Ask HN: Easiest Way To Formalize with Cofounder

https://news.ycombinator.com/item?id=2421155

by bglenn09 • 15 years ago

5 7 15 years ago

news.ycombinator.com

My cofounder and I are looking to formalize our arrangment. Is there a legalzoom for start-ups or anything to make it easy to work through all the issues and file all the necessary papers. We don't want to shell out tons for attorneys at this point or over-complicate this but we do need to form an entity as are starting to work with outside parties.

rdin• 15 years ago

Forming a startup without a real lawyer is very difficult, especially if you have to create contracts with outside parties. For a basic incorporation and issuing of shares, you are looking at a few thousand in legal fees. Though it may seem like a lot, it's best to do it correctly from the start, rather than doing it multiple times.

ryanlchan• 15 years ago

I'm going to echo the 'real lawyer' advice. It's really not that expensive - your first consultation is likely free, giving you the ability to shop around to find a firm that you trust. With the right lawyer and a boilerplace incorporation, you should be able to get incorporated with only $2-3K.

Though there's nothing terribly complicated about forming an S-Corp or a LLC (the two entities you'd be likely to form), there are a lot of little niggles that, should you get wrong, can go very wrong. Allow me to remind you of this disaster that happened on HN just a few days ago: http://news.ycombinator.com/item?id=2399139

tl;dr Don't hack your legal stuff. Get a real lawyer.

kirpekar• 15 years ago

http://nolo.com

jwang815• 15 years ago

Depends on what type of business. My first startup was a mobile app development business, so I formed an LLC on LegalZoom. It was no more than $200.

My current startup, Munch On Me, was going to be much bigger and I needed several contracts drafted with founders and such. I knew I wanted funding eventually so I set it up as a C Corporation from the start. Legal fees are in the several thousands for a good lawyer. There was a lot of customization in the process, which is why it costs so much as opposed to a one stop shop like LegalZoom.

davetong• 15 years ago

Like @rdon stated, lawyers cost a lot, and that's fine if you have the capital. But if you are in the early stages of a start-up without the resources, all you need is a written document that states your terms that you would liked 'formalized', make a copy of it (prevents people from conveniently misplacing it), then both sign it with dates (consider having a witness sign it too). Then in the event that you need to 'sort' things out, both your pieces of the signed document act as your contact.

codenerdz• 15 years ago

I still dont understand why your startup incorporation has to be very difficult and expensive. There should be a template that works for 90% of startup cases(which would avoid any unneccessary annual taxes as mentioned in the HN post several days ago).

bglenn09• 15 years ago

This is what I had in mind. Are there specific templates that are recommended or heavily used?

Ask HN: Easiest Way To Formalize with Cofounder

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