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Entries in StartUp Attorney (11)

Wednesday
Apr212010

Form an LLC Online. Fast. Using an attorney.

A good first step for anyone starting a business is to form a separate legal entity through which to conduct business.  Usually this means that a limited liability company or corporation is formed.  Except in certain instances, I usually recommend that an LLC be formed.  The business owner then has a choice to make - how to form the entity.  

 

  • Do it yourself?
  • Use a non-attorney legal forms provider like legalzoom.com?
  • Retain the services of an attorney?

 

This decision usually comes down to one factor - cost.  Most people, in the absence of the typical relatively high cost of using an attorney to set up an LLC, would likely use an attorney.  This is why non-attorney legal forms providers have become so prevalent and successful - the provide a pseudo-legal service at a much lower cost that an actual attorney. In the past, I myself have lost clients seeking to form an LLC when opted to use a legal forms provide rather than retaining my services - simply due to cost.

That is what inspired me to launch myIndianaLLC.com - which is designed to give clients the best of both worlds - the LLC formation services of an attorney with the afford-ability and speed (although our services are much faster than most legal forms providers).  myIndianaLLC.com allows you to create single and multiple member Indiana LLCs online by walking you through an interactive questionnaire that has been carefully crafted by me to mimic the exact same process I use when setting up an LLC for a client in the traditional manner.  The system then analyzes the answers provided and generates a set of documents that are sent to me for my review.  After I review them, I make th appropriate filings with the Indiana Secretary of State, send the documents back to the client, and POOF - a brand new Indiana LLC has been formed!  All of this can be done in as fast as 1 business day.

If you are interested, check out myIndianaLLC.com.  

Wednesday
Jan132010

Do I need a PPM to offer notes? (Private Placement Attorney - Debt PPM)

This is a question I get from so many clients and potential clients that have the misconception that only stock in a corporation, membership interests in an LLC, or partnership interests in a partnership are "securities."  Under the Securities Act of 1933, a security is defined as:

...any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

Notice the first word is NOTE.  The words "EVIDENCE OF INDEBTEDNESS" are also used.  Notes, bonds, and indebtedness in general are a form of a security, and as such, any offering involving them must be handled and scrutinized in the same manner as an offering for equity (stock...etc).  This doesn't necessarily mean that you need a private placement memorandum (PPM) depending on the specifics of the offering, the types of investors you seek, or the securities law registration exemption you will pursue - but that is a determination that should be made by an attorney with experience in those matters.  

So don't make the mistake of believing that debt instruments are not securities!

Wednesday
Sep022009

LLC Attorney - Member vs. Manager Managed

If you are thinking about forming an LLC - one decision you will need to make is whether the LLC should be managed by its members of by its managers.  I have a post over on IndianaStartup.com on this subject - check it out.

Wednesday
Jul152009

New Blog for Start-ups and Small Business - IndianaStartup.com

Up until now, this blog has really focused on start-up businesses and the many legal issues that come with running a start-up or small business.  That focus has been moved to a new blog I just launched today called IndianaStartup.com.  Here is short blurb about the new blog:

IndianaStartup.com is a resource for entrepreneurs, start-ups and small businesses. The site will constantly be evolving, but the focus is to provide information (not legal advice – see the Terms of Use/Disclaimer) that hopefully will be useful to the start-up community. Beyond the information supplied on this site, I am hopeful entrepreneurs will engage in a constructive dialgue by leaving comments about the articles posted here.

IndianaStart-up.com also serves as a platform for start-ups to let the world know they exist through our Start-Up of the Week feature. This is something that is provided to qualifying start-ups free of charge. Hopefully this site will gain a strong following, and the platform provided will help more than a few start-ups get the word out.

So please check out the new blog. I think it has lots of possibilities - and I am not totally sure what direction it will take.  I love the format, the platform and the message - so I am hopeful for good things.

I will still be posting to this blog, but more on about personal musings related to my law practice. 

I will also be launching two more blogs in the coming weeks - so stay tuned!

 

Wednesday
Jul082009

Internet Attorney - A Checklist for Internet Start-ups

Internet start-ups are a lot like traditional, brick and mortar businesses.  The require all of the same things I listed here. There are also some unique matters that must be attended to when starting and operating and Internet Business.  Below is a checklist of some of the things every Internet start up should have.

  • A properly organized corporate entity.  Just because you are doing business on the Internet does not mean you are free from the liability concerns of traditional businesses. Make sure you form an entity through which to do business and adhere to corporate formalities.
  • A plan to protect your intellectual property.  This should include proper registrations of copyrights, trademarks and patents.  It should also include the use of confidentiality, nondisclosure, and invention assignment agreements. There should also be clear, conspicuous notices of your intellectual property rights. 
  • Properly drafted Terms of Use and Privacy Policy for your website.  This is an important step for traditional businesses who's website is merely complimentary to the bricks and mortar.  It is a vital and even more important step for an Internet business.  Don't rely on cutting and pasting from another site - that is just a bad idea.
  • If you are an SaaS provider, make sure you SaaS agreement is bullet proof.  Don't try to do this on your own!  You not only need to make sure the provisions in the agreement are sound, but you also need to make sure that you have a valid acceptance of the agreement by the end user.
  • Make sure you have carefully reviewed any development agreements.  Among other things, this needs to be reviewed VERY CAREFULLY to ensure the scope of the project, developer obligations, warranties and most importantly intellectual property ownership are all adequately spelled out in the agreement.

This list is, of course, not inclusive.  You should consult with an Internet Start Up Attorney prior to and during the operation of your Internet start up business.

 

Tuesday
Jul072009

An Internet Start-up Attorney - Advising Internet Start-Ups

About 10 years ago, during the Web 1.0 dot-com boom, I co-founded an Internet start-up.  For 3 years I raised capital, hired employees, developed web applications, and did everything else necessary to operate the business.  My experience as an Internet entrepreneur has been invaluable for the portion of my practice that focuses on Internet start ups.  I am a firm believer that specialized experience prior to practicing law allows an attorney to provide real value to clients - beyond just rendering legal advice.  My Internet start-up clients also seem to appreciate the "been there - done that" aspect of my background.

If you have an Internet start-up, contact me  to speak with an Interent start-up attorney that has a practical understanding of your business and the legal issues it faces.

Monday
Jun222009

Business Start-Up Attorney - Employees vs Independent Contractors

 One question I get from quite a few start-up clients of my business start-up law practice, is whether they should hire employees or independent contractors. After a brief discusion, those clients usually will opt to classify new workers as independent contractors instead of employees. This is mainly a cost saving decision. The costs attributable to hiring employees can be substantial, including workers’ compensation, unemployment insurance tax, social security tax and withholding and local payroll taxes.


A good start to identifying workers as independnt contractors vs employees is to have a properly drafted agreement signed in writing by the company and the worker, although simply identifying a worker as an independent contractor, even in a signed agreement, does not mean that the law will recognize the worker as such. The law will look to factors such as the degree of control and direction the company has over the worker. Misclassification of a worker can lead to obligations to pay back taxes, penalties, and interest payments.

If you are a start-up and have questions about how to classify your workers as independent contractors, make sure you seek the legal advice of a good business start-up attorney.

Sunday
May312009

Business Incorporation - Why you should consider your home state.

Martin Zwilling over at Startupprofessionals.com has a nice post regarding why start-ups should consider incorporating / organizing their business in their home state.  The post can be found here, but here is a brief summary:

  • Don't automatically flock to incorporating in Delaware.  Sure there might still be some advantages to doing so, but they don't really apply to start-ups.
  • In Indiana, where I practice law, the filing fees for incorporating a business are inexpensive and the process is relatively straightforward - not the case in popular states such as Delaware and Nevada.
  • Attorneys in your home state, if you are using an attorney (hopefully you are), will be more familiar with your state incorporation laws.
  • Your company may qualify for an intrastate securities law exemption in the event it offers securities for sale.
  • There is no need to register as a foriegn entity in your home state - and added expense if you incorporate elsewhere. 

As he points out, there are many other concerns that should be addressed when determining in what state you should incorporate - concerns you should address with a corporate attorney in your home state.

Thursday
May212009

Starting a Business - A checklist of things to consider.

If you are starting a business, there are a number of things you need to consider when you are in start-up mode, beyond what you might normally think of (i.e. the business name, business location, sales and marketing...etc).  From a legal perspective, here are some of the things you should carefully consider with the help of a business start-up attorney:

  • What form of business entity should you choose?  There are multiple entries on this blog dealing with the various forms of entity a start-up can choose from.
  • If there will be multiple owners (i.e. shareholders, partners or members), how will control of the business be structured?  
  • How much and how often will the business owners be paid should the business turn a profit?
  • What record keeping methods will the business employ?
  • Will the business hire employees, contractors, or a mix of the two?
  • What type of liability insurance will the business need?  How much will it need?
  • Will the business enter into a lease for space?  Or will it buy and develop its own real estate?
  • If the business will have employees, will it provide benefits? How will the business handle payroll?
  • What types of banking relationships will be necessary?
  • Will the business need to raise capital?  If so, will it be through debt or private equity?
  • Will any sort of license or permit be required to conduct business?

These are just a few things that should be considered?  Need help sorting through your start-up business questions?  Contact start-up business attorney Brian V Powers.

 

Monday
May112009

Raising Venture Capital - What is a Liquidation Preference?

There is an informative article posted on TheStartpLawyer.com, a great blog maintained by Texas attorney Ryan Reynolds, about liquidiation preferences.  Liquidation preferences are often required by a venture capitalist as a component to the preferred stock they receive in return for their investment.  Check out the post for a brief overview of liquidation preferences.