Essential Legal Advice for your Start-Up Company

Selecting the most advantageous legal structure for your entity is vital. There are pros and cons to each type of legal entity type, so you must determine which is most beneficial for accomplishing your goals. Some of the most common entity formations are a limited liability company (LLC), partnership, C Corporation and S Corporation. To learn more about these types of entities, please read our blog titled “Selecting the “Right” Legal Structure for Your Business.”

A vesting schedule is important to new entities because it creates the rights and obligations between the founders of the company. It can establish a balance between founders who operate the company and absent founders or those who leave early. Co-founders are able to obtain their stock when the company is first created, but a repurchase agreement executed by all of the founders, can provide the company the right to take the stock back for compensation. The agreement can provide the company’s right decreases over time which in turn allows the owners’ stake to increase over time while also providing for tax benefits, long-term capital gains treatment and voting rights. Additionally, the vesting schedule should provide for acceleration if the company is sold, changes control or an owner is fired.

A start-up company must take measures to protect its intellectual property. If your business uses independent contractors to perform work, you must ensure that they execute an assignment of intellectual property rights to the company when they are hired.

The above are just a few examples of issues an attorney can help you with when starting a new company. Obtaining the right advice from the start can significantly increase the likelihood of your business being a success. Contact The Swenson Law Firm for help.

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