Legal & Liability
From how to choose and work with a lawyer, to how to mitigate your liability, the Legal & Liability section has resources to help you navigate the legal matters your company will face. Of course, nothing here should be considered legal advice, and it's always a good idea to consult with a lawyer.
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Some docs are too long and boilerplate to read, so this is how I read financing docs: 1- Read and understand everything in the term sheet. 2- Get a good lawyer because you probably don’t have one. 3- You probably can’t tell the difference between good legal advice and bad legal advice.
Forming a company is the best way to "putting a buffer between you and the business." But you can't just pretend to be a business, you have to be a business. "Being a business" means separating your personal and business records, separating your personal and business bank accounts, treating the business as a real entity, having board meetings, taking board minutes, doing major activities via board resolutions, following "due process." If you don't behave as a real business, you could find yourself in a situation where someone, most commonly someone who is suing your business, can come after you (and your business partners) personally. And then you are going to say "but what about the liability limitation the business provides?" It may not be there for you.
When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should be: product, recruiting, marketing etc. One slightly disturbing trend I’ve noticed is founders trying to creative about stuff like legal terms that really are better left in their “default” form.
I know that people have an allergy to lawyers out of fear of being screwed. Much of this is unfounded – some is not. If you’re a startup and you don’t have a close relationship with a few law firms you’re really missing one of the most important relationships that any entrepreneur can have. This all got me thinking about a post on how to best work with lawyers. This is stuff I tell people verbally at least twice / month so I’m glad to finally get it into written format.