THE LEGAL CHECKLIST FOR STARTUPS
SEED
Entity Formation
Choose your business entity structure
File appropriate documents with the Secretary of State
File for an EIN (Employer Identification Number) with the IRS
Publish a notice of organization in a local newspaper (if the entity is formed under Nebraska law)
Prepare governing documents (e.g., bylaws and potentially a buy/sell agreement for a corporation, or an operating agreement for an LLC)
NEW FEDERAL REPORTING OBLIGATION! Consult an attorney to determine whether the Corporate Transparency Act obligation to report applies to your business.
Intellectual Property Protection
Search trademark and Secretary of State registries
File for Trademark Registration for your business name
SPROUT
Increased IP Protection
Pursue additional trademark registration, or rebrand if your existing materials are infringing
Pursue other forms of IP protection (e g , trademarks, copyrights, patents, trade secrets)
Analyze whether licenses will be required to pursue an existing concept
Consider Real Estate Needs
Analyze whether you currently or prospectively require an office or building space to continue or expand operations;
Consider your acquisition options: Leasing, Triple-Net Leasing, Outright Purchase, Lease Option, Assumption;
Analyze feasibility: present and projected cash flow, collateralization, existing debt service obligation(s).
BUDDING
Funding Options
Seed-ConvertibleNotes,SimpleAgreementsforFutureEquity(SAFEs),SBALoans&Microloans,Grants
Growing-SeriesA,B,CRounds(&Beyond),TraditionalBankLoansandLinesofCredit,Mezzanine
Financing
Exit-Acquisition,InitialPublicOffering(IPO)
FLOWERING
Employment Matters
Analyze proper worker classification (i.e., independent contractors vs. employees; if employees, exempt vs. non-exempt)
If hiring employees:
Comply with tax, reporting, insurance, and notice requirements as an employer
Consider recruitment strategies, including pay, benefits, and other perks
Build onboarding procedures and ensure work authorization (Forms I-9)
Comply with wage and hour laws
Understand applicable laws regarding non-discrimination, leaves of absence, etc.
Develop or delegate payroll management
Document policies and practices in a basic Employee Handbook
GROWTH
Risk Management
Identify all of the risks and evaluate how significant that risk is to your business
Keep good records pertaining to the risk
Monitor the risk
Consider purchasing insurance
REAP
Exit Strategy
If your exit takes the form of an M&A (merger and acquisition) transaction:
Engage advisors, including your legal, accounting, and brokerage teams
Complete corporate and compliance “clean up” to make your business sale-ready
Shop the company and enter into an LOI (letter of intent)
Before closing, reward key employees for helping your crop grow with equity compensation (which would convert to cash upon closing)
Enter into a purchase agreement and satisfy all of the prerequisites for closing