{"id":109,"date":"2012-05-10T10:57:12","date_gmt":"2012-05-10T14:57:12","guid":{"rendered":"http:\/\/blog.markkirkwood.com\/?p=109"},"modified":"2012-05-11T11:13:12","modified_gmt":"2012-05-11T15:13:12","slug":"the-legal-checklist-every-startup-should-reference","status":"publish","type":"post","link":"https:\/\/blog.markkirkwood.com\/?p=109","title":{"rendered":"The legal checklist every startup should reference"},"content":{"rendered":"

This checklist is very helpful as you contemplate startup ideas, business formation(s) and their corresponding structures, etc. I have followed many of these ideas in most of the new ventures (e.g., Grid Corporation, Artifax Incorporated<\/a>, and Matrix Ventures<\/a>, etc.) that I have been involved with over the years… It also fits right in with the “do it right the first time”<\/strong> philosophy that I first learned back at the Crosby Quality College<\/a> in the late 1980s.<\/p>\n

The legal checklist every startup should\u00a0reference |\u00a0<\/strong> \u00a0Scott Edward Walker<\/a><\/p>\n

To avoid the fundamental legal mistakes that I\u2019ve seen startups repeatedly make (many of which surface when investors are conducting their due-diligence investigation(s)),\u00a0I thought it would be helpful to provide a simple legal checklist for startups (included within are links to indepth posts for a more detailed discussion).<\/p>\n

Startup checklist:<\/strong><\/p>\n

1.\u00a0Form a corporation, not an LLC (see post\u00a0here<\/a>) or a partnership (see post\u00a0here<\/a>).<\/p>\n

2.\u00a0Incorporate in Delaware and qualify the company to do business in the state in which its principal office is located (see #2\u00a0here<\/a>).<\/p>\n

3.\u00a0Set-up vesting schedules for the founders (see post\u00a0here<\/a>) and file 83(b) elections with the IRS (see #3\u00a0here<\/a>).<\/p>\n

4.\u00a0Button-down Intellectual Property (IP) ownership and assignment issues (see post\u00a0here<\/a>).<\/p>\n

5.\u00a0Split the equity based on prior contributions and expectations going forward, not necessarily equally (see post\u00a0here<\/a>).<\/p>\n

6.\u00a0If you hire any employees, make sure you don\u2019t misclassify them as an independent contractor or fail to pay them at least the minimum wage (see post\u00a0here<\/a>).<\/p>\n

7.\u00a0Only raise funds from \u201caccredited investors\u201d (see post\u00a0here<\/a>) and don\u2019t pay anyone a commission for raising funds for you unless they are a registered broker-dealer (see post\u00a0here<\/a>).<\/p>\n

8.\u00a0Put proper privacy policies in place and make sure you adhere to them (see post\u00a0here<\/a>).<\/p>\n

9.\u00a0Don\u2019t issue stock options unless a proper option plan is in place and a valuation has been done in compliance with Section 409A of the Internal Revenue Code (see post\u00a0here<\/a>).<\/p>\n

10.\u00a0Regarding lawyers, don\u2019t give them equity (see post\u00a0here<\/a>); don\u2019t use your investors\u2019 lawyers (see post\u00a0here<\/a>); and there are ways of cutting legal fees in half (see post\u00a0here<\/a>).<\/p>\n

Note:<\/em> None of this is rocket science. \u00a0But as the late, great super-lawyer and VC\u00a0Craig Johnson<\/a>\u00a0wrote in the book,\u00a0The Silicon Valley Edge: A Habitat for Innovation and Entrepreneurship<\/a>, \u201cStarting companies is a lot like launching rockets: if you\u2019re a tenth of a degree off at launch, you may be a thousand miles off downrange.\u201d<\/p>\n

Scott Edward Walker<\/em> is the founder and CEO of\u00a0Walker Corporate Law Group<\/a>, PLLC, a law firm specializing in the representation of entrepreneurs.<\/p>\n","protected":false},"excerpt":{"rendered":"

This checklist is very helpful as you contemplate startup ideas, business formation(s) and their corresponding structures, etc. I have followed many of these ideas in most of the new ventures (e.g., Grid Corporation, Artifax Incorporated, and Matrix Ventures, etc.) that I have been involved with over the years… It also fits right in with the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[8,11,4],"class_list":["post-109","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-ideas","tag-lists","tag-quotes"],"_links":{"self":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts\/109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=109"}],"version-history":[{"count":0,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=\/wp\/v2\/posts\/109\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.markkirkwood.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}