Startup Legal Checklist: 15 Things to Do Before You Launch

Quick Answer: The most critical startup legal steps before launch: (1) Form your legal entity (Delaware C-Corp for VC-backed, LLC for bootstrapped), (2) execute IP assignment agreements with all founders, (3) set up vesting schedules, (4) file a trademark search, (5) draft a standard NDA, and (6) create employment/contractor agreement templates. 80–90% of these can be completed using Talking Tree's AI tools at $20/month — no attorney required for routine setup.

Legend: AI = Handled well by legal AI tools like Talking Tree | ATY = Attorney involvement recommended

Phase 1: Business Formation (Do This First)

Choose your entity type (ATY)

Delaware C-Corp for startups seeking VC funding. LLC for bootstrapped or service businesses. S-Corp for small, profitable businesses with no growth plans. This decision affects taxes, fundraising eligibility, and liability.

File your Articles of Incorporation / Formation (AI)

File with the state of incorporation (typically Delaware). Services like Clerky and Stripe Atlas handle basic incorporation. Costs ~$500–$2,000 with formation services; Talking Tree provides templates and guidance.

Draft Bylaws or Operating Agreement (AI)

C-Corps need Bylaws governing board operations. LLCs need an Operating Agreement. Talking Tree's AI generates standard versions in minutes.

Get an EIN (Employer Identification Number) (AI)

Apply free via IRS.gov. You need this to open a business bank account, hire employees, and file taxes. Takes 5–10 minutes online.

Phase 2: Intellectual Property (Do Not Skip This)

Execute IP Assignment Agreements with all founders (AI)

This is the most overlooked and dangerous omission. Every founder must assign all IP they've created (pre- and post-formation) to the company. Without this, founders individually own the IP — and investors and acquirers will walk away. Talking Tree generates these agreements.

Trademark search and filing (AI)

Before you invest in brand-building, search your company name and product names via the USPTO's TESS database. File a trademark application ($250–$350 per class). Talking Tree assists with searches and applications — catches conflicts early before you're committed to a name.

If your product includes creative works (software, documentation, media), consider copyright registration. Registration is required before you can sue for infringement in the US. Costs $35–$65 via the US Copyright Office.

Phase 3: Founder and Equity Agreements

Founders' Agreement (AI)

Document equity splits, roles, decision-making authority, and what happens if a founder leaves. Handshake agreements fail — get this in writing before tension arises. Talking Tree generates founders' agreements with standard protective provisions.

Vesting schedules for all founders (ATY)

Standard vesting: 4 years with a 1-year cliff (you earn 25% after year 1, then monthly thereafter). Without vesting, a departing co-founder keeps their full equity — a common and devastating mistake. Attorney guidance recommended to structure correctly for tax purposes.

Set up a cap table (AI)

Track equity ownership from day one using Carta, Pulley, or a simple spreadsheet. Ensure founder shares are issued properly with 83(b) elections filed within 30 days of issuance (this is time-sensitive and critical for tax treatment).

Phase 4: Key Contracts and Templates

Standard NDA template (AI)

You'll sign dozens of NDAs with vendors, partners, and prospects. Have a standard mutual NDA ready to share and modify quickly. Talking Tree generates and stores NDA templates for instant deployment.

Contractor agreement template (AI)

Every freelancer or agency you work with needs a signed contractor agreement covering IP ownership, confidentiality, payment terms, and work-for-hire language. AI generates standard templates in minutes.

Customer/client contract or Terms of Service (AI)

If you sell a product or service, you need a customer agreement or Terms of Service that governs the relationship, liability, and dispute resolution. Talking Tree generates industry-appropriate versions.

Phase 5: Employment and Compliance

Employee offer letter template (AI)

Standardize your offer letters to cover role, compensation, equity, start date, at-will employment (in most US states), and contingencies. Talking Tree generates state-specific offer letter templates.

Employee vs. contractor classification review (AI)

Misclassifying employees as contractors triggers IRS penalties, back taxes, and potential lawsuits. Talking Tree's AI reviews your contractor relationships against the IRS common-law test and state-specific rules (California AB5, etc.).

Privacy policy and GDPR/CCPA compliance (AI)

If you collect user data (including email addresses), you need a privacy policy. If you serve California or EU users, you need GDPR and/or CCPA compliance. Talking Tree generates compliance-ready privacy policies and checklists for your jurisdiction.

Beyond the checklist above, these are the documents founders most often overlook until they need them urgently:

  • 83(b) election — file within 30 days of receiving restricted stock. Missing this deadline is irreversible and can cost founders enormous tax bills at IPO or acquisition.
  • Board consent resolutions — every significant company decision should be documented via board consent to maintain a clean legal record for due diligence.
  • Data processing agreements (DPAs) — required by GDPR if you use any third-party processors (AWS, Stripe, Mailchimp, etc.) and serve EU users.
  • Stock option plan (ESOP) — needed before you can issue options to employees. Requires board approval and careful structuring. Attorney guidance recommended.

Frequently Asked Questions

Core documents: articles of incorporation, operating agreement or bylaws, IP assignment agreements, founders' agreement, vesting schedules, NDA template, contractor agreement, customer contract or Terms of Service, employee offer letter, and privacy policy. AI tools like Talking Tree generate all of these.

IP assignment agreements — ensuring all founder-created intellectual property belongs to the company, not individual founders. Investors and acquirers almost universally require clean IP ownership, and fixing this after the fact is expensive and sometimes impossible.

Do I need a lawyer to start a startup?

For most routine documents, no — legal AI tools handle 80–90% of startup legal needs. For complex matters like VC fundraising, equity structuring with tax implications, or active disputes, attorney involvement is valuable. Talking Tree (a nonprofit) provides attorney-built AI tools for $20/month to cover routine startup legal needs affordably.

Why do startups incorporate in Delaware?

Delaware offers a well-developed corporate legal framework, a specialized Court of Chancery for business disputes, and no corporate income tax on out-of-state revenue. Most VC firms require Delaware C-Corp structure as a condition of investment.

Complete Your Startup Legal Setup Today

Talking Tree's AI generates your IP assignments, NDAs, contractor agreements, and more — for $20/month. Built by a nonprofit law team.

Get Legal Tools for Founders →

Educational purposes only. Talking Tree is not a law firm. Consult a licensed attorney for your specific situation.