Author: Ryan Roberts
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Draft a Complete Employment Contract
If you’re hiring an employee early—especially your first few non-founders—the practical answer is: you don’t need a 20-page “complete employment contract,” but you do need a clean offer letter plus a small set of attached policies and invention/IP paperwork that hold up in a financing or an acquisition. The biggest misconception is that “more pages…
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Leasing Office Space
Once you’ve outgrown your garage, your home office or your executive suite, you will probably consider leasing commercial office space. The best advice I can give you, the entrepreneur, is to treat the office space lease process the same way you might the car buying process. If you don’t, you could end up legally responsible…
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Prevention Always Makes Cents, Part II
I wanted to follow-up with you concerning the importance of taking preventative legal steps when starting your business. Googling this weekend, I found a blog entry from Rhonda Abrams, author of The Passionate Entrepreneur on Yahoo! Finance. Here’s an excerpt: “Taking care of your company’s legal health is like taking care of your personal health:…
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Prevention Always Makes Cents
A recent Wall Street Journal article detailed the steps you should take to avoid collection problems when expanding your business across state lines. The article suggested prevention was by far the best defense. I believe that’s right, but I’ll make a much broader statement: Prevention is the best defense for any potential business problem. As…
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The Theory Behind Subchapter S
Subchapter S status was enacted so that startup companies and other entrepreneurs would not shy away from choosing a corporate form of organization because of the potential for double taxation. A corporation that elects Subchapter S status is treated for federal income tax purposes as a partnership, but maintaining the corporate advantage of limited liability…
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Friends Can Be Bad Business Partners
Launching a startup business with a friend can be an exciting and rewarding experience. However, I suggest you take a moment and really think about what the potential consequences might be. Starting a business is tough and having a friend involved will only make it more difficult if things go sour. Most importantly, your friendship…
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Call Your First Organizational Meeting Sooner than Later
Running a startup, you have a billion things to do. Don’t forget to add “First Organizational Meeting” to your to-do list. This meeting should take place after the issuance (or effective date) of your certificate of incorporation. But don’t wait too long, as you have some important business to handle, such as: adopting share certificates,…
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Where to Incorporate
After you have made the decision to incorporate, the next question is “where to incoporate?” You can incorporate in your own state and be considered a domestic corporation, or you can incorporate elsewhere and do business in your own state as a foreign corporation. Generally, if most of your business will be conducted in your…
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Choosing a Name for Your Business: Stick with It
When choosing a name for a new startup, you should make sure the name is one the public will remember and associate with your business. It can be catchy or dull, short or long, but this name should be permanent, as a large portion of your company’s goodwill will be the name itself. Some lawyers…
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When to Use an Earnout Provision
If you’re selling your startup and the buyer proposes an earnout, the short answer is this: earnouts are usually a sign of unresolved risk or disagreement, not free upside. Sometimes that risk really does need to be bridged. Often, it’s a warning light. This matters most if you’re a founder selling a venture‑backed company where price,…