agreement : Startup founders should have complete ownership of all IP assets in writing.
- Technology Assignment Agreements assign startups any intellectual property created before forming the company. Developers may in certain instances retain individual IP ownership rights, or they may sell their rights in exchange for equity or cash.
- Invention Assignment Agreements assign the new company IP ownership of any relevant work product created by employees after the company’s formation. A confidentiality and invention assignment agreement is typically signed by founder(s) and employees. The company will own all rights to the IP portfolio.
- Bylaws : Formulate strong bylaws. Bylaws should establish the internal rules of the company like how to settle disputes, select leadership and determine the rights and powers of shareholders. Most importantly, bylaws should institute voting thresholds for approvals to certain actions by the corporation like electing new board members or entering into debt.
- Operating Agreement (Founder’s Agreement) : All co-founders should sign a comprehensive operating agreement, which defines relationship of the founders, provide the expectation that all work will belong to some entity in the future and outline a basic communication and conflict-resolution clause that can help prevent disputes.
- Non-Disclosure Agreements : It should specify: What constitutes confidential information, How confidential information should be handled, Who owns that information (the company), The time period that the information will be disclosed, The time period confidentiality will be maintained .
- Employee Contracts and Offer Letters : Should clearly state the following:
- Terms of employment (e.g., compensation, role responsibilities, working hours and grounds for termination)
- Reporting structure
- IP ownership of work
- Required commitments
- Share vesting
- Company policies (e.g., vacation days, paid time off structure, dress code)
- Shareholder Agreements : Determines the rights of shareholders and defines when they can exercise those rights. Those rights can include shareholders’ right to transfer shares, right of first refusal, redemption upon death or disability and shareholders’ power to manage and run the startup. Document the sale of any shares to avoid huge financial penalties under state and federal laws.
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