Ask HN: What contracts/paperwork should cofounders set up before starting work? | Hacker News Reader

Ask HN: What contracts/paperwork should cofounders set up before starting work?

9 pointsthethimble6 comments

We're in the process of starting a potentially profitable company.

Does HN have any advice on what sort of paperwork we should setup amongst us cofounders regarding ownership percentages, vesting shares, etc. None of us have any experience with the legal aspects of starting a company.

Should we seek legal counsel or is this something we could take care of ourselves? (Keep in mind that we're all broke college students).

Thanks for your help! -Advait

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Here are some great resources we've been referencing:

Founders Agreements: http://www.yourlegalcorner.com/articles.asp?cat=corp&id=... http://blog.optimalupgrades.ca/2010/01/founders-agreements-2... http://blog.simeonov.com/2010/02/22/startup-founder-agreemen...

Others: http://startuplawyer.com/startup-issues/7-legal-documents-fo... http://startuplawyer.com/incorporation/the-when-to-incorpora... http://startuplawyer.com/startup-issues/if-i-launched-a-star...

Get legal help. If you are college students there may be low cost legal help available through your school. I regretted not getting legal advice for a company i founded 7 years ago, lawyers are good at foreseeing problems that you are unlikely to. Figure out vesting, what to do when a founder leaves, what to do for new hire stock options, and how it will go when you raise or borrow money.

We hadn't considered getting legal help through our school. We'll definitely look into that route. Thanks for the suggestions!

If you're trying to build a scalable startup and raise funding, seek an attorney to set everything up. There's quite a few different legal documents you'll want in place beyond setting up the company and stock distribution. I would not try to do this yourself. And ALWAYS vest all cofounders.

We're planning on bootstrapping. We plan on having positive cash flow within a couple weeks of deployment so the the cofounders agreed to foot the initial costs. Unfortunately, that has its consequences (trying to spend as little as possible). But from the looks of the comments here, it looks like everyone is suggesting to get legal help. That's probably the route we'll take.

Founders Agreement, Operating Agreement, Restricted Equity Agreement (for vesting).

You should seek counsel. Remember that technically, each of you should seek your own counsel (and so should the entity).

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