Starting a new business venture? Growing your existing business? Here are some basics you need to know.

Startup law is a specialized area of law that focuses on the legal issues that arise during the formation, operation, and growth of a startup company. Startup lawyers typically advise entrepreneurs and startup companies on a variety of legal issues, such as corporate formation, financing, intellectual property protection, employment law, and contract negotiation.

Here are some common legal issues that startup lawyers might assist with:

Entity formation: choosing the right legal structure for the business, such as LLC, C-corp, or S-corp.

Intellectual property protection: registering trademarks, filing patents, and protecting trade secrets.

Fundraising: assisting with equity financing, convertible notes, or other funding options.

Employment law: drafting employment agreements, employee handbooks, and ensuring compliance with labor laws.

Contracts: reviewing and drafting various contracts, such as vendor agreements, service agreements, and licensing agreements.

Regulatory compliance: ensuring compliance with applicable laws and regulations in the industry or market the startup operates in.

Startup lawyers can help navigate the complex legal landscape that comes with starting and running a business. It’s important for entrepreneurs to seek legal advice early on to avoid potential legal issues down the road.

Here are some common legal terms in startup law:

Equity: Ownership interest in a company, typically represented by shares of stock.

Vesting: A schedule that specifies when an employee or founder will earn ownership interest in the company.

Convertible note: A type of debt instrument that can be converted into equity in the company at a future date.

Cap table: A spreadsheet that shows the ownership and capitalization structure of a company.

Term sheet: A non-binding document that outlines the key terms and conditions of a proposed investment.

IP (Intellectual property): The legal rights that protect creative works, such as patents, trademarks, and copyrights.

Non-disclosure agreement (NDA): A legal contract that restricts the disclosure of confidential information.

Due diligence: The process of investigating a company’s financial, legal, and operational status prior to an investment or acquisition.

Founder agreement: A legal agreement between the founders of a startup that outlines ownership, management, and decision-making responsibilities.

Stock options: The right to purchase shares of stock in a company at a specified price, typically granted to employees as part of their compensation package.

These are just a few examples of the legal terms and concepts that are important in startup law. It’s important for entrepreneurs to work with experienced startup lawyers who can help explain and navigate the legal landscape of starting and running a business.

Choosing the right business entity is an important decision for any startup. The choice of entity will impact the legal and tax structure of the business, as well as the liability of the owners. Here are some common business entities and their key features:

Sole proprietorship: A business owned and operated by a single individual. The owner is personally liable for all debts and obligations of the business. This is the simplest form of business entity, but it does not provide any liability protection.

Partnership: A business owned by two or more individuals who share in the profits and losses. There are two types of partnerships: general partnerships and limited partnerships. In a general partnership, all partners have unlimited liability for the debts and obligations of the business. In a limited partnership, one or more partners have limited liability and are not involved in the day-to-day management of the business.

Limited liability company (LLC): A hybrid entity that combines the liability protection of a corporation with the tax benefits of a partnership. LLC owners are called members and are not personally liable for the debts and obligations of the business. An LLC can be managed by its members or by a separate manager.

Corporation: A separate legal entity owned by shareholders. Corporations provide the greatest liability protection for owners, as shareholders are not personally liable for the debts and obligations of the business. However, corporations are subject to more regulatory requirements and formalities, such as holding annual meetings and maintaining corporate records.

S corporation: A corporation that elects to be taxed as a pass-through entity, meaning that profits and losses are passed through to the shareholders and taxed at their individual tax rates. S corporations are limited to 100 shareholders and can only issue one class of stock.

Choosing the right business entity will depend on a variety of factors, such as the number of owners, the desired tax structure, and the level of liability protection needed. It’s important for entrepreneurs to consult with experienced business lawyers and accountants to determine the best entity for their startup.

Corporate governance documents are a set of legal documents that govern the management and operation of a corporation. These documents outline the rights and responsibilities of the shareholders, directors, and officers, and provide a framework for decision-making and corporate governance. Here are some of the key corporate governance documents:

Articles of Incorporation (or Certificate of Incorporation): This is the founding document of a corporation. It outlines the basic structure of the corporation, including the name, purpose, duration, and number of shares authorized.

Bylaws: These are the rules and procedures for the internal governance of the corporation. Bylaws typically address issues such as the number and duties of directors, the process for holding meetings and electing officers, and the distribution of profits.

Shareholder agreements: These agreements are entered into by the shareholders and govern their relationship with each other and with the corporation. Shareholder agreements typically address issues such as the transfer of shares, the allocation of voting rights, and the distribution of dividends.

Board resolutions: These are formal documents that record the decisions and actions of the board of directors. Board resolutions are used to authorize transactions, such as issuing stock, entering into contracts, and hiring officers.

Minutes of meetings: These are written records of the proceedings of meetings of the shareholders, board of directors, and committees. Minutes provide a record of decisions made and actions taken, and are typically required by law.

Code of ethics: This is a document that sets forth the ethical standards and principles that guide the conduct of the corporation and its employees.

Employee agreements: These are contracts between the corporation and its employees that address issues such as compensation, benefits, and confidentiality.

Corporate governance documents are essential for ensuring that a corporation is well-managed and operates in compliance with legal requirements. It’s important for corporations to work with experienced business lawyers to develop and maintain these documents.