A Dedicated Legal Team at Your Fingertips
Get your legal questions answered by real humans, anytime.
Protect your quickly growing business and get ahead of your legal needs.
Scale your business and team with daily support from your legal team.
Stay ahead of your legal needs with daily support from your Fractional General Counsel (GC)
Get your legal questions answered by real humans, anytime
Protect your quickly growing business and get ahead of your legal needs
Scale your business and team with daily support from your legal team
Stay ahead of your legal needs with daily support from your Fractional General Counsel (GC)
Simple review of documents/ emails, E.g., NDAs, contracts under 8 pages, etc.
Day-to-day review, revision, drafting, questions, advice, etc., e.g.:
- NDAs
- B2B contracts
- Vendor agreements
- Terms of Service/Privacy Policy
- Licensing agreements
- Partnership agreements
- MSA/SOW's
- Sales agreements, etc.
Audit of Client's existing employment practice/procedure, including:
- Offer Letter, Employee Handbook
- Severance Policy
- Employment/ Contractor/ Severance Agreements
- Draft/Revise agreements/policies
- Implement SOP for Client
- Provide on-going hiring/firing communication, documentation, and execution based on new procedures.
3 Routine Projects/
quarter are included in
this tier. No Complex
Projects are included.
3 Routine or Complex
Projects/quarter are
included in this tier.
6 Routine or Complex
Projects/quarter are
included in this tier.
An Attorney-Supervised
Law Clerk will be your
dedicated point of contact.
An Associate Attorney
will be your dedicated
point of contact.
An Associate Attorney
will be your dedicated
point of contact.
A Senior Attorney will be
your dedicated point of
contact.
Ties into Corporate Governance
and Employment Compliance, e.g.:
- Cap table setup and management
(Carta/Pulley) - Founder/executive stock purchase
agreements - Advisor/employee option grants
- Equity Incentive Plan
- 409A consultation
- 83(b) consultation
- SAFEs, Convertible Notes
- Collaboration with @VC partner
referrals (Accounting, CPA, etc.) - Dispute mitigation
- Counsel re: dispute mitigation
- Draft/response to Cease & Desist
- Communication with aggrieved
third parties, creditors, collectors, opposing counsel, etc. - Dispute resolution
E.g.:
- Corporate structure issues
- Corporate compliance issues
- Foundational documents
- Board consents/resolutions
- Shareholder consents/resolutions
- Comprehensive company audit to
find weak points
Industry-specific research and
advice, e.g.:
- Branding/marketing guidance
- GDPR/CCPA regulations
- HIPAA guidance
- FDA oversight
- FTC advertising standards
- International operations, etc.
3 Routine or Complex
Projects/quarter are
included in this tier.
6 Routine or Complex
Projects/quarter are
included in this tier.
Pricing Disclaimers & Footnotes.
The pricing outlined above is based on a monthly billing cycle and requires a minimum quarterly contract commitment. Clients are billed on a quarterly basis for the services provided during the preceding months.
* Annual Pricing Discount:
For clients seeking a long-term commitment, we offer an annual pricing option with a 20% discount. This discounted rate is applicable when the full annual fee is paid in advance at the beginning of the contract term. Please note that all pricing is subject to our terms and conditions. Feel free to contact us for further details or customization of services to meet your specific needs.
** Custom Add-Ons ("A la carte" Projects):
Should your business require additional services beyond the subscription, you have the flexibility to include these services as needed. These "A la carte" projects are available at an extra cost in addition to your monthly subscription. Starting at $3,000, these projects can be seamlessly integrated into your subscription to meet evolving needs and challenges.
Special Discounts for A La Carte Projects:
- Clients subscribed to @VC Lite enjoy a 10% discount on all "A la carte" items.
- Clients subscribed to @VC Startup enjoy a 15% discount on all "A la carte" items.
- Clients subscribed to @VC Growth & @VC Fractional enjoy a 20% discount on "A la carte" project
Exception: Corporate Transactions and Capital Fundraising are not available under our a la carte pricing. Please note that the pricing for these specialized services is determined through case-by-case negotiations.
Feel free to get in touch with us for more information regarding our "A la carte" options, and to explore how they can complement your subscription package.
@VirtualCounsel reserves the right to make changes to these terms.
Our flat fee services
What our clients are saying
Superluminal Systems is currently developing several confidential projects that intend to support a global social operating system using fractal cryptocurrency transactions and ownership.
Superluminal Systems relies on @VirtualCounsel as fractional General Counsel to navigate the various complex corporate, SEC, and regulatory obstacles it faces as it takes on massive and novel initiatives in the social media and cryptocurrency spaces. We have collaborated together on countless projects including: fundraising efforts, cap table management; joint venture agreements; MSA/SOW, licensing agreements, equity compensation, employment matters, etc.
Alex co-founded Logos to revolutionize the way that individuals, coaches, couples, and teams clarify their zones of genius using the world's most revealing psychometric assessment tools available.
Alex has been working with @VirtualCounsel since its inception on Logos, various business projects of his own, and also with his business partners involving corporate formation, ownership, and consulting on key business relationships, and just about any legal or strategic issue that Alex and his team have come across.
NxTSTOP makes functional, sustainable travel apparrel, they're a direct to consumer brand that also works with some of the largest companies in the world.
NxTSTOP and @VirtualCounsel have worked together for years on complex B2B transactions, corporate restructuring, cap table management, fundraising, equity incentive, and employment matters.
Vessel is a completely remote organization with 50+ employees across the US an internationally. To run a large tech organization remotely requires incredibly strong procedures and communication, and Christian has cultivated them from the ground up.
Vessel relies on @VirtualCounsel as fractional General Counsel, and has collaborated together with numerous projects including: fundraising; equity compensation; cap table management; licensing; FDA/regulatory analysis; SaaS agreements; vendor/B2B contract negotiation; hiring/firing; employee severance; dispute mitigation, etc.
James co-founded Amphibian Capital in 2022 to consciously build a community fund to invest in projects designed to usher in the New Earth.
James has been working with @VirtualCounsel since its inception on Amphibian Capital and various business projects involving corporate formation, ownership, and consulting on key business relationships, and just about any legal or strategic issue that James and his team have come across.
Kim is a badass solopreneur. She started her coaching, sound healing, and retreat business by herself from the ground up and has developed a powerful offering for her clients and the world.
Kim is what we like to call a DIY-CEO. In other words, she is highly skilled in most every area of business development, and has the ability to do just about everything herself. However, as she is growing in her role as a CEO and a healer, she now wisely decides to empower others to be in their zones of genius, which is why choosing @VirtualCounsel to handle her business formation was key to her leveling up her business.
Dr. Matt Geller stopped seeing patients so he could focus on filling a need in the optometric space for reliable content and career development for other doctors, and for the eyecare industry as a whole.
Covalent and @VC have collaborated on just about every corporate, business, and strategic project (e.g., equity compensation, cap table management in Carta, M&A, employment, licensing contracts, etc.) since Covalent started with just 3 employees. Now, Covalent has grown to over 40 employees, and @VC operates as fractional General Counsel for Covalent as a true extension of Covalent's team.
Michael has grown from a DIY-CEO to a powerful leader of Motiv Mkth. He realized that his talents as a digital marketer deserve to be enhanced by building a team and a system of delivery around his business.
With growth comes growing pains and Motiv Mktg collaborates with @VirtualCounsel with every one of those pain points including: hiring decisions, strategy decisions; contract negotiation, business development, etc.
Fulcrum relies on @VirtualCounsel as fractional General Counsel and have been collaborating together over several years, product advancements, pivots, fundraising rounds, and overal structural changes during its growth as a software and SaaS company in the workforce efficiency and productivity space. We have worked together on SaaS agreements, licensing agreements, MSA/SOWs with some of the biggest companies in the world, employment matters, cap table management, contract negotiation, etc.
Undaunted is a film and art production company that has a boutique set of clients and projects primarily in Los Angeles, CA.
@VirtualCounsel has supported Undaunted with various projects including: contract negotiation; licensing; disputes; business strategy, etc.
FAQs
How do I get started?
Book your free consultation here now!
How are you different from LegalZoom or BizCounsel?
LegalZoom and BizCounsel have done a great job of providing low costs to its customers - they rely heavily on templates that can be found almost anywhere on the internet and also don’t deep dive into YOU and your business as much as @VirtualCounsel does.
With @VirtualCounsel, you have a dedicated attorney point of contact who develops a deep understanding of your business model, goals, and way of operating - we provide far more than templates. We become true counsel in short order based on the level of involvement we have with you and your business - we balance legal protection with business goals and become strategic advisors more than just lawyers.
How are you different from big law firms?
We are a tight team and like it that way. We have work/life balance ourselves. Names, faces, families, souls. No corporate bureaucracy. Big law firms employ humans too, but they are kind of like a top-down scheme that focuses on demanding work hours from lower-level associates who are incentivized to increase billable hours and not incentivized to increase their or their clients’ success and happiness.
We developed our model so that we can select powerful businesses to align with as our clients and provide true partnership and counsel - our clients’ success and happiness are directly aligned with our success and happiness.
What law firm will provide my legal services?
VirtualCounsel, PC (i.e., @VirtualCounsel) is a virtual law firm, headquartered in San Diego, CA.
@VirtualCounsel™️ is not a law firm. Any legal services will be performed by the law firm VirtualCounsel, PC, a California professional law corporation.
What is @VirtualCounsel?
VirtualCounsel, PC (i.e., @VirtualCounsel) is a virtual law firm headquartered in San Diego, CA. We are progressive corporate attorneys. We are a startup ourselves, and we built our law firm to serve startups in the way that we believe a professional service provider should serve their clients.
Do I get a dedicated point of contact?
Yes. At the beginning of a relationship you will have a kick-off call with one of our talented attorneys who will operate as your primary point of contact. Even better, our technology gives our whole firm - all attorneys, legal staff, etc. - visibility into every client’s confidential portal. So you will have a team of bright minds collaborating on the important work for your business - and will always have your primary attorney point of contact running point.
What if something falls outside of the Scope of Work?
We provide representation and advice on the specific legal matters you have hired us for, which means that our work together is limited to the Representation. If a project falls outside of the Scope of Work, we will always discuss the parameters of the work and fees with you before moving forward with it.
Additionally, if your business changes substantially, we will discuss the change in Scope of Work and will agree to a revised fee arrangement. Representation on any future matters will be subject to the terms of this Agreement and any other fee arrangements we may mutually agree upon. The question of whether a matter or issue falls within the scope of this Representation will be handled with common sense, mutual agreement, mutual respect, and fairness to both parties.
What is an A la Carte project?
A la carte projects refer to individual, one-off projects with a specific scope of work. These projects can be carried out for new clients or for current subscription clients when the work falls outside the scope of their subscription. On a case by case basis, we may bill these projects on an hourly basis or as a flat fee.
How will I be charged?
Legal fees are often a hot topic with our clients, so we want to share our philosophy with you.
We prefer to engage in a Flat Fee or @VC Monthly Subscription for legal projects instead of charging by the hour because we plan to become strategic partners with our clients, and we want to help you grow. We have found that engaging in a Flat Fee or @VC Monthly Subscription fosters a better attorney-client relationship.
Because we want you to succeed, we will always treat you with respect and fairness. We never want you to be shocked with a surprise bill. That said, it is not a requirement to engage us through a Flat Fee or @VC Monthly Subscription, as some matters are better suited for hourly billing. If/when hourly billing becomes necessary or preferable from either or both parties’ perspectives, we will discuss it with you in a collaborative forum.
How do Flat Fees work?
Click here to see all of our flat fee services.
For Flat Fee projects, we will send you a fee quote in writing by electronic means, which will specifically describe the parameters of the project. Payments for Flat Fees are required before beginning work and are considered earned when charged and deposited directly into our operating account at that time.
If, after beginning work, the scope of the project expands beyond what was originally anticipated, we will discuss and agree upon an increase in fees.
Our Flat Fees are based on receiving your prompt input and making revisions right away, so Flat Fee projects must be completed within four (4) weeks of beginning the project, or additional fees will be incurred.
To be mutually respectful of both parties’ time, if you engage us for a Flat Fee project, you agree, to the best of your ability, to be timely and descriptive in your communications to allow the applicable member of our team to complete the scope of the project within the four (4) week timeline.
How do Hourly Rates work?
For projects or work product that is billed hourly, the Firm's hourly rates are as follows:
- $675/hour for Transactional, Tax, or Special Counsel, as needed from time to time on special transactional matters;
- $595/hour for Senior Attorneys and/or all securities, transactional, and equity-related legal work;
- $445/hour for Associate Attorneys and/or all other legal work;
- $245/hour for Paralegals and Law Clerks.
Our hourly rates may increase in the future. Any such increase will only occur upon written notice to you. If you decline to pay the increased rates, we will have the right to withdraw as attorney for you if permitted under the Rules of Professional Conduct of the State Bar of California and/or applicable law.
Time is charged in minimum units of tenth-of-an-hour increments (0.1). Time spent on a task will be rounded up to the nearest tenth-of-an-hour. Unless we agree otherwise in writing by electronic means, all work will be billed on an hourly basis.
How do Retainer Deposits work?
For projects that are billed hourly, the Firm requires a minimum retainer deposit or payment method on file. The @VC Billing department will provide the Client with detailed invoices for hourly projects every two weeks, which will become payable within five (5) business days. During that time, please carefully review the detailed invoice and raise any questions or concerns you may have with the @VC Billing department.
Absent any questions or concerns, we will draw down on the retainer deposit to cover the invoice. We will replenish the retainer deposit in equal installments using a payment method on file.
Any funds paid towards retainer deposits will be deposited into our firm's trust account and handled in accordance with our trust accounting policies pursuant to California Rule of Professional Conduct 4-100 and Business and Professions Code §§ 6211-13. In other words, retainer deposits belong to the Client until we invoice. This does not apply to Flat Fees or @VC Monthly Subscription fees, which are considered earned when charged. Unless we agree to a Flat Fee or @VC Monthly Subscription, all work will be billed on an hourly basis.
Are filing fees/expenses included in any of your fee structures?
Our fees DO NOT include third-party charges for postage, filing fees, license fees, application fees, or other charges and fees. Notably, this includes fees associated with forming a corporate entity and/or amending Articles/Certificates of Incorporation or other similar corporate documents and/or filing with governmental authorities. When we pay those fees on your behalf, you will be billed for them at cost.
Should I use SAFEs or convertible notes?
Both are common at the earliest stages. SAFEs are simpler and don’t carry interest or maturity dates, making them easier for founders. Convertible notes function as short-term debt and may be preferred by some investors who want added protection. Either way, model the impact on dilution before signing.
What’s the difference between pre-money and post-money valuation?
- Pre-money valuation: The company’s value before new capital is added.
- Post-money valuation: The company’s value after adding new capital. For example, a $10M pre-money valuation with $2M raised results in a $12M post-money valuation. Ownership percentages are calculated using the post-money figure.
How much money should I raise in my first round?
Enough to hit meaningful milestones that will position you for the next round. For most pre-seed and seed companies, that means 12–18 months of runway. Avoid raising “as much as possible” — overcapitalization leads to unnecessary dilution and pressure.
Do I need to raise venture capital to build a successful company?
No. Many great businesses are bootstrapped or funded through revenue. Venture capital is best suited for companies chasing large markets and rapid growth. If your business can thrive without outside capital, you retain more control and ownership.
How do I know if my startup is ready to fundraise?
You’re ready to raise when you have clear evidence of progress — whether that’s a working MVP, early customer traction, or revenue growth. Raising too early, without proof points, often leads to rejection or unfavorable terms.
Are non-competes enforceable?
It depends on the jurisdiction. Some states (like California) ban most non-competes, while others enforce them only if narrowly tailored in scope and duration. A safer approach is to rely on confidentiality and non-solicitation clauses, which are more broadly enforceable.
Should every employee get equity?
Not necessarily. Equity is a powerful incentive, but it should be allocated strategically. Early hires often receive equity, while later hires may receive market-rate salaries with smaller or no equity grants. What matters most is aligning compensation with company stage and employee contribution.
What’s the risk of misclassifying contractors?
Misclassification can trigger back taxes, wage penalties, benefits liability, and lawsuits. Regulators look at the reality of the relationship, not the contract label. If a worker acts like an employee - taking direction, working set hours, or performing core functions - they probably are one in the eyes of the law.
Do startups really need an employee handbook?
Yes. While not legally required for very small teams, a handbook sets expectations, communicates policies, and helps protect against legal claims. As soon as a startup hires beyond a handful of people, a simple but tailored handbook becomes a best practice.
How often should contracts be updated?
Contracts should be revisited whenever your business model, regulations, or relationships change. As a rule of thumb, review key agreements annually. For privacy policies and TOS, updates may be required more frequently to stay compliant with evolving laws like GDPR and CCPA.
What are the “must-have” contracts for every startup?
At a minimum, most startups need:
- NDAs for protecting confidential information.
- Employment/contractor agreements with IP assignment clauses.
- Customer contracts (sales, SaaS, or licensing).
Terms of Service and Privacy Policy for digital products. Additional contracts like MSAs, vendor agreements, and partnership agreements become essential as the company grows.
Can I just use templates for contracts?
Templates are a useful starting point, but rarely sufficient on their own. Every deal has unique elements - scope, payment, IP, liability - that need tailoring. Using a template without legal review risks leaving out critical protections or including terms that don’t fit your situation.
Do I really need contracts if I trust the other party?
Yes. Trust is important, but contracts provide clarity and prevent misunderstandings. Even well-intentioned partners can recall terms differently months later. A contract protects both sides and preserves the relationship by setting expectations upfront.
How do I evaluate whether the deal is successful later?
Use original objectives and metrics (revenue growth, cost synergies, retention, integration milestones) to measure success over 12–36 months.
What role do seller and buyer advisors play?
Advisors help structure the deal, manage process, run auctions, negotiate, draft agreements, coordinate diligence, and maintain alignment between parties.
How is tax treated in M&A?
It depends on structure (asset vs stock), parties’ jurisdictions, use of tax elections (e.g. 338), and deferred consideration. Always engage tax counsel early.
Are earn-outs and deferred payments common?
Yes - when buyer and seller disagree on future projections, partial payments may be contingent on performance (revenue, EBITDA) after closing.
What happens to my equity / role post-acquisition?
That depends on negotiated terms: you might roll over equity, receive a new role (e.g. leadership, board seat), or exit entirely. Clarify this in the agreement.
How is integration risk managed?
By creating an integration plan early (even during diligence), having a dedicated integration team, defining workstreams and metrics, maintaining communications, and monitoring synergy progress vs forecast.
What if the buyer doesn’t complete regulatory approvals or consents?
Include conditions precedent in the agreement (deal contingent on approvals). Also negotiate termination rights, refund or break-up fees, and fallback structure planning.
How can I structure to avoid taking on risky liabilities?
Asset purchases, carve-outs, strong representations/indemnities, limited liability caps, escrow, and holdbacks are tools to limit exposure. But complete insulation may not be possible in stock or merger deals.
What protections should I negotiate in the agreement?
Key protections include representations and warranties, indemnification caps and baskets, survival periods, escrow or holdback amounts, earn-outs, and carveouts (e.g. for tax, IP, regulatory matters).
Can a deal fall apart or be renegotiated after signing?
Yes - many agreements include conditions precedent, Material Adverse Change (MAC) clauses, break-up rights, or renegotiation triggers if due diligence uncovers issues. A poorly performing integration may also prompt adjustments.
When should I tell employees or stakeholders about the deal?
Disclosure should be timed carefully to balance confidentiality and trust. Many deals maintain confidentiality until the signing, sharing information only under NDA and with key stakeholders, then broad communication following closing or in a controlled way.
What’s the difference between an asset sale, stock sale, and merger?
- Asset sale: buyer chooses which assets (and some liabilities) to acquire - gives flexibility but requires consents.
- Stock sale: buyer acquires ownership interests (shares) - continuity is smoother but buyer inherits full liability.
Merger: legal consolidation of entities; often simplifies transfers but may trigger statutory rights (dissenters’ rights, shareholder votes).
How is the purchase price determined?
The price is based on valuation methods (DCF, comparable companies, precedent transactions, asset approach) and then adjusted via negotiation, risk allocation, escrow, earn-outs, and working capital / debt adjustments.
What is the typical timeline for an M&A deal?
Most deals take 6–12 months from initial negotiations to full integration. Complex deals, cross-border structures, or regulatory approvals can stretch this longer.
Do I need a privacy policy before launch?
If you are collecting user data - even email addresses for a waitlist - yes. Privacy policies are required by laws like GDPR and CCPA and are expected by users. A simple, transparent policy early on builds trust and avoids compliance risks.
Can I use open source code in my product?
Yes - but only with caution. Permissive licenses like MIT or Apache are generally safe. Copyleft licenses like GPL or AGPL may require you to open source your entire codebase if combined improperly. Always review licenses before including open source code in your product.
Should I prioritize patents or trademarks?
It depends on your business model. Trademarks are generally a faster, cheaper way to protect brand identity and avoid conflicts. Patents are valuable for companies with novel inventions or defensible technology but are expensive and time-consuming. Many startups begin with trademarks and trade secrets, and pursue patents only if they become strategically necessary.
Do I own IP created by freelancers or contractors?
Not automatically. Unless a contractor signs an invention assignment agreement, they may retain ownership of what they create. Always use written agreements that explicitly assign all IP to the company.
What’s the difference between warrants and stock options?
Both give the right to purchase stock at a fixed price, but:
- Stock options are usually granted to employees as compensation.
- Warrants are often given to investors, lenders, or strategic partners as part of financing or business agreements.
Can contractors or international employees receive equity?
Yes, but typically through NSOs, RSUs, or phantom equity rather than ISOs. International employees may require country-specific equity plans due to tax and legal differences. Always consult counsel before granting equity outside the U.S.
Do founders always keep control of the company?
Not always. While founders begin with control, each financing round introduces new investors with board seats, voting rights, and protective provisions. Some founders implement dual-class stock or other structures to retain control, but most startups rely on alignment with investors rather than super-voting rights.
How does dilution affect my ownership?
Dilution reduces your percentage ownership as new shares are issued, but it doesn’t necessarily reduce the dollar value of your stake. If a funding round increases valuation, your smaller percentage may still be worth significantly more in absolute terms.
What happens to employee equity if the company is acquired?
It depends on the acquisition terms. Options may be assumed by the acquirer, cashed out, or accelerated. Double-trigger acceleration is common, meaning unvested shares vest if the company is acquired and the employee is terminated without cause.
How often should we update our 409A valuation?
At least once per year, or whenever a major event occurs (funding round, acquisition offer, significant revenue milestone). A current 409A valuation is required to set fair market value for stock option grants and to maintain compliance with IRS rules.
What’s the difference between RSAs and RSUs?
- RSAs (Restricted Stock Awards): Shares are issued upfront, subject to repurchase rights if unvested. Best for founders and early hires when valuation is low.
- RSUs (Restricted Stock Units): Shares are delivered only when vesting is complete. Best for later-stage hires when valuation is high.
What is an 83(b) election and who should file one?
An 83(b) election allows recipients of restricted stock to pay taxes at grant rather than as shares vest. Founders and early employees almost always benefit from filing, since share value is usually negligible at the start. Missing the 30-day deadline can create significant tax burdens later.
Do all startups need an option pool?
Yes. Even small teams benefit from reserving equity for future hires. Without a pool, you may run into hiring roadblocks or face last-minute dilution negotiations with investors. Most early-stage companies set aside 10–20% of total equity.
What’s the difference between ISOs and NSOs?
- ISOs (Incentive Stock Options): Employees only, potential tax advantages, subject to holding rules and limits.
- NSOs (Non-Qualified Stock Options): Broader eligibility (contractors, advisors, board members), taxed as ordinary income at exercise. Both give the right to buy stock at a set price, but their tax treatment differs significantly.
Both give the right to buy stock at a set price, but their tax treatment differs significantly.
What happens to my equity if I leave the company?
You retain only the shares that are vested at the time of departure. Unvested shares are usually repurchased or forfeited by the company. If you hold stock options, you may need to exercise them within a set window (often 90 days). Some companies extend this window, but it must be negotiated.
Should advisors get equity?
Yes, but in small amounts. Typical advisor grants range from 0.1% to 0.5%, usually subject to a vesting schedule of one to two years. Be cautious about over-granting equity to advisors - their contributions are rarely equivalent to those of full-time employees.
How much equity should I give my first hires?
Early employees typically receive between 0.25% and 2% depending on their role, experience, and timing. Senior executives may receive more, while junior hires may receive less. Always tie grants to role benchmarks and company stage rather than giving away arbitrary percentages.
How should co-founders split equity?
There’s no single formula. Many accelerators recommend equal splits to avoid resentment, since the majority of value creation lies ahead. Others prefer contribution-based allocations that reflect past input. What matters most is alignment and trust - and making sure all founder equity vests over time.
What’s the difference between general counsel and a board advisor?
A board advisor provides strategic or industry expertise but does not carry legal authority. General counsel, by contrast, ensures compliance, manages legal risks, and protects the company from liability. Both roles are valuable, but they serve different purposes.
When should a startup hire in-house general counsel?
Most startups rely on outside counsel in the early stages. Hiring a full-time GC typically makes sense once the company has raised a significant round (Series B or later), has 50+ employees, or is managing complex contracts and regulatory issues. Until then, fractional or outside GCs can provide cost-effective support.
Do I need to keep records after incorporation?
Yes. Recordkeeping is critical. You should maintain bylaws or operating agreements, stock records, board meeting minutes, financial statements, and compliance filings. These documents protect your liability shield and will be scrutinized by investors, lenders, or acquirers.
What if I want to change my business structure later?
You can convert your company from one entity type to another (for example, from LLC to C-Corp), but the process may have tax and legal consequences. Conversions are common as businesses grow, but they require careful planning and professional guidance.
What is an 83(b) election and why is it important?
An 83(b) election is a filing with the IRS that allows you to pay taxes on stock at the time it is granted rather than as it vests. For founders, filing an 83(b) locks in a low tax basis early, potentially saving thousands in future taxes. Missing the 30-day filing deadline can create serious tax consequences.
Do I need a lawyer to incorporate?
You are not legally required to hire a lawyer to incorporate, and many states allow you to file online. However, legal guidance is highly recommended, especially if you have multiple founders, plan to raise capital, or need to issue equity. Mistakes at this stage can be costly to fix later.
Will incorporation affect my taxes?
Yes. Your entity type determines how your business is taxed. LLCs and S-Corps typically use pass-through taxation, where income flows to your personal return. C-Corps pay taxes at the corporate level, and shareholders are taxed again on dividends. Each structure has pros and cons depending on your income, growth goals, and fundraising plans.
What documents do I need after incorporation?
At a minimum, you’ll need:
- Articles of Incorporation (or Certificate of Formation)
- Bylaws (corporation) or Operating Agreement (LLC)
- Board resolutions and organizational meeting minutes
- Restricted stock purchase agreements and vesting schedules
- 83(b) elections for founders receiving restricted stock
- Intellectual property assignment agreements
- Annual compliance filings and reports
How long does incorporation take?
Most states process incorporation filings within a few business days. In some cases, you can pay for expedited service and receive approval within 24 hours. Applying for an EIN online usually takes less than 10 minutes.
What happens if I don’t incorporate?
Without incorporation, you are personally liable for all debts, contracts, and lawsuits related to the business. You also lack formal ownership agreements, making disputes with partners more likely. Banks and investors are unlikely to take your business seriously without a formal entity.
Should I always incorporate in Delaware?
Yes. Many startups begin as LLCs for simplicity and later convert to C-Corps to raise capital. However, conversions carry legal and tax implications. It’s usually easier and cheaper to start as a C-Corp if you know you’ll need it, but conversion is always an option.
Do I need an EIN if I don’t plan to hire employees?
Yes. Accepting investments before incorporation can create serious legal and tax problems. Incorporation ensures you can issue equity properly, protect personal assets, and provide investors with legitimate ownership records.
Do I need to incorporate before raising money from friends and family?
Yes. Accepting investments before incorporation can create serious legal and tax problems. Incorporation ensures you can issue equity properly, protect personal assets, and provide investors with legitimate ownership records.
Why do investors prefer C-Corporations?
C-Corps allow multiple classes of stock, an unlimited number of shareholders, and provide a clear framework for equity compensation. Venture capitalists are familiar with Delaware C-Corp law, which gives them confidence that governance and shareholder rights will be handled consistently.
What is the best business structure for a small startup?
It depends on your goals. If you are self-funded and want flexibility with minimal compliance, an LLC is often the best choice. If you plan to raise venture capital or scale nationally, a Delaware C-Corporation is the standard. For mission-driven ventures, a Public Benefit Corporation or non-profit may be more appropriate.
How can investor relations help with future fundraising?
Investors who feel informed and engaged are more likely to participate in follow-on rounds and make introductions to new investors.
What’s the difference between investor relations and board management?
Investor relations cover all investors, while board management focuses on directors who have governance authority. Both require structured communication.
How often should I send investor updates?
Monthly or quarterly is standard. The key is consistency and clarity.
How do terms like option pools and liquidation preferences affect valuation?
They don’t change the headline valuation but impact founder dilution and investor returns. This makes it critical to understand the full term sheet, not just the valuation number.
What role does traction play in valuation?
Traction is one of the strongest drivers. Revenue, user growth, and customer engagement make valuations more defensible.
Should founders always push for the highest valuation possible?
Not always. An inflated valuation can create problems in later rounds if you can’t meet growth expectations, leading to down rounds.
How do investors decide which valuation method to use?
It depends on your stage. Early-stage investors rely more on methods like Berkus and Scorecard, while later-stage investors lean on DCF and comps.
How do I follow up without being pushy?
Send a thank-you email, provide requested info, and share milestone updates. Respectful persistence is better than silence.
Should I hide risks from investors?
No. Experienced investors expect risks. Addressing them openly with mitigation strategies shows maturity and builds trust.
How long should an investor meeting last?
Most initial meetings run 30–45 minutes. Your pitch should take 10–15 minutes, leaving the rest for questions.
What materials do investors expect to see in the first meeting?
A pitch deck, a one-pager, and your cap table are usually enough. Financial models and product demos are useful for follow-ups.
How can founders avoid conflicts over decision-making?
By documenting approvals, following bylaws, and keeping communication open with both the board and shareholders. A decision matrix can help prevent disputes.
Can founders override the board?
No. The board of directors has ultimate authority over major corporate decisions. Founders who ignore board approval requirements risk invalidating decisions and breaching fiduciary duties. The best approach is collaboration and transparency with the board.
What are protective provisions?
Protective provisions are special rights negotiated by investors - usually preferred shareholders - that give them veto power over key corporate actions like mergers or issuing new stock.
When do investors usually join the board?
Investors typically negotiate board seats at the Series A stage or later, once institutional capital is involved.
Do advisors need to be on the board?
Not necessarily. Many founders keep advisors in an informal capacity or through an advisory agreement rather than granting them board seats.
How many people should be on an early-stage board?
Most early-stage boards start with 3 members, expanding to 5 or 7 as the company grows.
Do all startups need a board?
If you incorporate as a C-corporation, yes. An LLC may not require one, but corporations legally must have a board.
What happens if co-founders disagree on a major decision?
If fiduciary duties are involved, decisions should follow proper corporate governance—through board votes, shareholder approvals, or documented resolutions.
How can founders avoid fiduciary duty issues?
The best practices are transparency, documenting decisions, avoiding conflicts of interest, and seeking approval from the board when needed.
Can fiduciary duties lead to personal liability?
Yes. Breaches of duty can expose directors and officers to lawsuits, financial damages, and even removal from their roles.
Do all founders owe fiduciary duties?
Yes. Founders who serve as directors or officers owe fiduciary duties of care and loyalty to the company and its shareholders. Even if a founder doesn’t hold a formal title, their influence may be scrutinized under fiduciary standards.
When should a company seek legal counsel for a reorganization?
It is best to involve counsel early in the process. Attorneys can advise on structure, draft necessary documents, ensure regulatory compliance, and help preserve tax advantages.
What is the difference between voluntary and involuntary reorganization?
A voluntary reorganization is initiated by a company’s leadership to improve efficiency or strategy, while an involuntary reorganization is often court-ordered in bankruptcy proceedings.
How long does a corporate reorganization usually take?
The timeline depends on complexity. Simple restructurings may take a few months, while larger mergers or court-ordered reorganizations can take a year or more.
What types of reorganizations are most common?
The most common types include mergers, acquisitions, spin-offs, recapitalizations, and bankruptcy reorganizations. Each has different strategic and financial implications.
What role does due diligence play in an acquisition?
Due diligence allows buyers to review financials, contracts, and liabilities. For sellers, preparing in advance avoids surprises and strengthens negotiating power.
How does an ESOP differ from selling to a competitor?
An ESOP transfers ownership internally to employees, preserving company culture, while selling to a competitor often results in consolidation and market expansion.
When should an owner start planning their exit strategy?
Ideally, exit planning should begin several years in advance. Early preparation increases valuation and ensures smoother negotiations.
What is the best exit strategy for a small business owner?
The right strategy depends on goals. Many small business owners pursue third-party sales or ESOPs, while larger companies often benefit from mergers or acquisitions.
What role does due diligence play in mergers?
Due diligence is the process of investigating financial, legal, and operational risks before closing. It helps identify liabilities, verify valuations, and strengthen negotiation positions.
Do all mergers require regulatory approval?
Not all mergers require government approval, but larger transactions or deals in regulated industries may need clearance from agencies like the FTC, DOJ, or industry-specific regulators.
What is the difference between a merger and an acquisition?
A merger combines two or more companies into one surviving entity, while an acquisition occurs when one company purchases another’s stock or assets.
Are stock purchases subject to taxation?
Yes. For sellers, stock purchases are often taxed at capital gains rates. Buyers typically cannot “step up” the tax basis of the company’s assets, which may affect future deductions.
Can a buyer avoid inheriting liabilities in a stock purchase?
Not entirely. Buyers inherit all liabilities of the company. However, risks can be managed through due diligence, indemnification provisions, and escrow arrangements.
What are the main advantages of a stock purchase compared to an asset purchase?
Stock purchases are simpler to execute because the company remains intact, preserving contracts, permits, and relationships. Asset purchases, while offering liability protection, often require more paperwork and consents.