Startup Legal Checklist: What to Handle Early

A startup legal checklist usually covers choosing and forming an entity, signing a founders' agreement with vesting, assigning intellectual property to the company, getting an EIN and local licenses, using proper contracts and policies, and keeping records. It is a conversation starter for an attorney, not legal advice for your case.

By the Revolutionary Startups editors · Reviewed 11 November 2026 · 11 min read · 2,348 words

How to use this checklist (and what it is not)

This guide is general education for first-time founders in the United States. It is not legal advice, and it cannot tell you what you must do in your state, industry or situation. Treat it as a list of topics to bring to a startup attorney so you do not discover them by accident later.

Why bother this early? Because most legal problems for young companies are not exotic lawsuits. They are boring gaps: nobody wrote down who owns what, a contractor built the product without signing anything, or a co-founder left and kept their shares. Each one is cheap to prevent and expensive to repair, usually at the worst moment, such as during a fundraise or a sale.

Laws vary by state and change over time. Where we mention rules, confirm them with a licensed attorney in your state and, for tax topics, an accountant. Many attorneys offer a short first consultation, and some sell fixed-fee startup packages. Ask what is included before you agree.

The order that makes sense

Decide who the owners are and how to split ownership.
Form the legal entity.
Put founder paperwork in place.
Make sure the company owns the intellectual property.
Handle tax IDs, licenses and registrations.
Set up contracts, policies and records for operating.

The sections below follow this order.

Step 1: Choose and form your business entity

Operating as an individual, called a sole proprietorship, or with a partner as a general partnership, makes you personally responsible for business debts and legal claims. Forming a company creates a separate legal entity that can limit that exposure, if you keep it properly separate.

The main options

LLC (limited liability company). Flexible and simple, with profits typically passed through to owners' tax returns.
C corporation. The common structure for startups that plan to raise venture capital and issue stock options.
S corporation. A tax status, not a separate type of entity, with limits on who can own shares.

Our guide to LLC vs C corp for startups explains the trade-offs. The IRS also publishes an overview of business structures, linked below.

Formation steps at a high level

Choose the state where you will form the entity, which may or may not be your home state.
Check that the name is available with the state, and consider a trademark search. See how to trademark your startup name and how to name your startup.
File the formation documents with the state (articles of organization for an LLC, a certificate of incorporation for a corporation).
Appoint a registered agent, a person or service that receives legal notices for the company.
Adopt governing documents: an operating agreement for an LLC, bylaws for a corporation.
Register in any other state where you do business, if required.

Fees and requirements differ by state. Ask your attorney which filings are needed for your situation.

Step 2: Founder agreements, equity and vesting

If you have co-founders, the single most valuable legal step is writing down how ownership works while everyone still likes each other. A founders' agreement records the deal. Depending on the entity, some of it lives in the operating agreement or in stock purchase agreements.

What a founders' agreement typically covers

Who owns what percentage. See our guide on splitting equity between co-founders.
Roles and responsibilities. Who is CEO, who decides what, and how disputes get resolved.
Time commitment. Full-time or part-time, and what happens if that changes.
Vesting. Founders' shares typically earn in over time, often with a one-year cliff, so a founder who leaves early does not walk away with a large stake. See vesting.
What happens when someone leaves, including whether the company or other founders can buy back unvested or vested shares.
Decision-making and deadlock. What happens when two equal founders disagree.
Intellectual property. A clear statement that work done for the company belongs to the company.

For example, suppose two founders each own 50 percent with no vesting, and one quits after three months. That person still owns half the company forever. Vesting prevents this. Whether vesting makes sense in your case, and how long it should run, is a topic to settle with an attorney.

If you are still looking for a partner, read how to find a co-founder.

Step 3: Make sure the company owns its intellectual property

Intellectual property (IP) is often the main asset of a startup, and many founders assume they own it automatically. In practice, ownership can be unclear unless it is written down.

Why it matters

Work that a founder created before the company existed, or that a freelancer created outside an employment relationship, may not belong to the company unless there is a signed assignment. Investors and buyers will ask to see these papers. Missing ones can delay or kill deals.

The basics to raise with your attorney

IP assignment from founders. A document transferring ideas, code and designs from each founder to the company. See IP assignment agreements for startups.
Agreements with employees and contractors. These should confirm that work done for the company belongs to the company and should include confidentiality terms.
Confidentiality and NDAs. Understand when they help and when they are unrealistic. See trade secrets and NDAs for startups.
Trademarks. Your name and logo can be protected as trademarks. The USPTO charges a base application fee of $350 per class. See the trademark guide.
Patents and copyright. Whether you need either depends on what you are building. Start with do I need a patent for my app and copyright for software startups. Be careful about disclosing an invention before you have thought through filing.
Open-source and third-party code. Licenses attached to code you use can place conditions on your product.

Step 4: EIN, business license and registration basics

These are administrative steps. They are usually less complicated than founders fear, but they differ by place, so treat the points below as a map, not instructions.

EIN (Employer Identification Number)

An EIN is a nine-digit tax ID the IRS assigns to businesses. You typically need one to open a business bank account, hire employees, and file certain tax returns. The IRS issues them for free through its own site, so be skeptical of any service that charges you to get one. Whether you need an EIN right away depends on your structure. An accountant or attorney can confirm.

Business licenses and permits

Many cities, counties and states require a general business license, and certain industries need specific permits, such as food, alcohol, health, construction or financial services. Some professions require personal licenses. Start by checking your city or county website and your state's business agency. The Small Business Administration also maintains guidance for new businesses.

Other registrations to ask about

Sales tax. If you sell goods or some services, you may need a seller's permit and to collect sales tax. Rules for online sales vary.
State and local taxes. Franchise taxes, payroll registrations and annual reports.
Beneficial ownership reporting. Rules about reporting a company's owners to the federal government have been changing. Ask your attorney what currently applies.
Doing business under another name. If you operate under a name different from the legal entity name, you may need to file an assumed name or "DBA."

Separate your finances

Open a business bank account and keep personal and business money apart. Commingling funds is one of the quickest ways to weaken the liability protection that your entity is supposed to provide.

Step 5: Contracts, policies and compliance for operating

Once the company exists and owns its IP, the next layer is the paperwork you use with customers, vendors and hires.

Documents most startups eventually need

Customer terms. Terms of service or a sales contract, covering what you provide, payment, limits on your liability and how disputes are handled.
Privacy policy. If you collect personal data, many laws require disclosure. Requirements vary by state and by who your users are, including children and customers outside the US.
Employment documents. Offer letters, confidentiality and invention assignment agreements, and correct worker classification. Misclassifying employees as contractors can lead to penalties, so ask first.
Contractor agreements. Scope, payment, ownership of work product.
Equity documents. Stock purchase agreements, option plans and grants. Giving someone equity casually, such as a promise by text, causes cap table trouble later. See the glossary entry for cap table.
Vendor and lease agreements. Read the termination and auto-renewal terms.

If you plan to raise money

Selling equity or convertible securities is regulated by securities law, even for small private deals. Rules on who can invest and how you can advertise are technical. Talk to a securities attorney before you take an investor's money, and read how to protect IP before fundraising and SAFE vs convertible note. Investors will review your records in due diligence, so keeping them tidy now pays off later.

Keep a record

Store signed documents in one organized place: formation papers, founder and IP agreements, board or member decisions, stock records, tax IDs and key contracts. A shared folder with clear names is enough to start.

Common startup legal mistakes

No written founder agreement. Handshake deals fall apart when the company gets valuable or someone leaves.
No vesting. Departing co-founders can keep large ownership stakes for work they never finished.
Contractors without IP assignment. The person who wrote your code or designed your logo may still own it.
Waiting to form an entity. Signing contracts or selling products personally exposes your own assets.
Using internet templates without checking them. Templates may not fit your state, entity or industry.
Promising equity informally. Verbal or text promises to advisors and early hires create disputes and cap table confusion.
Mixing personal and business funds. It weakens liability protection and makes accounting painful.
Ignoring licenses and taxes. Fines and back taxes can be far more costly than the original fee.
Disclosing an invention publicly first. If you may want patent protection, talk to a patent professional before public launches or talks. See provisional patents for startups.
Relying on this checklist alone. It is a starting point. Rules differ for each business.

Printable checklist and when to hire a lawyer

One-page checklist

Entity type chosen and reviewed with an attorney and accountant
State of formation and registered agent decided
Formation documents filed
Operating agreement or bylaws signed
Founders' agreement signed, with vesting and roles
Founder IP assignment signed
Contractor and employee IP and confidentiality agreements ready
EIN obtained
Business bank account opened
Local, state and industry licenses checked
Sales tax and payroll registrations checked
Name and brand search done; trademark plan decided
Customer terms and privacy policy drafted
Equity issued on paper, with records kept
Document folder organized

When to hire an attorney

Hire one before you form the entity if you have co-founders, expect investors, or are building something where IP is central. Hire one before you take investment, sign a large contract or hire your first employee. You can often save money by arriving prepared: bring this checklist, your co-founders' details and your plan.

Questions to ask in the first meeting

Which structure and state do you recommend for my plans, and why?
What are the fixed fees for formation and founder documents?
How should vesting work for us?
What IP documents do we need now?
What licenses or regulations apply to my industry?
What should I do before I talk to investors?

If you are still planning, see how to start a startup step by step for the wider sequence.

Frequently asked questions

What are the legal steps to start a business?

Typically: choose a business structure, form the entity with your state, sign a founders' agreement and operating agreement or bylaws, assign intellectual property to the company, get an EIN, open a business bank account, and check licenses, permits and tax registrations. Details vary by state, so confirm with an attorney.

What legal documents do startups need?

Common ones include formation documents, an operating agreement or bylaws, a founders' agreement, IP assignment agreements, employee and contractor agreements, customer terms, a privacy policy and equity documents such as stock purchase agreements. Which ones you need depends on your structure and plans.

Do I need a lawyer to start a startup?

Not legally for most basic filings, but an attorney is strongly advisable when you have co-founders, plan to raise investment, or rely on intellectual property. Many offer fixed-fee startup packages or a brief first consultation, so ask what is included and what it costs.

What is an EIN and do I need one?

An EIN is a nine-digit federal tax ID that the IRS issues to businesses. You typically need one to open a business bank account, hire employees and file some tax returns. The IRS provides them without charge through its own website. Your accountant can confirm whether you need one now.

Do I need a business license?

Often, yes. Many cities, counties and states require a general business license, and some industries need special permits. Rules vary by location and business type, so check your local and state business agencies, and ask an attorney if your industry is regulated.

What is a founders' agreement?

It is a written agreement among co-founders about ownership percentages, roles, time commitment, vesting, what happens if someone leaves, and how decisions are made. It prevents disputes and is usually requested by investors. An attorney can tailor it to your entity type and state.

What are the most common startup legal mistakes?

Skipping a written founder agreement, giving equity without vesting, letting contractors build the product without signing an IP assignment, delaying forming an entity, mixing personal and business money, and ignoring licenses and taxes. Each is cheaper to prevent than to fix later.

Key terms on this page

LLC vs C Corp for Startups: How to Choose GuideLLC vs C corp for startups: how each is taxed, what investors expect, why Delaware is common, and what to ask your lawyer and accountant before you file.
IP Assignment Agreements for Startups Explained IP guideIP assignment agreement basics for startups: founder IP assignment, invention assignment for employees, contractor IP ownership and what to include.
How to Split Equity Between Co-Founders (and Vesting) GuideHow to split equity between co-founders: factors to weigh, equal vs unequal splits, 4-year vesting with a 1-year cliff, and a worked example with round numbers.
How to Start a Startup: A Step-by-Step Roadmap GuideHow to start a startup step by step: validate the idea, pick a structure, build an MVP, handle legal basics, fund it and get customers, even with a day job.
How to Trademark a Business Name: Startup Guide IP guideHow to trademark a business name: search first, pick the right classes, file with the USPTO, and see how a trademark differs from an LLC name registration.

Learn more from Wysebridge

Wysebridge owns, operates and sponsors Revolutionary Startups, so these are links to its own free resources and directories. Read the disclosure.

Wysebridge U.S. IP law courseA 20-chapter self-study course on U.S. patent, trademark, copyright and trade secret law; module 1 is free.
Learn patent law free at WysebridgeFree patent, trademark, copyright and trade secret guides, MPEP flashcards and more, with no account needed.
Find a USPTO-registered patent attorney or agentProfiles of USPTO-registered patent attorneys and agents, built from the public USPTO roster. Covers patent practitioners, not trademark-only lawyers.

Part of Running a Startup · All guides · Glossary

Sources

IRS: Business structures

General information, not legal, tax or financial advice. Reviewed 11 November 2026.