Startup legal documents

Disclaimer: Obviously, I am not a lawyer. It’s worth the money to pay for a great lawyer; sure, LegalZoom can get you documents on the cheap, but the real value of your lawyer is in their advice and connections. Rafer and I mentioned the ones we use yesterday. Every company is different, so what you need may be different than what we have needed.

So yesterday I spent hours poring over the multitude of legal documents we’ve received over the last few months (with more in the pipeline) and I think I’ve got everything straightened out. For people who have never started a company before but are thinking about it, I thought it might be helpful to outline all the documents we have needed.

Here are the various legal documents we have needed in the first several months of our company (YMMV):

  1. Organizational Resolutions – This describes the actual formation of the company, the board of directors, the equity split, etc.
  2. Bylaws – The rules that describe the various details of your company given various situations and circumstances.
  3. Form of Proprietary Information Agreement – By working for the company, you agree that what you do is proprietary and should not be shared.
  4. Invention Assignment Agreements, one for each founder – This assigns all of the work you do and ideas you have that are related to the company over to the company.
  5. Restricted Stock Purchase Agreements, one for each founder – This outlines the equity in the company you receive, your vesting schedule, and the various rules and restrictions associated with that.
  6. Equity Compensation Plan – Outlines the rules and restrictions for granting equity in its various forms: stock grants, options grants (there are two kinds), restricted stock, etc.
  7. Board of Directors consent to Equity Compensation Plan – The Board needs to approve #6.
  8. Shareholders consent to Equity Compensation Plan – The Shareholders also need to approve #6.
  9. Form of Nonqualified Stock Option Grant – This is what you use to give non-employees (like advisors) options. You don’t want to give them straight up equity because they will have to pay taxes upon receipt. 
  10. Form of Incentive Stock Option Grant - This is for granting employees options.
  11. Stock Certificates that embody the stock you receive as founders.
  12. You may also need Convertible Debt Notes for your earliest investors.
  13. You may need Non-Disclosure Agreements, although there are lots of people who refuse to sign them (with good reason). We haven’t used one yet.
  14. If you have hired a contractor to do some work for you (like design your logo), you need them to sign a Contractor Invention Assignment Agreement. It’s not sufficient that you paid them; they need to sign their work over to your company for you to actually own the IP.

In some cases, it may make sense to file a patent. Go talk to a patent attorney about that. It’s tens of thousands of dollars, but sometimes having one can be critical to your company.

You will also need to do the following (your lawyer can help you):

  1. Register and file for incorporation. We are a Delaware C-Corp, but there are lots of reasons why LLC or S-Corp makes more sense at the start.
  2. Qualify to do business in the state you live.
  3. File for copyright on your name and codebase. You just have to paste in a 1000 lines of code, it’s easy and affordable.
  4. File for trademark. You want to do this as early as possible, because the longer you hold your trademark, the more defensible it is.
  5. Buy a minute book. Corporations are required to have these (and use them).

I’m new to this, so some of it may be incorrect (like I said, IANAL). Let me know if something isn’t quite right. Hopefully it’s helpful.

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