Most startup legal problems aren’t complicated — they’re just ignored until they become expensive. A little awareness goes a long way.
The common landmines:
Incorporation structure — LLC, C-Corp, B-Corp? Each has different tax implications, liability protection, and fundraising implications. If you plan to raise VC, they’ll almost always want a Delaware C-Corp. Do this early.
Founder agreements — the number one legal mistake founders make is not having clear agreements with co-founders about equity splits, vesting schedules, roles, and what happens if someone leaves. Do this before you start building.
Intellectual property — who owns what you build? If you build something while employed, your employer might own it. If a contractor builds it, they might own it unless your contract says otherwise. IP assignment clauses matter.
Equity and vesting — standard is 4-year vesting with a 1-year cliff. This means if a co-founder leaves after 6 months, they don’t walk away with 25% of the company. Protect yourself and your partners.
Contracts — get everything in writing. Handshake deals between friends become lawsuits between strangers when money gets involved. This isn’t cynicism — it’s protection for everyone.
Privacy and data — GDPR, CCPA, and similar regulations have real teeth. If you collect user data (you probably do), understand your obligations.
Employment law — misclassifying employees as contractors, not paying minimum wage, ignoring overtime rules — these create massive liability.
The general principle: spend a little on legal early to avoid spending a fortune later. A startup lawyer who understands your space is one of the best investments you can make.