1. Which Legal Work Should Come before Your Next Commitment?
A startup attorney in California can identify the work needed before a planned hire, contract, or investment. The review starts with the company's next decision and any existing problems that could affect it.
Set Priorities and Identify the Client
Common services include:
- Forming the company and reviewing registration needs.
- Documenting founder ownership and IP transfers.
- Reviewing hiring and customer contracts.
- Negotiating investment terms and checking filings.
An attorney can separate work needed before signing from work that can follow. The engagement should also name the client. A lawyer for the company does not automatically represent each founder personally.
2. Company Formation and Local Registration
Where a company forms and where it operates raise separate legal questions. Entity choice should reflect ownership, management, taxes, and funding plans.
Choose a Structure That Fits the Business
An LLC may suit some owner-run businesses. A corporation may better fit plans to issue different classes of stock or seek certain investors.
Delaware incorporation is not required for every startup seeking investment. Review investor expectations, management rights, and tax treatment before choosing.
Check Registration, Licenses and Taxes Separately
A company formed outside California may need to register before conducting business within the state. The decision depends on its activities and applicable exceptions.
Review operating locations, local transactions, and business entity filings. Registration does not replace required licenses or permits.
The Franchise Tax Board applies separate rules to determine tax duties. A registration decision alone does not settle whether the company owes state taxes.
3. Ownership, Hiring and Customer Agreements
Signed documents should support the rights the company expects to use. A startup attorney in California can compare those records with actual ownership, working arrangements, and business promises.
Match Ownership Records to Approved Agreements
A cap table lists shares and rights to future shares. The list alone does not prove that the company properly approved or issued them.
Compare:
- Founder agreements and payment records.
- Required company approvals.
- Terms for earning or keeping shares over time.
- Options and other promises of future equity.
Departure terms should explain what happens when a founder leaves. An informal promise may leave ownership or repayment rights unclear.
Confirm Who Owns the Product
Forming a company does not automatically transfer work created beforehand. Paying an outside developer also does not, by itself, settle ownership.
Check signed rights transfers, development contracts, and licenses. Review prior employment agreements for possible competing claims.
Employee invention agreements also need review for state limits on required transfers and related notice duties.
Review Workers before Hiring
A contractor label does not decide a worker's status. When the ABC test applies, the hiring company must show that the worker:
- Works free from its control and direction.
- Performs work outside its usual business.
- Runs an established independent business of the same kind.
An exception may change the test without making the worker a contractor automatically. Employment counseling can address classification, pay duties, and hiring terms together.
Check Promises before Signing
A customer agreement can create duties worth far more than the contract price. Review payment, delivery, cancellation, and responsibility for claims.
For software and service companies, check ownership of new work and permitted uses of customer data. A focused contract review can identify terms that need negotiation.
4. Funding Review and Common Mistakes
Investment terms can change ownership and control. They also raise federal securities questions and separate state requirements.
Review Investment Terms and Filing Dates
A SAFE generally gives an investor rights to future shares under stated conditions. A convertible note is debt that may turn into shares.
Review conversion terms, ownership changes, investor rights, and required approvals before signing.
For offerings using Regulation D, Form D generally is due within 15 calendar days after the first sale. A binding investment commitment can start that period before money arrives. Weekend and holiday rules may extend the filing date.
Rule 506 generally removes state registration and review requirements for the offering. State notices, fees, and anti-fraud rules may still apply.
Correct Missing Records without Changing History
Missing approvals or unsigned rights transfers can delay an investment review. Keep original agreements, emails, and signing records.
Avoid these mistakes:
- Changing ownership figures without checking supporting documents.
- Backdating signatures.
- Assuming a standard investment form handles required filings.
An attorney can assess lawful corrections and explain any remaining gaps.
5. Startup Attorney Costs and Review Scope
Fees depend on the work, the condition of existing records, and the negotiations required. Defined projects may use a flat fee. Ongoing advice or changing deals may use hourly billing or another agreed arrangement.
Confirm What the Fee Covers
Ask whether the fee includes drafting, revisions, negotiations, filings, and corrections. Confirm government charges and other outside costs separately.
A filing package may exclude founder negotiations, tax advice, or later changes. Compare the scope as well as the price.
Prepare for Legal Review
Bring formation and registration records, ownership documents, signed rights transfers, and contracts tied to the next decision.
Discuss the planned hire, contract, or investment with a startup attorney in California. Request a defined review of applicable duties, missing documents, and work needed before signing.
09 Nov, 2026
