Legal costs of startup?

https://news.ycombinator.com/item?id=103272

by brianm • 19 years ago

11 10 19 years ago

news.ycombinator.com

What are the unavoidable legal costs to get a typical web based startup off the ground and into a beta launch? Guy Kawasaki pointed out Truemors took just under 5k USD, is that typical?

chaostheory• 19 years ago

according to a lawyer I talked to at DLA Piper it is

sgoraya• 19 years ago

Depends - We had our lawyer draft the incorporation docs (c-corp) and investment term sheets - We spent approximately $7,500 on the aforementioned items

That said, we quickly spent close to $15k to include: Employment contracts that included equity allocations, IP docs and contracts for two of our larger clients (the bonus here is that we can reuse the contracts that have been tailor made to protect us)

Stubbs• 19 years ago

In the UK it's worth contacting your local Chamber of Commerce to see if they have a local BusinessLink. Sheffield Enterprise Network Trust Asc. have so far paid all my legal fees for writing the T&C's & other documents.

They can also provide financial help in other areas too, merket research, branding and general business guidence, all the stuff someone with a tech background might struggle with.

There are limitations to what their funding will cover, and they don't require any equity in return.

corioliseffect• 19 years ago

If you're spending more than $5k on a standard C-corp you're paying too much. These docs are boilerplate at any reasonable firm. $15k is out of line.

mightybyte• 19 years ago

Is a C-corp what most web startups are using? Everything I have seen seems to indicate that an LLC or S-corp are better to start with.

davidw• 19 years ago

"It depends". Search the archives - there have been lots of good discussions about this. I went for an LLC myself, and that seems to be working ok so far.

marcus• 19 years ago

S-Corp doesn't allow multiple classes of stocks which can hinder VC funding, as they usually insist on preferential stocks of some kind...

The correct answer is it all depends on your financing plans, importance of liability protection, projected income and team makeup. Consult a lawyer.

jam• 19 years ago

Starting as a C-corp from the beginning makes it much easier for you to take investment. If you aren't planning on doing that, though, then an LLC or S-corp are fine.

SamanthaG• 19 years ago

Hi - is your business based in the UK or in London?

NoBSWebDesign• 19 years ago

I'm on my 3rd company (first web startup), and I've never spent more than $1500 to start. If you're willing to get down and dirty with legal docs, you can easily draft everything yourself (this of course takes great attention to detail and enough confidence in your ability to rid yourself of the notion that they're too difficult for common folk to write) and just get a lawyer to review it.

Then, if you're equally willing to throw yourself into the code and server setup, customer interaction, and the networking that goes along with starting a business, again, it doesn't cost much.

I like LLC's personally because they're simple, protective, and structurally transparent. Then again, I don't usually go out and seek investment funding. I like to startup out of pocket, launch early the agile way, and then fund development with revenue.

Legal costs of startup?

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