7 Figure Store Legal Checklist

Intro

• Lots of questions about start ups, to us, these are not all that interesting. Reality is a true start up is going to do the bare minimum to get going. Ownership agreements between the founders are probably the most important, after that, it is completely dependent on what the business can afford.

• More interesting is to open the hood on businesses that have been around. What should you have in place if you have been around for 3, 5, 10 years. What could be considered a luxury for a start up can become an absolute need for a more mature business

• No business is perfect, you won’t have all of these

• But end of the year is approaching, it is time to pull out that dusty list of legal needs and start making plans to get things done

  1. Organizational Structure

  a. Internal corporate documents (bylaws/shareholder agreement/operating agreement)

i. Clear outline on ownership/managers

ii. Buy/sell agreements

b. Relations with investors

You should be able to clearly, and without question, answer:

• all questions about your cap table, capital accounts, rights of first refusals, and your complete org structure

• know your (and other owners) rights about selling

• what happens if people die, divorce

• key man insurance (and how to distribute the money)

If you exit, this must be 100% clear or it will cause problems.

2. Contracts

a. Employment agreement

i. Non-compete

ii. Confidentiality

iii. Work for hire

b. Independent contractor agreements

i. Work for hire

c. Phantom stock / incentive agreements

d. Employee handbooks

i. Workplace policies (time off, sick leave, benefits, etc)

e. Service agreements (how you get paid)

f. Real terms of use

g. Real privacy policy

h. Real copyright policy (copyright registered agent)

i. Manufacturing agreements

j. Insurance

ii. Property/personal property

iii. Key man

iv. health

You should have organized documents that all have signatures. You will need to produce all of these documents in an exit.

3. IP

a. Trademark

i. Federal/state registrations

ii. Process to clear names before investment

iii. Trusted counsel

iv. Make sure registrations are owned by the correct entity

v. International trademarks

1.US only good for US

2.Take advantage of Madrid

3. File in “first to file” countries - china

b. Copyright

i. Understanding what can/should be registered

1. Industry specific but advantages for all

   c. Patent

i. Knowing basics of when/how to act if you want to seek patent protection (or at least who to ask)

ii. Contracts with employees help to make sure you have all rights

d. Trade secrets

i. What they are

ii. How you maintain trade secrets

You should be able to:

• Explain and document all cases all alleged infringement on your IP and threats against you

• Know where the business could invest in more IP protections

• Have a domain portfolio of domains registered for your brand, including defensive registrations to cover typos or even gripe site type domains

  1. Taxes

     a. Understand tax structure, tax planning

i. What states for sales tax – nexus

b. Trusted CPA

c. Paying quarterly

d. Taking advantage of tax laws

i. Cars

ii. Spouses / kids

e. Not trying to nickel and dime, just do it right

1. Accounting

   a. Clean books