Stripe Atlas is a simplified, streamlined tool that guides your internet business through the process of incorporation. Under the right circumstances, it can be an easy way to save money and time on getting your business started.
However, business registration is really only step one. After you have incorporated your business, using Stripe Atlas or any other resource, you still have a long to do list of legal issues to address. Elsewhere, we have offered some insight into the most important post-incorporation documents that you should be thinking about. Here, we provide an overview of the most important strategic legal considerations once you have incorporated:
Important Tax Management Decisions
As soon as you have completed the process of incorporation on Stripe Atlas, your company exists as a separate legal entity – one that is taxable. This has two immediate legal implications: you need to ensure that you know what the tax implications for the company itself is, and you need to make decisions about tax management from a personal perspective.
From a personal tax management perspective, many founders decide that they want to file a Section 83B Election with the IRS – this can result in significant tax savings down the line when they want to sell their shares.
From the corporation’s perspective: you need to decide about the assets that you transfer to the corporation (in many startups, this consists of valuable intellectual property). This will have implications for the tax liability of the corporation. It is generally advisable to get legal advice in this regard.
Equity Disbursement Decisions
Stripe provides templates for disbursing equity after the process of incorporation, and it might be sufficient for your company’s needs. In that case, using their equity disbursement tools and templates could be a great idea. However, it is advisable to get some legal advice before making hasty decisions about equity disbursement.
How you decide to approach capitalization, equity dilution, the option pool, and issues such as vesting schedules and stockholders’ agreements has profound implications for potential future investors. Not getting equity disbursement right can significantly harm your chances of successful fundraising and eventual exit.
Having completed the process of incorporation is really only half the job when it comes to protecting your company’s value proposition. You need to ensure that your employees and co-founders can’t institute claims to the company’s intellectual property (assignment agreements) or open competing firms (non-compete agreements).
You also need to limit your exposure to legal liability by ensuring you have compliant terms of service, licensing, and privacy protection agreements. Ensuring proper contractual protection for your company is not only a matter of protecting the company – it is also the first thing investors look towards during due diligence.
Protecting your Intellectual Property
The second thing investors usually look towards is your intellectual property portfolio. Does your company own the exclusive right to monetize your ideas, brand, and inventions? This is a key step towards establishing your strategic value, and it is often a time sensitive matter: patents are awarded to those who first file for patent protection, for example.
Intellectual property protection is also not merely a matter of filing for protection: it is a strategic endeavor. You need to decide which forms of intellectual property to utilize, how to structure your prosecution strategy, and whether and how you should pursue international protection.
Find an Affordable Lawyer and a Reliable Legal Partner
Starting a company is about much more than just registration. It is a strategic effort that requires legal expertise. For that reason, it is better to seek an attorney to help you with the process. An attorney that has experience in this area gives a huge advantage to an entrepreneur. To find an experienced attorney to help you form your business, visit LawTrades where we match entrepreneurs with top attorneys.