Football season is upon us again and, with it, the excitement, the thrill of moving the ball forward for a touchdown, and the agony of defeat. Ups and downs like this are what most start-ups experience. In football, it is important to protect the ball, to play good defense, and to avoid penalties. Similarly, start-ups need to protect their assets, defend their intellectual property, and avoid incurring unnecessary costs in the future. Following a few simple “rules” can help your start-up do all of these things.
RULE NO. 1: Stop the rushing game and avoid “illegal formation” penalties. Avoid quick-fix company formation tools you find on the internet. I know, start-ups hate paying lawyers. (This isn’t unique to start-ups.) You may like your lawyer, enjoy talking to her, appreciate the insights and ideas but, in the end, I know you’d rather not pay me for all of that (why can’t we just be friends, you ask). Why do smart clients nonetheless retain lawyers (like me) knowing full well we have to be paid? Because smart clients, like a good coach, recognize that starting a business is a process and that investment on the front end can lead to considerable savings on the back end.