Startup America Webinar- 7 Ways to Legally Bulletproof Your Startup
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Startup America Webinar- 7 Ways to Legally Bulletproof Your Startup

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This webinar features 7 simple steps startups can follow to legally bulletproof your business! Visit rocketlawyer.com for more information and to get started today.

This webinar features 7 simple steps startups can follow to legally bulletproof your business! Visit rocketlawyer.com for more information and to get started today.

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  • There are a lot of questions out there. About whether now is the right time to launch a startup or how early stage companies should seek funding, or whether there is any real innovation happening out there. All questions aside, you’ve already made it this far. You are acting upon your idea and hey, it’s not easy, but amidst all this, entrepreneurs like you and me are starting successful and disruptive companies.\n
  • As your startup takes off the ground, legal issues will arise.\nBut there are 7 key steps you can take to lay the right foundation, protect your company and ultimately protect yourself.\n
  • One of the most important things to a successful business is having the right foundation. We’re talking specifically about the kind of legal business entity you choose for your company. \n
  • Each entity has pros and cons for every different business. It’s worth doing your research and making an education decision. \n
  • When choosing, it’s important to consider your business’s priorities, goals, and resources, as well as your long-term vision for the business:\n\nConsider the following factors:\n\nLiability protection\nAll businesses are susceptible to liabilities, but personal liability varies according to the type of business. For example, if you are a sole proprietorship [comment if this is the case for the majority of viewers], you may be personally liable for all debts and claims against the business. To protect your personal assets, consider investing in liability coverage, or incorporating the business as a separate entity (we’ll go over this in more detail in a minute).\nReinforce your business name and establish greater legitimacy - being incorporated established legitimacy in the marketplace and in the minds of customers and other businesses you work with. \nPerpetual existence - incorporated companies outlive their founders and shareholders\nTax planning\nSome business structures offer ways to minimize taxation, so be sure to consider your financial plans and resources.\n
  • So, onto number 2. Comply with the Law. \n\nThere are laws and regulations for everything from Advertising to Employees to Environmental rules and more. For full list, see the small business gov website at SBA.gov \n\nBecause we don’t have days for this webinar, we’ll focus on keeping your startup compliant.\n
  • When in doubt, write it down. You never know when you might need to reference a meeting in the future.\n\nIn addition, keep a record of all your business transactions including spending, and investing processes, and records of all company contracts, including signed deals, arrangements, employment contracts and leases. \n\nIn the event of any dispute – be it with the IRS, a disgruntled employee, an insurer, or a shareholder – proper documentation protects your business entity’s legal status as separate from you. If you don’t keep records, you may have your good standing revoked, incur penalties, or, in extreme cases, your business entity could be dissolved entirely, which also dissolves your limited liability. Your limited liability protection could be compromised, jeopardizing your personal assets\n\nRecords also allow you to paint an honest picture for prospective investors, reference past meetings, and defend yourself in court.\n
  • \nFile on time and keep all of your formal business documents safe and well-organized for at least seven years.\nIf you are incorporated, check with your state to find out what your annual or semi-annual “informational” filing requirements are, and make sure you get it done.\nEvery business also has several tax dates through the year, from 1099s and W2s, to quarterly and annual filings. \nThere are also typically local business license filings. \nThe easiest way to remain compliant is knowing what to file, to file on time and to keep your records. \n\nVisit our Corporate Compliance Center or call us to get matched with an attorney.\n
  • Number 3. Protect what’s yours.\n
  • here’s the breakdown. \nTrade Secrets\nTrademarks\nCopyrights\nPatents \n\n I’m going to talk about each one individually and the various steps you can take to ensure your IP is protected.\n
  • Confidential information is the most common form of intellectual property in a business. \n\nUnder U.S. law, it has three parts:\n1.Information\n2.Reasonable measures taken to protect the information; and\n3.Independent economic value derived from the information not being publicly known.\nYou can protect this information through non-compete and non-disclosure contracts with your employees.\nThis type of protection is effectively a perpetual monopoly on the information – it does not expire as a patent would.\nWithout this protection, a third party can independently duplicate the secret information.\n
  • Having a trademark helps protects your logo, brand, and business name from unfair use\nTrademarks distinguish your business from other brands, names and logos. \nAdding the “™” mark to your name lets others know that that specific combination of words, phrases, symbols and designs are taken. Registering your trademark grants you exclusive legal rights to your name and logo.\nTrademarking your name is fairly simple and it can protect your brand while differentiating your company from competitors.\n\nFor extra protection, trademark registration allows you to:\n\nnotify the public of your claim\nestablish legal presumption of your ownership of the mark\ntake legal action\nuse the registration to get further registration in other countries\nlist your mark in the U.S. Patent and Trademark Office database\n\nCompleting a Trademark Application Worksheet on Rocket Lawyer can help you get organized before you apply for a registered trademark with the USPTO.\nFor more information about trademarks and the difference between Common Law Trademarks ™ and registered marks ® visit our Intelletual Property Center.\n\nOnce you have your trademark, you should monitor its use to maintain control of your brand. Regularly check to ensure that no one else is using your name and/or logo. Do a search online and also check by performing a trademark search on the US Patent and Trademark Office website. If you find that other individuals are using your name or logo, a Trademark Violation Letter is your first step in taking legal action against them. If the party using your name will not voluntarily stop using your name, we’ll connect you with an intellectual property attorney for more help.\n
  • With rocket lawyer, you can make a copyright notice\nThis document is used to create a personalized copyright notice for attachment to original works. Although copyright protection is available whether or not you attach a copyright notice to your work, certain benefits are only available if you use a copyright notice.\nBenefits:\nProvide notice to others that you claim copyright protection in your work.\nProvide contact information so that potential licensees are able to properly identify the owner of the work.\nPrevent accused copiers from arguing that their acts of copying were innocent mistakes.\nClaim for yourself the full range of benefits afforded under copyright law.\n
  • A patent can be awarded to a person who invents or discovers any new, useful and actual process, machine, manufacture, or composition of matter\nThe key words here are useful, and actual – meaning that patents cannot be filed simply for ideas or suggestions. Patents Guarantees exclusive rights to the inventor, in exchange for public disclosure of the invention.\n\nThis year, the U.S. changed to a “First to File” system. It is now imperative to file at least a provisional patent as soon as possible. Waiting even a day can sometimes be costly.\n
  • The purpose of the Provisional Patent Application is to create a document that can be submitted to the U.S. Patent and Trademark Office (USPTO) to secure provisional patent status for an invention.\n\nAdvantages:\nIt’s cheaper and easier than a full patent in the short term. \nYou can use a "Patent Pending" notice on your invention to deter others from copying your invention.\nYou have up to a year to decide whether you should move forward with filing a non-provisional application (which is much more costly and time consuming).\nYou establish an official patent application filing date. This is important because the U.S. now follows a "first to file" rule.\nPlease note: A provisional patent application will NOT get you a patent on its own. In order to obtain a formal patent, you must follow up with a non-provisional application within 12 months.\n
  • We’ll cover more employment issues soon, but it’s important to think of how you should protect your intellectual property when it comes to your employees.\n\nSometimes, your employees will create intellectual capital while they’re working for you\nA well-written Confidentiality Agreement can prevent your employees from divulging your secrets\nWhen you hire a new employee, make sure they sign an Invention Agreement. They can assert ownership over the ideas they come in with, and you can assert ownership over new ideas\n
  • Register your trademark\n*Apply for your provisional patent (visit the Patent and Trademark office website at www.uspto.gov to search for and file patents and trademarks online)\n*Send Infringement Letters\n*Connect you with an IP Lawyer\n*Confidentiality and invention agreements\n\nFinally, confidentiality and invention agreements are a must, and no involvement with the U.S. government required!\n
  • Your employees can be your greatest advantage or your costliest challenge, if you’re not prepared\n
  • [read differences from slide]\n\nAn important result of these distinctions is a difference in the payroll taxes you need to pay as an employer.\n\nFor employees:\n\nYou must withhold state and federal income tax, Social Security tax and Medicare tax\nYou must pay Unemployment tax on wages\nYou must complete a W-2 form for each employee\nDouble check all Employment Agreements and Independent Contractor Agreements to be sure of your working relationship, and be consistent.\n\n\nFor independent contractors:\n\nYou do not have to withhold payroll taxes and there are typically fewer reporting requirements\nYou may have to file information returns (form 1099-MISC) to report certain types of payments made to independent contractors.\n\nWhat if you misclassify?\n\nIf you misclassify employees as independent contractors on your tax return, you’ll be sending a red flag to the IRS. If they find that you’ve misclassified an employee as an independent contractor, for example, you’d be liable for paying a penalty plus all back payroll taxes for that worker.\n
  • You can offer your employees all the perks they could ever ask for, but if you don’t follow through with the legal process for hiring and writing agreements, nobody will be happy.\n\nOnce you know who’s who, make it legal by getting everything in writing. \nInclude an arbitration agreement and aNon-Disclosure Agreement\n\n\nGet your employee (or contractor) to sign a contract, clearly laying out their responsibilities, rights, and obligations\nDon’t forget to include an arbitration agreement. It can keep you out of court in the event of a conflict and save you a lot of money\nMake sure they sign a Non-Disclosure Agreement (NDA) as well. This will protect your company’s intellectual property\n\nOther best practices include:\n\nAn Employee Handbook\nthis outlines a company's employment-related policies and general rules of conduct while on the job\nhaving one with help to ensure that your work environment is safe, healthy, and positive for all company personnel.\n\nEmployment Agreements\n\nEmployment Agreement forms may be used when extending an offer of employment to an applicant. There is no legal requirement to formally notify candidates of job offers in writing, but many employers choose to use Employment Agreement forms for this purpose. \nEmployment Agreements typically specify the terms and conditions under which the job is being offered. The applicant can formally accept the position by signing the agreement, which represents of the terms specified in the document. \n\nFor more information, visit our Employment Legal Center.\n
  • Let’s face it, not everyone is cut out for the job, and you may face difficult situations with employees who aren’t performing up to par. If you are considering letting go of an employee, be careful and do it right.\n\nAlways be professional.\n\nIf you decide to terminate an employee, think about employee warning letters first. This creates a paper trail and gives the employee a chance to improve\nGive your employee a chance to resign as well. \n\nThe final straw: termination can be undertaken when there’s really\nnothing more you can do to work through an employee’s bad behavior or\npoor performance.\n\nRemember to document in writing (and with witnesses, if possible) all stages of the disciplinary process (our termination letter form is helpful). Not only will this (a) protect you from lawsuits resulting from the termination, it will (b) minimize your terminated employee’s anger, confusion and stress, and (c) maintain morale in the office by underlining the fact that nothing more could be done in this no-win situation.\n
  • If your young company doesn’t ship the new product on schedule, if adoption is slower than hoped or if buying cycles turn out to be longer than anticipated, those investors who were once willing to write checks might disappear. There’s also the risk that your company gets hammered by market forces completely out of your control, or you never know when there might be other circumstances that can cause financial burdens down the line.\n\nAs a startup the last thing you want to do is drain your bank account (or credit card for a true startup) buying insurance.  However, some insurance is necessary and prudent. \n
  • Every business has slightly different needs. Some businesses will need more comprehensive insurance than others.\nAsk yourself a few questions:\n\nCan consumers be injured by the product?\nDo you have property that could be damaged or stolen?\nDo you have employees that you need insurance for?\n\nProtect your place of business and normal operations with General Liability coverage\nGet extra protection with Umbrella coverage\nWhat does business umbrella liability insurance cover?\nLawsuits, legal costs, court awards and out-of-court settlements can reach staggering sums, far exceeding the limits of your current general liability policy. Business umbrella liability insurance can help to cover costs that your other policies cannot.\nIf you perform professional services, consider Professional Liability Coverage\nWho generally purchases professional liability insurance?\nAny individual in a profession that provides advice, expertise, recommendations or a professional service to customers, clients or another party would benefit from professional liability insurance.\nProtect yourself from human disasters such as an employee injury with Employment Practice Liability Insurance (EPLI for short), which protects you from employment related claims\nIt provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations\nDon’t overlook disasters of the natural kind – such as fires and earthquakes. You can protect yourselves from these too. \n\nHere are some other things you may want to consider:Tech E&O insurance for failures in your web service that could cause customers damages. \nData Breach/Privacy Coverage\nMedia Coverage if you are doing any kind of media/social networking\nInternational Coverage because you are working internationally\nGeneral Liability Coverage\nProperty Coverage including business income for DOS attacks, etc\nDirectors & Officers Insurance if you have investors or stakeholders\nDisability insurance\n\n\nVisit the Rocket Lawyer Insurance Center to learn how to choose the right insurance for your business.\n
  • \nVisit the Rocket Lawyer Insurance Center to learn how to choose the right insurance for your business.\n
  • The handshake is not enough to secure an agreement. Doesn’t hold up in a court of law\nNever assume anything \nIt’s your job to negotiate. If you’re unsure, hire someone to act on your behalf\n
  • Look before you jump. Make sure you understand what you’re signing. \nDon’t be afraid to seek legal advice!\nDon’t forfeit leverage by not negotiating\n
  • Rocket Lawyer can help you draft all the documents you need to maintain good records. Visit our website to see all the documents that are available for your business to keep compliant and have everything in writing to avoid legal and financial problems down the road\n
  • As many of you know, good counsel can be the difference between success and failure, so it’s really important to have an attorney who can keep you on the right path.\nThere are a lot of things you can do yourself, but an attorney's advice can be invaluable. Whenever you have questions or in doubt, you should consult with a lawyer. \nThere might be questions you didn’t even know were important to ask, or didn’t know about. \n\nThis is Michael Bracamonte, one of our on-call attorneys!\n
  • That said, keep in mind that not every matter requires the work or counsel of a professional\nEducate yourself. Even if you end up needing an attorney when you didn’t foresee it, knowing the issue will make the work faster and, ultimately, less costly\nDon’t be afraid to reuse contracts or agreements. For example, you don’t need an attorney to look over your Employee Agreement each time you hire another worker\n
  • Having an attorney can give you a competitive advantage. Lean on their expertise if you have any doubts.\nAn attorney can help you strategize, plan for growth, and make sure you are protected for worse case scenarios.\nConsult a lawyer for big legal decisions your company makes. It’s better to pay a little up front than a lot down the road.\n\nThis is Deepa Menon, one of our on-call attorneys!\n
  • These are some examples of when you definitely need a lawyer:\nSomeone sues you or you need to sue someone else\nCriminal matters\nNegotiating large contracts\nNegotiating the sale of your company or the acquisition of another company or its assets\nEmployee actions and suits\nGovernment audits and investigations\n
  • As your startup takes off the ground, legal issues will arise.\nBut there are 7 key steps you can take to lay the right foundation, protect your company and ultimately protect yourself.\n

Startup America Webinar- 7 Ways to Legally Bulletproof Your Startup Startup America Webinar- 7 Ways to Legally Bulletproof Your Startup Presentation Transcript

  • 7 WaysTo Legally Bulletproof Your Startup
  • Connect With Us @Charleymooreesq @rocketlawyer #bulletproofyourbiz /charleymoore.esq /rocketlawyer
  • Headlines Is Silicon Valley as we Know it Dead? Is it worth it? Startups fight back as patent wars intensify
  • 7 Ways to Legally Bullet Proof YourStartup 1. Build on the Right Foundation 2. Comply with the Law 3. Protect What’s Yours 4. Be a Smart Employer 5. Maintain Enough Insurance 6. Record Everything in Writing 7. Keep Good Counsel
  • 1. The Right Foundation1. Whether you’reforming an LLC or a Corporation,building on a solid foundation is the first thing every company should do.
  • Business Entities  Sole Proprietorship  Partnership  LLC  Corporations (S Corps and C Corps)
  • Things to Consider  Liability protection  Reinforce your business name  Establish greater legitimacy  Perpetual Existence  Tax Planning
  • 2. Comply with the Law2. Keeping your company in good legal standing is dependent on staying compliant
  • Keep Records Written proof helps you resolve disputes Your good standing can be revoked if you don’t have accurate records
  • Learn more and get startedVisit our Corporate Compliance Center to: Create an operating agreement Organize your company recordsVisit http://www.rocketlawyer.com/center/corporate-compliance.rl 09/25/12 10
  • 3. Protect What’s Yours3. IP protects yourvaluable assets and defends against competitors
  • 3. The IP Basics 1. Trade Secrets 2. Trademarks 3. Copyrights 4. Patents
  • Trade Secrets3 Components of Trade Secrets: 1. Information 2. Reasonable measures taken to protect the information 3. Independent economic value Protect your trade secrets with a non- disclosure agreement
  • TrademarksTrademark registration allows you to:  Notify the public of your claim  Take legal action against infringers  Use the registration to get further registration in other countries  List your mark in the U.S. Patent and Trademark Office database 14
  • Protecting Your CopyrightA copyright notice is a goodidea because it: Provides notice to others that you claim copyright protection in your work and contact information. Prevents accused copiers from arguing that their acts of copying were innocent mistakes.
  • Patents Patents guarantee exclusive rights to the inventor, in exchange for public disclosure of the invention The new “First to File” system means it’s important to file as soon as possible
  • Why Start with a ProvisionalPatent? Cheaper and easier than a full patent Can use "Patent Pending" notice on your invention to deter others from copying your invention for up to a year Establish an earlier patent filing date for your non-provisional application. 09/25/12 17
  • Protecting IP with Employees andContractors There are two important documents you need: 1. A Confidentiality Agreement can help prevent your employees from divulging trade secrets. 2. An Invention Agreement specifies that the employer owns all inventions created by the employee.
  • Get Help with IPVisit our Intellectual Property Center to: Register your trademark Apply for a provisional patent Send infringement letters Create confidentiality and invention agreements Connect with an IPVisit http://www.rocketlawyer.com/center/intellectual- lawyer property.rl 09/25/12 19
  • 4. Be a Smart Employer4.Your employees can be your greatest advantage or your costliest challenge, if you’re not prepared
  • Employee or IndependentContractor? Employee Contractor  Hired for an  Generally hired for a extended period of specific time-frame time or project  Generally get  They are part of a benefits separate,  Hiring an employee independent is a big decision. business Make sure you can  Hiring a contractor see the employee for a single job can providing be much smarter long-term, tangible than hiring the gains individual as an
  • Best Practices  Employment Agreements  Independent Contractor Agreements  Employee Handbook  Non-Disclosure Agreements  Arbitration Agreements
  • Terminating an EmployeeBe careful and do it right  Think about issuing an employee warning letter first  Give your employee a chance to resign  The final straw: issue a termination letter  Be sure to keep copies of letters for your own records.
  • 5. Maintain Enough Insurance5. Unforeseen circumstances can torpedo your startup. Get a Defense. Get Insured.
  • Choose the Right Insurance Types of Coverage:  General liability coverage  Umbrella coverage  Professional liability coverage  Employment practice liability insurance
  • Learn more and get startedVisit our Insurance Center to: Select the right coverage for your business Select coverage for your family Connect with an attorney if you need help Visit http://www.rocketlawyer.com/insurance- center.aspx 09/25/12 26
  • 6. Record EVERYTHING in Writing6. Get ironclad with written contracts
  • Understand and Negotiate Read everything before you sign. Don’t be afraid to seek legal advice if you’re unsure. It’s your job to negotiate. If you don’t know how, hire someone to act on your behalf.
  • How to Get Everything in WritingGet the documents you need for yourbusiness  General contract for services  Contract amendment  Partnership agreement  Consulting agreement  Independent contractor agreement http://www.rocketlawyer.com/center/business- contracts.rl09/25/12 29
  • 7. Keep Good Counsel7. A good businessattorney can be thedifference betweensuccess and failure
  • Know what you knowEducate yourself  Not every matter requires the work or counsel of a professional  Knowing more about the issue will make the work faster and ultimately, less costly  Don’t be afraid to re-use contracts or agreements: You don’t need an attorney to look over your Employment Agreement each time you hire another employee
  • Know what you don’t knowAn attorney can help you:  Strategize  Plan for growth  Make sure you are protected for worse case scenarios
  • Situations That Require anAttorney  When someone sues you or you need to sue someone else  Criminal matters  Negotiating large contracts  Negotiating the sale of your company or the acquisition of another company or its assets  Employee actions and suits  Government audits and investigations
  • Get started todayLegally Bulletproof Your Startup By: 1. Building on the Right Foundation 2. Complying with the Law 3. Protecting What’s Yours 4. Being a Smart Employer 5. Maintaining Enough Insurance 6. Recording Everything in Writing