Startup Law
What legal steps does a startup founder actually need to take?
Most U.S. startups must get five things right early: (1) form the right entity — usually a Delaware C-corporation to raise venture capital, or an LLC if bootstrapping; (2) issue founder stock with vesting and file an 83(b) election within 30 days; (3) assign all IP to the company in writing; (4) follow securities law when raising money; and (5) classify hires correctly. Getting these right early prevents costly cleanup later.
Do I actually need a lawyer to start a startup?
Not for every task — you can form an entity yourself — but founders benefit from counsel on the decisions that are expensive to reverse: entity choice, founder equity and vesting, IP assignment, and your first raise.
These build the 'chain of title' investors examine in diligence; mistakes here can delay or kill a financing. Routine filings can be do-it-yourself; structural decisions reward experienced review.
What entity should my startup be?
Usually a Delaware C-corporation if you will raise venture capital, or an LLC if you are bootstrapping a services or lifestyle business.
See the entity-choice page for the full comparison, the tax stakes, and what investors require.
How do I split equity with a co-founder, and why does vesting matter?
Split based on contribution, role, and risk, and put every founder's stock on a vesting schedule — the market standard is four years with a one-year cliff — so the company can reclaim unvested shares if someone leaves early.
Pair the grant with a founder stock purchase agreement and an 83(b) election. See the equity-and-vesting page.
What is an 83(b) election and why is the deadline so strict?
It is a one-page IRS filing that taxes your unvested stock now at its low grant-date value instead of later as it vests; you must file within 30 days of receiving the stock, with no extensions.
Missing it can create a large tax bill if the company's value rises. See the 83(b) page for how to file.
How do I make sure the company — not me — owns the IP?
Every founder, employee, and contractor must sign a written IP assignment; without it, the person who created the work generally keeps the rights, which is a deal-killer in diligence.
See the IP-ownership page.
How do startups legally raise money?
Most early rounds use a SAFE or convertible note sold under a securities exemption such as Rule 506 of Regulation D, with a Form D filed within 15 days of the first sale.
See the SAFE-vs-note and the 506(b)-vs-506(c) pages.
What compliance do founders forget?
Common blind spots are beneficial-ownership (BOI) reporting status, 409A valuations before granting options, worker classification for the first hire, and trademark clearance before committing to a name.
See the BOI, 409A, contractor-vs-employee, and trademark pages.
Explore the Startup Law topics
Each issue below has its own in-depth page:
- LLC or Delaware C-Corp for a Startup? — Should I form an LLC or a Delaware C-corporation for my startup?
- The 83(b) Election — What It Is and the 30-Day Rule
- Co-Founder Equity Splits and Vesting Schedules — How much equity should I give a co-founder, and do we need vesting?
- SAFE vs Convertible Note — Is a SAFE better than a convertible note for my first raise?
- Corporate Transparency Act / BOI Reporting (2026 Status) — Do I have to file a beneficial-ownership (BOI) report?
- Who Owns Your Startup's IP (and How to Make Sure It's the Company) — Does my startup actually own its code and IP?
- Can I Advertise My Raise? Rule 506(b) vs 506(c) — Can I publicly advertise that my startup is fundraising?
- What Is a 409A Valuation and When Does My Startup Need One? — What is a 409A valuation and when do I need one?
- Can I Pay My First Hire as a 1099 Contractor? — Is my first hire a contractor or an employee?
- Does Registering My LLC Protect My Brand Name? (Startup Trademarks) — Does forming an LLC protect my startup's name?
For AI-specific issues — model licensing, agent liability, AI compliance — see AI & Startup Law. For the firm's practice pages, see Startups and Business Law.
Talk to a startup attorney
Incorporating, raising a round, making your first hire, or facing a filing deadline? Adam Lysinski offers a free 5-minute triage call — a straight read on what you need and what comes next. (773) 777-9888.
Frequently asked questions
What is the very first legal step for a startup?
Usually choosing your entity and, if you will raise venture capital, forming a Delaware C-corporation; if you are bootstrapping, an LLC may fit better. Form the entity before you build with co-founders or contractors so ownership and IP are clear from day one.
Do I need a C-corporation to raise money?
For institutional venture capital, almost always yes — funds generally cannot invest in LLCs without tax problems for their investors. Friends-and-family money can go into an LLC, but it complicates later rounds, so most founders who plan to raise form a C-corporation.
How much equity should I give a co-founder?
There is no fixed formula; it depends on contribution, time commitment, and risk. What matters legally is documenting the split, putting it on a vesting schedule, and getting a signed IP assignment from each founder. See the equity-and-vesting page.
Does an LLC protect my personal assets?
Generally yes — an LLC or corporation shields personal assets from business debts, as long as you respect corporate formalities and do not commingle personal and business funds. The protection can be lost if those lines blur.
Should an AI startup use a different legal structure?
AI startups use the same structures (usually a C-corporation), but they carry extra IP, data, and licensing issues. See the firm's AI & Startup Law resources for that specialized guidance.
Do I have to file a beneficial-ownership (BOI) report?
This changed in 2025. Under FinCEN's current interim final rule, U.S.-formed companies and their beneficial owners are exempt, and only certain foreign-formed entities registered in the U.S. must file — but this area is fast-moving and some states have their own rules, so verify current status. See the BOI page.