Legal Checklist for Starting A Business

By: Jim Dossey, MS, MBA, JD, Patent Attorney

The list below details some of the legal decisions and documents required to start a business, including documents required for pre-formation, entity formation, taxation, funding, protection of intellectual property, website creation, state licensing and permits, and human resources.

Pre-Formation

1. Employment contract reviews of the founders and key employees à any issues with non-compete or non-solicitation agreements?
2. Decision on type of entity to form (LP, LLC, S-Corp, C-Corp)
3. What state to form business in?
4. Decision about ownership structure of the entity

Formation

1. Register entity with the Secretary of State
   1. Determination of principle place of business
   2. Determination of registered agent
2. Agreement to the "rules" of the entity à Partnership agreement for LP, Company Agreement for LLC, Bylaws for Corporation
3. Organizational meeting, documented in meeting minutes
4. Minute Book
5. Documentation of ownership à membership certificates, if LLC or LP. Stock certificate if C-Corp or S-Corp.
6. DBA, if necessary
7. Buy-Sell agreement, if necessary

Federal Taxation

1. EIN (needed to set up entity bank account and for tax return)
2. S-Corp election for taxation purposes

Funding – Debt or Equity?

1. Term Sheet describing basic agreements about the investment
2. Closing Documents
   1. Debt: Promissory Notes, Security Agreements
   2. Equity: Stock Transfer Agreement, Stock Purchase Agreement, or Stock Subscription Agreement (Corporation), Assignment of Interest (LP or LLC)
   3. Convertible Note, debt to equity

Protection of IP

1. Trademarks à protects goodwill of a brand
2. Trade secrets – NDA and Confidentiality Agreements
3. Patents
4. Copyrights

Website Creation

1. Terms of Use
2. Privacy Policy
3. Copyright Policy
4. Registration of a DMCA Agent

State Licenses and Permits

1. Sales Tax and Use Certificate, if selling goods
2. Auto Dealer License, others

Human Resources

1. Employee handbook
2. Employment Agreements

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