Ask HN: When should I worry about legal docs?

https://news.ycombinator.com/item?id=10031231

by z-magic • 11 years ago

3 3 11 years ago

news.ycombinator.com

Hey everyone,

Aspiring startup guy here.

I am in the early stages of developing a social app, but I am quickly heading to a point where I want to beta test with my larger College community.

That being said, when do I need to worry about Terms of Conditions, DMCA, Privacy Policy etc.

Should I incorporate and become an llc before any of this?

Also, would I be able to adopt legal documents from other similar apps eg Snapchat, Instagram and tailor it for my specific app?

Any insight would be appreciated. Thanks hackers!

cdvonstinkpot• 11 years ago

I formed an LLC early when I was doing my startup, and regretted it b/c it became a burden to maintain all the necessary records I might have not had to do if I had chosen to incorporate later- like when I had paying customers. I would wait as long as I can stay unincorporated if I were to do it again.

I would create a Sole Proprietorship first, before there are many assets belonging to the startup- it'd allow for the use of company accounts with vendors, without the cost associated with an incorporation. I think it was less than $50 to do that.

As for ToS, I believe that would be a good thing to get in place early on just to have some sort of protection/insulation from liability as far as that would provide. There are resources on HN if you search to help get that done at minimal cost. I hired an attorney to do mine, & it was way more expensive than it had to be, as I learned later.

techjuice• 11 years ago

Handle all the legal stuff up front were it is much easier and affordable. My advice to you: a few hundreds up front with an attorney and certified professional accountant will save you thousands or millions down the road.

I recommend starting your business up front as it is cheap to do so ( legalzoom.com ) and helps you run your business in a proper structure for growth from the beginning. In terms of what documents to use you, can only adopt what others have once you receive their official permission from an officer of the company authorized to allow you to do so. Also note that copying their terms may not be applicable to your business or give you the best benefit legally so getting legal advice from an attorney is advised.

If you want to enable more investor options you will have to convert your LLC to a Corporation so insure that you know the differences between the two and plan out what you want to do up front. When you have an LLC up front you can have the separate business accounts and separate your personal assets from the business assets which will help you keep your books straight along with with having the ability to show your cash flow to potential investors without having to include personal items in it that are irrelevant to the business.

You can build the product or other things once you have a product and do not need to start the business up front until your really ready to start marketing it, bringing in employees, investors, etc.

jseeff• 11 years ago

Incorporation is not a straight-forward question. Depending on what kind of IP you have (if any), what kind of costs and when you anticipate revenues, can all affect your position (notably in respect of future tax issues). Also assuming in all this that we are talking about US jurisdictions of some kind. Generally speaking, you probably want to incorporate before you start incurring significant costs and liabilities or before you start accumulating significant assets (including IP). There are a ton of resources online about this kind of thing so I'd recommend doing a basic google search and going from there but ultimately it is worth speaking to a lawyer or accountant about this.

As for legal docs, this is often a catch 22 for start-ups and again, will depend a lot on your circumstances. What are your risks (i.e. what does your app actually do)? By looking at many different examples online, you can probably get a good idea of the kinds of things you need to cover, but a lot of it will be specific to your business. Many law firms offer start-ups deferred fee structures so even getting a lawyer to help doesn't necessarily have to cost you an arm and a leg....

Ask HN: When should I worry about legal docs?

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