You’re starting a startup and need to know the applicable laws. Well, you’re in luck, because this is a quick legal guide to launching a tech startup. While it’s always a good idea to speak with a startup law attorney before launching, this advice for tech startups should set you down the right legal path.
First Things First: Pick A Home-base For Your Business
Not all state startup laws are created equal. Some states have affiliate-friendly statutes; others favor e-commerce outfits. Finding the best jurisdiction for your company is the first step in establishing a legal base for your operation. In addition to industry considerations, remember to review the partnership laws in your state of choice. Some states have laws that prevent a co-founder from being let go without being bought out, others don’t. Some have tax structures that favor small tech startups, some don’t. So when you’re debating the decision, take some time to really think about your business; think worst case scenarios and then figure out which state is best for you. If you’re not sure where to begin with something like that, a good startup lawyer can help.
Legal Advice for Tech Startups Point #1: Register That Intellectual Property Properly
These days, intellectual property is as valuable to a startup as a bottomless venture fund would be. OK, that’s an exaggeration, but it can’t be stressed enough that IP is the equivalent to digital gold. Think about how much it would sting if you lost your branding edge due to an ill-filed copyright or trademark registration.
Another bit of startup advice: in the interest of clean records, make sure the intellectual property is registered to the company, not an individual. In the event of a partner split, the last thing you need is to be haggling over who owns the IP. It could get nasty.
Legal Advice for Tech Startups Point #2: Work Out a Partnership Agreement and a Pre-Nup
If you are embarking down startup path with others, make sure a partnership “pre-nup” is signed. Starting a company can be stressful, just as stressful as an unsuccessful marriage. Putting an exit agreement on paper while things are good is a great idea. Moreover, it allows you to see how you and your partners deal with unpleasant necessities – and it may just save you from getting into the wrong relationship with the right people.
Legal Advice for Tech Startups Point #3: Domestic and International Online Privacy Laws
While the Internet industry currently has fewer regulations than many others, there are still a number to which all companies must adhere. If you’re planning on doing business overseas – or targeting clients in the EU as well as North America – then there are even more laws you must heed. Here’s a quick list of a few:
Children’s Online Privacy Protection Act
The Children’s Online Privacy Protection Act is the only Internet privacy bill that has not been shot down in some way by the Supreme Court of the United States. And it looks like it’s about to be updated again – in a not so great way. If you are running a site or app that could potentially be attractive to kids – even if it’s not your intent to target kids – you’d better familiarize yourself with COPPA regulations. If not, crippling fines could play a major role in your not so distant future.
Gramm-Leach Bliley Financial Modernization Act
The mighty GLB – otherwise known as the Gramm-Leach Bliley Financial Modernization Act – is a wide sweeping bill that affected many industries. Tech startups need to be aware of the bill’s very specific financial online privacy standards. It’s a nuanced piece of legislation that must be understood, or, again, you could find yourself beat before you warm up.
United Kingdom Cookie Law
The Internet knows very few borders. That’s why any startup in North America must consider Internet law happenings across the pond. Currently, the new UK cookie law is the main regulation any new online venture should understand and incorporate into their platform. If not, you could face some very time-consuming European litigation, and possibly a hefty fine.
Legal Advice for Tech Startups Point #4: The Dot Com Disclosures
If you market on the Web, you must follow guidelines in the Dot Com Disclosure — the online marketing bible put out by the Federal Trade Commission. It covers everything from the proper use of testimonials to disclosure statements to allowable online marketing language. Get a copy, read it, know it — doing so will save you a lot of grief in the long run.
Legal Advice for Tech Startups Point #5: CYB and Invest In Proper Website Policies
The Kelly / Warner Law Firm was established to cater to the needs of online businesses and Internet entrepreneurs. We know the industry and the regulations that govern it; we understand the difference between blackhat and whitehat; we spend our days lawyering and our evening devouring anything tech-related. If you’re a startup looking for legal counsel, contact us today. We’re confident you’ll be impressed with our efficiency…and Internet law geek quotient.
In search of a solvent for the 2008 financial crisis, in 2010, lawmakers waved through the Small Business Jobs Act. Why jump-start the small business sector instead of bolstering the big boys? Because for the past 15 years, small businesses (fewer than 500 employees) have generated close to 65% of all new jobs.
Moreover, the 2008 $825 billion stimulus package didn’t do much in the way of small business stimulation, so politicians wanted to rectify the oversight.
Provisions Of the Small Business Jobs Act
- A permanent increase in the size of the maximum loan available under the 7(a) and 504 loan programs from $2 million to $5 million; a corollary increase in the maximum loan amount available through the 504 loan program specifically targeted at manufacturing from $4 million to $5.5 million.
- A permanent increase in the micro-loan cap from $35,000 to $50,000 specifically designed to help entrepreneurs and startups.
- A temporary increase in the loan amount available to SBA Express loan recipients from $350,000 to $1 million.
The bill also introduced eight significant tax cuts for small businesses:
- The elimination of all capital gains taxes for small business investments held five years or over.
- An increase in the write off for capital investments from $250,000 in Year One and $25,000 in Year Two to $500,000, and increasing the threshold for these write-offs to $2 million.
- An extension of the 50% bonus depreciation through the close of 2010.
- A health insurance deduction for the self-employed.
- Simplified rules regarding the deduction of cell phones and cell phone-related expenses.
- A temporary increase in the deduction for start-up costs from $5,000 to $10,000 (with a ceiling of $60,000.)
- For certain small businesses, the ability to offset taxes – including the Alternative Minimum Tax – through business credits from the past five years.
- A decrease in penalties for tax errors that disproportionately affect small businesses and small business owners (particularly sole proprietors.)
Speak With A Lawyer About Issues Related To The Small Business Jobs Act
Counter-intuitive as it might sound, historically recessions have been excellent times to launch startups. Just ask FedEx.
Don’t launch a startup without first consulting an attorney to make sure your plan and business are on the right side of the law. And remember: provisions in the Small Business Jobs Act can be used to your advantage; get in touch with a startup lawyer to find out how.
The #5 Reason Why Arizona Is A Best State For A Startup: The Weather
Sure, California is known for its warm weather. But the Eureka state doesn’t have a monopoly on sunshine. Arizona is also warm year round. And its pleasant dry-heat — the kind that’s great for people who suffer from allergies and asthma. And for people who don’t have any environment-triggered ailments, the AZ atmosphere is great for general well being — which is why there are so many spas in the state.
The #4 Reason Why Arizona Is A Best State For A Startup: Cheap Travel Launching Pad
Contrary to popular belief, Arizona does have water — and denizens do own boats. It’s not just a desolate expanse of dessert (well, part of it is). And if you simply must dip your toes in the Pacific Ocean, California is close. Better still, Arizona to California plane tickets are cheap, because California works hard to attract weekend tourists from nearby states.
The #3 Reason Why Arizona Is A Best State For A Startup: Great Golfing
Like California, Arizona is awash with outdoor activities — especially golf. So where would you rather be: a) closing a deal on a choice Arizona golf course (even the public ones are impressive), or b) in budget-crisis California struggling to pay bills?
The #2 Reason Why Why Arizona Is A Best State For A Startup: Cheaper Living
In terms of beauty and amenities, point-for-point, the cost of living in Arizona is less expensive than the cost of living in California. It’s a gorgeous state with dozens of picturesque locales. And most importantly, your dollar will go very far in Arizona.
And the #1 reason Why Arizona Is A Best State For A Startup is….
Legislators are SUPER business friendly. Straight up.
Thanks to Arizona’s small-business-friendly tax statutes, instead of seeing your business crumble, you’ll enjoy watching it grow.
Aaron Kelly is a startup lawyer based in Scottsdale, Arizona. He’s a founding partner of Kelly / Warner Law — a boutique legal practice that focuses on defamation, business and Internet law — the perfect firm for a tech startup. Get in touch today if you, too, are thinking that Arizona just may be the best state for a startup. We’ll get you set up.