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Comment by mattmaroon | Hacker News Reader

His advice about lawyers is bad. Very bad. Not incorporating properly can sink you quickly, especially if co-founder disputes come up. I've seen perfectly good startups get sunk that wouldn't have had they just gotten the founder contracts right in the beginning (especially with respect to vesting).

They cost so little in the grand scheme of things and take so little time. I don't know what he means about them becoming advisers. Mine have never advised me in any unnecessary capacity, and I suspect he just has experience (first or second hand) with some Saul Goodman type.

Get an experienced startup lawyer to help you incorporate at a bare minimum. Many will even defer something like your first $15k of fees (more than enough to get started) in the hopes of earning more business later when you turn into the next YouTube.

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The VERY SAME happens even when lawyers are involved. If you're naive, paying a lawyer doesn't protect you from that. But ASKING people who have been there and done this (and made mistakes) DOES protect. Far moreso than a lawyer who is just regurgitating template documents.

$15k?? Only in the US. It costs £15 to incorporate a company in the UK... maybe a little more if you want 'extras'.

You are RIGHT about making sure the incorporation is done properly, but that is not the same as hiring a lawyer to do it.

He didnt say it costs 15k but that sometime lawyers will defer the first 15k of billing in hopes of you getting bigger and helping you with other things.

It is humorous to me how critical reading skills have dropped here over the years. Two people somehow took away from my comment that it costs $15k to incorporate, even though I said it was cheap and the $15k is more than enough to get started.

I miss the old HN where every thread didn't get bogged down with stuff like that.

You can use * around words to add emphasis in a more readable way.

Yes, sorry, I will stop the inappropriate uppercase usage

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Sure, you can find that stuff online, but you really need to do your homework. Should you incorporate in your home state or in Delaware? You assume S-Corp, are you sure C-Corp or LLC isn't a better fit for your situation? Are there local tax benefits you can take advantage of? The answers depend based on the nature of your startup, your future plans, your location, etc. There are also a couple of gotchas where if you screw them up at the start it could cost you a lot later and is not easy to fix (google "83B Election" for an example)

In my experience, getting a lawyer who knows startups wasn't that expensive, and having someone sit down and explain every provision of the agreements was totally worth it. I learned a lot. And then when we actually needed a lawyer a few months later, we already had a relationship with someone who knew our business.

There are a number of lawyers in California in both Silicon Valley and Silicon Beach who make decent money repairing LegalZoom documents that startups thought they could use to incorporate their companies.

LegalZoom is great if you don't need to customize your documents from the base case at all. Unfortunately for startups, the LegalZoom base case is not for companies seeking Venture Capital, it is for family-owned or single owner small corporations.

>Ask founders in the community for legal help and chances are they'll give you better advice over a lawyer. You really don't need a lawyer when you're starting out, avoid them at all costs.

I laughed so hard at this I almost got stomach cramps. You will get better business advice from other founders, but invariably the worst legal advice you get will be from nonlawyers.

You may not need a lawyer when starting out, but this is actually when they are most relevant and when they are the cheapest, because all they have to do is provide advice. This doesn't take long or incur much (if any) cost. If you wait until you have problems before turning to a lawyer, you've already driven up the legal fees you will incur by 10x or more.

> It costs $300 to form a company(s-corp) on legal zoom. The bylaws, vesting schedule, and share holders agreement can all be found online for free. If you need to include a specific cliff in your documents chances are its already online, just copy and paste it.

You do that, "copy and paste" a provision from one document into another. Cleveland lost a football franchise over a single misplaced comma, and Frank McCourt almost lost the Dodgers over a single extraneous statement in his post-nup, but you go ahead and insert multiple paragraphs from one unrelated document into another. See how well that works out for you if you have problems with your co-founders.

A good startup lawyer's template documents are based on the experiences of people who have been there and done that. And unlike an entrepreneur, who has started a very small number of companies, an attorney gets to see hundreds or maybe thousands and has a wealth of knowledge as to what can go wrong and how to prevent it.

And I didn't say it costs $15k, only that they'll defer up to $15k. You'll still have most of that $15k left.

15k for setting it up properly before raising funds. It is a great deal more than just incorporating, which was more like $1k for me even using my very expensive corporate lawyers.

Hiring a lawyer is like buying insurance for your legal needs. If you hire a lawyer, you get to sue the lawyer for malpractice if they mess up (which means your damages incurred as a result of the malpractice, plus legal fees paid, plus legal expenses paid to maintain the malpractice suit).

In the UK, incorporation is really very simple. Unless you're raising money (which you probably shouldn't), you don't need a lawyer to help you incorporate.

Now, if you want to do some kind of custom shareholder agreement or the like, then yes, getting a lawyer involved can definitely help - but if you stick to standard stuff, this is really not necessary in my opinion. Default terms and docs available online are good enough.

I fall right in the middle with the lawyer advice.

You should not incorporate without seeking very good legal advice from someone who knows what they are talking about in your industry. Yes, incorporating a business is easy and standardized, but as MattMarron pointed out, you can do it in a way that is bad for your type of business. For example, as a tech startup, you shouldn't structure yourself life a restaurant. You need founder shares to vest overtime, etc

On the other end, some people just blindly pay and trust lawyers to know your business for you. Lawyers should not be decision makers. Rule of thumb: Do not pay lawyers to tell you how to do things. Figure out how you want to do them, then pay lawyer to make sure that's actually represented in the fine print.

Find a lawyer who's worked with similar companies, seems trustworthy and doesn't charge you for every 15 min phone call

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