Startup Legal Counsel: Everything You Should Know

You should incorporate your startup in Delaware no matter where you are located, but you should also look into incorporating in your home state. Delaware’s court system is known to provide maximum flexibility in business entity structures with its well-developed case law. The information in this article is provided for general informational purposes only and is not legal advice. Transmission of this information is not intended to create, and receipt does not constitute an attorney-client relationship.
However, use of the optional “assumed par value capital” method of tax calculation will typically result in a lower tax obligation than the amount shown in the “amount due” box online for the tax bill. A corporation has the option of using whichever method of tax calculation results in the lower tax. Explanation of the Delaware tax calculation methods are posted on the Delaware Division of Corporations’ web siteas set forth below. Bottom Line – For the above reasons, Delaware Startup Attorney is globally considered one of the most popular jurisdictions to incorporate technology and VC-backed companies. So, for your tech startup, the answer to which corporate entity is best is a no brainer – it must be a Delaware C Corp. "I would like to have someone help me review employment contracts for our startup to ensure that the terms are not out-of-bounds with common industry standards. I am also looking for general advice on how to structure the compensation structure."

As soon as you hit submit your number will be assigned to your Delaware LLC. The state will also assign a 7-digit number to new businesses that will be used for state tax purposes and other LLC applications. After performing a Delaware LLC name search, you’ll need to consider whether you want to conduct business under the name you’ve chosen for your LLC, or if you’d like to use a “doing business as” fictitious name. If your company specializes in more than one industry you may want to use a formal name for your LLC (often the last name of the founding member) to minimize confusion. However, you must register those DBAs with the Delaware county in which you are operating. Registering your LLC name with the Delaware Division of Corporations is the first step to forming an LLC in Delaware.
Then as the ecosystem matured, we saw the emergence of specialized cap table software, like Carta and Pulley . These tools make a lot of sense at moderate levels of cap table complexity – based on our experience at Optimal, typically around Series A or post-Seed. Nowhere am I saying here that the legal industry’s values should take full precedence over those of the software industry. We just need to avoid myopia in letting the software industry’s values steamroll over legal’s as it relates to high-stakes legal work simply because clients think that they have to use BigLaw, and BigLaw can’t make its actual lawyers cheaper. Automating and standardizing everything, because we won’t consider alternative possibilities for achieving efficiency, most certainly is not.

They’ll market this tool, and then publish data saying things like, “80% of seed deals are Post-Money SAFEs, and so it is a standard.” Actually , 80% of seed deals on your half-baked automated platform are Post-Money SAFEs. That is not the same thing as saying 80% of all seed deals in the country or world are. Elite lawyers – the kind with very extensive top-tier training, experience, and ability to handle high-stakes complexity – are in fact quite expensive. This is a great question and the answer is “it depends.” What industry are you in? The answers to these questions make a difference on what you will need to do.
A qualified legal expert can help you as you deal with lawsuits, choose a business structure, handle intellectual property issues, write contracts and bylaws, and perform other essential tasks that will give your business a firm foundation. UpCounsel is the perfect place to start when you're seeking legal advice. Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits.
Delaware is considered one of the most business-friendly states in the union, with regularly updated laws intended to help businesses thrive. The creation and operation of Delaware LLCs is governed by the state’s Limited Liability Company Act, which includes a flexible provision allowing LLCs more contractual freedom to form certain relationships in operating agreements. LLC is an acronym for “limited liability company.” The basic LLC definition is a business entity with the flexible tax structure of a proprietorship or partnership and the liability protection feature of a corporation.

The next step in Delaware LLC formation is designating an individual or business entity to act as your registered agent. A registered agent receives legal documents such as service of process and other official documents on your LLC’s behalf. Once you have an ongoing business, however organized, you will have a host of various commercial transactions. We prepare agreements with lenders, lessors, partners, customers, employees, and consultants. We provide business legal services for your company, preparing confidentiality agreements, nondisclosure agreements, licensing agreements, distribution, employment agreements, independent contractor agreements, lease agreements, and many others. We will help you understand what each part of these agreements require and make sure that these agreements provide protection to you and your business.
This efficiency helps facilitate getting transactions done and relieves the uncertainty as to the timing of when a corporate filing is going to be completed. There also are ways to expedite the corporate filings, such as same day, within four hours and other options. Working with Delaware is quick, easy and efficient, so if you have a company that will raise a lot of money or will be very transactional, a Delaware Corporation is the way to go. Where should you incorporate your business, Delaware or California? This is a very important issue that you need to get right so that you start your company with the right state of Incorporation and get it going down the right path.

While in law school, Mr. Yeager interned for the Office of the Public Defender in Ft. In many instances, you will need several lawyers to tackle these tasks. However, the more subjects a single lawyer knows, the better and more convenient for you. This helps form a better relationship personally and in the business. This prevents you from spending an entire day on travel for a meeting. Look for a lawyer that gives several options to meet your needs.
Though there are two types of forms, one for domestic entities and one for foreign LLCs, both foreign and domestic LLCs pay $200 for dissolution. There are additional considerations to be aware of, even after successfully setting up your LLC. Please read the next sections for an idea of how to keep your new business in good standing. Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky. She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town.
Using a dedicated business banking account and business credit card is essential for maintaining personal asset protection. An LLC is the most popular, simple, and inexpensive way to get personal liability protection. If you're feeling overwhelmed, consider using business planning software. There are several reliable programs out there that can help you create a detailed business plan.

If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. If your LLC has more than one member, it must obtain its own IRS Employer Identification Number , even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship . You may obtain an EIN by completing an online application on the IRS website. Here are the basic steps you need to take to start a limited liability company in Delaware.