Legal work is not exciting, but it is existential. The wrong incorporation structure can block fundraising. Missing IP assignments can kill an acquisition. Ignoring compliance can result in fines that destroy your runway. Here is the practical legal foundation every startup needs.
Incorporation: Delaware C-Corp Is the Default
If you plan to raise venture capital, incorporate as a Delaware C-Corporation. This is the standard that 90% of VC-backed startups use. Delaware has well-established corporate law, a specialized court (Court of Chancery), and investors are comfortable with it. Use a registered agent service and file online.
IP Assignment and Protection
Ensure all intellectual property created by founders and employees is properly assigned to the company. This means: All founders sign an IP assignment agreement at incorporation. Every employee signs a PIIA (Proprietary Information and Inventions Assignment) agreement. Contractors sign work-for-hire agreements that clearly assign IP. Without these, your company does not actually own its product.
Equity Documentation
Use a standard stock purchase agreement for founder shares. File an 83(b) election with the IRS within 30 days of receiving restricted stock -- missing this deadline can have devastating tax consequences. Set up a formal option pool (typically 10-15% for seed-stage) for future employees.
Key Contracts You Need
Terms of Service and Privacy Policy for your product (legally required in most jurisdictions). Standard employment agreements and offer letter templates. Customer contracts or subscription agreements. NDA template for sensitive conversations with potential partners.
Compliance Basics
Understand the regulatory requirements for your industry and geography. If you handle personal data, GDPR and CCPA compliance is mandatory. If you are in fintech, know your licensing requirements. If you are in healthcare, understand HIPAA. Ignorance is not a legal defense.
