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This article lists out the 11-factor test used by the IRS to determine whether a company's workers are independent contractors or employees, and provides a few helpful tips for companies to better ensure that they are properly treating their...
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This article discusses the effect of executing an offer of incentive stock options (which can only be offered to employees) as compensation for independent contractors and the consequences that may occur if such an error is not quickly corrected.
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This article briefly discusses Washington state's recent efforts to adopt a state equity crowdfunding law pending the full legalization of nationwide equity crowdfunding, as well as the possibility of others states adopting their own equity...
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This article discusses the "startup visa" provisions in Congress' recent draft comprehensive immigration reform bill.
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This article discusses the importance of drawing up some sort of collaboration agreement among team members participating in Startup Weekend- or hackathon-type events, and the potential consequences if a basic framework of rights is not established...
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This article briefly discusses the issues that arise with tax liabilities in relation to the matter of startup stock value.
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This article briefly discusses a couple of the issues that face big data companies in the area of privacy law, and points out the increasing difficulty such companies will face from increase governmental regulation.
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This article discusses the Massachusetts Supreme Judicial Court's ruling recognizing a confidential relationship between co-workers and privileged communications between them, which the SJC termed "work spouses".
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This article briefly discusses the consequences of electing Subchapter S taxation for corporations and particularly startups.
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This article discusses the recent Supreme Judicial Court opinion that ruled that retailers who collect ZIP codes from customers who used credit cards violated Massachusetts' privacy and consumer protection laws.
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This article briefly discusses the importance of bring-your-own-device (BYOD) policies for startups, and identifies some key issues that should be addressed by a comprehensive policy
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This article briefly describes some federal and state requirements to adhere to when running a contents, or simply a game-of-chance sweepstakes, in order to avoid inadvertently setting up an illegal lottery.
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This article discusses the difficulties small companies who will utilize equity crowdfunding, specifically with being able to publicize their offering without running afoul of Title III of the JOBS Act's (the law that will authorize equity...
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Acquisition is an endpoint for many startups, and many of those grant stock options to employees. This article briefly discusses some of the options for how stock option plans can be treated in the event of an acquisition.
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This article briefly discusses letters of intent (and similar documents such as memoranda of understanding or term sheets) and the issues that surround the non-binding nature of letters of intent.
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This article discusses the recent Massachusetts Supreme Judicial Court ruling regarding new standards for executing an enforceable worker's waiver of the Massachusetts Wage Act.
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This article discusses the recently-introduced Startup Act 3.0 -- which in part creates two new visa categories, one for graduate students in science, technology, engineering, and math fields to stay in the U.S. after graduation to work in those...
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This article briefly discusses the new proposal, written by the authors of last year's non-compete bill, to change Massachusetts non-compete laws, which is soon to be introduced into the state legislature.
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This article briefly discusses the necessary steps under the Copyright Act companies must take to ensure that copryrightable material created by their workers -- both employees and independent contractors -- is actually owned by the company.
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This article briefly discusses the requirement for increased disclosures, similar to disclosures for registered offerings, required when offering securities to non-accredited investors in a Rule 506 offering.
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This article discusses two important concepts for non-lawyers who are writing their own contracts to consider when drafting and executing those contracts: the offer (and acceptance) and consideration.
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This article briefly identifies a couple of the important documents business owners should be aware of when beginning to hire employees or other workers.
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This article discusses some of the differences for two of startups' favorite compensatory equity schemes, restricted stock and stock options.
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This article finishes up our series on drafting alternative dispute resolution clauses by discussing some issues and concerns to be cognizant of when drafting arbitration clauses in particular.
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This article continues our discussion of alternative dispute resolution by touching on some of the general issues to consider when drafting alternative dispute resolution clauses .
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This article briefly discusses the basic forms of alternative dispute resolution: negotiation, mediation, and arbitration (and the major subtypes of arbitration).
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This article briefly discusses the efforts of startup company ciValidator to develop an automated online platform that not only monitors equity and non-equity crowdfunding campaigns for fraud, but also promises to help solve one of the biggest...
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This article discusses common arguments against utilizing non-disclosure agreements (NDAs), then discusses the reasons why NDAs may be necessary or useful, particularly in the context of startup-private equity deals.
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This article serves as a brief, basic overview of the features and functioning of corporate boards of directors.
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This article discusses best practices for drafting a privacy policy for your startup's website or application, identifying the key points of information your policy should convey to users.
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The IRS recently announced several areas of focus it says it intends to look at in reviewing and auditing small businesses for underreporting of taxes. This article briefly discusses these areas of interest for the IRS.
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This article briefly discusses the cost-benefit analysis when deciding when to register a copyright or trademark. Specifically, it questions the benefits of registration if the copyright or trademark holder lacks the resources to actually defend the...
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This article considers the uncertainty surrounding whether the piercing of the corporate veil doctrine applies as well to LLCs and briefly discusses acting as though that standard applies as opposed to other, perhaps less strict, standards
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This article explains the concept of consideration and discusses why entrepreneurs and startup owners who are negotiating agreements by themselves need to make sure their agreements have consideration
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This article briefly discusses strategies entrepreneurs who are particularly protective of their business's IP or trade secrets can use when negotiating with private equity investors -- particularly, when might be the right time to ask a prospective...
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This article discusses a proposal for a different legal framework for equity crowdfunding that addresses some of the fundamental criticisms of the JOBS Act.
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This article continues from Tuesday's article on crowdfunding. Today's installment discusses many of the legal and business risks entrepreneurs may face when crowdfunding.
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This article is Part 1 of 2 in a crowdfunding primer series based on a seminar the law of crowdfunding hosted by the Boston Bar Association. In this Part 1, the four types of crowdfunding and a brief history and the facts and figures of crowdfunding...
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This article looks to the future of the law for startups by reviewing the proposals for new legislation to help the startup ecosystem contained in Obama and Romney campaigns' responses to the open letter published by the New York Tech Meetup.
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Seeing as how the SEC is unlikely to meet the deadlines for passing guidelines pursuant to the equity crowdfunding provisions of the JOBS Act and has given little guidance as to when they will actually complete that task, perhaps the time is right to...
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Startups often hire independent contractors, and then fail to execute agreements that define their relationship. This article discusses key points that startups and the independent contractors they hire should negotiate and agree to in order to...
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This article discusses the main features of the early-stage funding vehicle created by the Founder Institute and law firm Wilson Sonsini, called "convertible equity". Convertible equity is intended to be an option, and even an improvement upon, the...
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This article discusses the requirements for Massachusetts companies to become a recently-authorized "benefit corporation", a corporation that is authorized to consider, and whose purpose is to generate, social benefit.
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This article discusses some of the terms, both express and hidden, in convertible debt deals that can be bad for startups. It is also a prelude to a discussion in the next article about the new private equity vehicle established by the Founder...
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This article discusses the need for startups to put some limitations and protections for themselves in indemnification clauses in their product sale agreements, particularly with larger companies, and highlights some of the clauses that startups can...
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If your startup's business revolves around its website, this article discusses the importance of having a well-drafted terms of service that can protect your business from costly liabilities and litigation, and also discusses some tips to ensure that...
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While startups are famous for their collegial atmospheres, it is also important to ensure that the workplace remains professional. This article discusses a few issues entrepreneurs should remain cognizant of in order to ensure that unprofessional...
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This article discusses the need for entrepreneurs to do their homework and educate themselves on the legal issues facing their business so as to have more productive relationships with their legal counsel -- in the context of answering the question...
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While incentive-based crowdfunding has been a popular way for startups to raise seed capital, issues can arise from being *too* successful with incentive-based crowdfunding. This article discusses the business and legal issues that can occur from...
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People who leave their regular jobs to start business that compete to one degree or another with their current employer often have trepidation and questions about whether they can legally do so and what kind of legal risks they face with their...
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Startup founders often try to be flexible employers, perhaps to attract top talent or create the working environment they themselves would enjoy. However, being flexible can also lead employers to violate various federal and state labor and...
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This article addresses a few legal concerns that can arise from employers who have telecommuting employees.
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This article discusses some steps entrepreneurs should take to prepare themselves and achieve the best deal for their company in an "angel" private equity round.
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This article explains some of the major terms of attorney-client representation agreements and discusses issues that should be covered by your agreement with your attorney or law firm
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This article discusses how having co-founders can have the benefit of giving a different perspective and critical advice, but there are legal issues that entrepreneurs partnering up as co-founders should be cognizant of.
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This article examines the issue of interns who are disruptive or provide unsatisfactory work, and suggests ways that companies can prevent or correct problems with interns, and gives a few suggestions for companies that are faced with the prospect of...
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This article discusses the recent updates given by SEC Chairwoman Mary Shapiro on the status of the SEC's rulemaking efforts pursuant to the JOBS Act and whether the SEC will meet the deadlines enumerated in the Act.
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This article discusses a bill that was under consideration in the Massachusetts legislature in the past session (although due to be reintroduced next year) that makes changes to the non-competition agreement laws in the Commonwealth.
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This article discusses the likelihood that many startups who seek private equity funding may not need it, and highlights a few of the pitfalls when obtaining private equity financing becomes the #1 priority for a startup.
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This article lists some of the provisions taking effect over the next couple of months and years that employers who are subject to the Affordable Care Act, popularly known as "Obamacare", should begin planning to comply with.
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This article answers the question of whether there is a "friends and family" exemption in the securities laws. While there is no technical exemption, this article discusses some practical exemptions that can be used if one must raise funds from...
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This article provides a brief discussion of the securities laws concept of "sophisticated investors" and how they can fit into a startup's financing plans.
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This article briefly explains Startup Act 2.0, a new bill introduced in both houses of Congress that, in addition to its entrepreneurship-aimed immigration reform, will also make permanent the tax exemption on qualified small business stock.
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This article discusses the primary feature of the America Invents Act (due to take effect in March 2013) -- switching the US patent application system from a "first-to-invent" to a "first-to-file" priority system -- and discusses the effects this...
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This article discusses some of the legal issues faced by all startups that they may need to consult an attorney for.
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Although the SEC has recently reported that it will miss the deadlines for promulgating regulations for crowdfunding set by the JOBS Act, this article discusses some of the mechanisms and regulations the SEC should be discussing and implementing in...
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Teenagers may be ideal employees for startups, particularly those with young founders -- they may be able to relate better to and supervise teenaged employees, teenagers often command lower wages than adults, and teenagers can have energy and...
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This article discusses several key reasons why, if your business has the legal budget for it, shareholder agreements can be one of the best legal investments the company can make, potentially saving tens of thousands in the event an issue arises...
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When one or more co-founders just aren't working out, it may be necessary to come to a decision among the founders to split up with some staying with the company, and some going. Or, more drastically, it may be necessary to ask a founder or founders...
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In the final part of this Equity series, issues relating to employee equity compensation, including the two primary forms of compensation -- stock options and restricted stock units -- are discussed.
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The second part of this equity series discusses issues pertaining to investors' equity, in particular issues regarding preferred stock and convertible debt.
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This first part of a three-part series on equity discusses some of the issues surrounding founder's equity, particularly concerns regarding dividing up the equity and making equity an incentive for founders.
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This article discusses the need for startups issuing equity compensation to place transfer restrictions and the benefits in placing transfer restrictions on the equity of a private emerging growth company.
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This article briefly discusses competing proposals put forth by President Obama and congressional Republicans for tax breaks for small businesses.
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This article briefly explains the recent Massachusetts Superior Court decision Falmouth Firefighters Union v. Town of Falmouth regarding employers' right to access employee company email accounts and employees' reasonable expectations of privacy and...
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This article briefly discusses the bipartisan legislation introduced this week, dubbed the Startup Act 2.0, that seeks primarily to reform the visa process to allow foreign-born students in math, science, engineering, and technology fields to remain...
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If your business has firmly decided to seek equity crowdfunding when it becomes legal next year, this article describes some of the steps you can take and some of the information you will need to compile, based on the requirements listed in the JOBS...
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This article discusses a couple of reasons why stable startups with valuable patentable intellectual property may want to consider taking the step of obtaining patents at an earlier rather than a later stage.
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This article discusses the need for businesses to treat unpaid interns like interns and not like paid employees and the consequences for misclassifying interns, and lays out the federal test for determining whether an internship program and interns...
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This article notes the development of the equity crowdfunding industry, including the development of trade groups that seek to become SEC-endorsed self-regulatory organizations and the announcement of new and existing companies that want to become or...
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This article discusses some of the legal and practical benefits, particularly for small businesses and start-ups, of providing employment perks, such as free meals, gym memberships, flexible schedules, or even allowing pets into work, as opposed to...
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This article discusses some basic methods every business should undertake to limit its exposure to legal liability.
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This article briefly discusses how an attorney can help your business with the process of securing a commercial real estate lease, and identifies issues you can and should be discussing with an attorney during that process.
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This article discusses some considerations your company should have when deciding how to split equity among the initial team when forming the company, with some suggestions for how to handle the prospect of founders leaving the company at an early...
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This article discusses the recent Maryland legislation, the first in the nation to prohibit employers from requiring prospective or current employees provide access to their personal social media accounts
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This article discusses a recent decision by the 2nd Circuit Court of Appeals that the copying of a proprietary computerized trading system program from Goldman Sachs did not fall under the statutory definition of theft in the National Stolen Property...
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This article discusses some of the benefits traditional legal services versus online business formation services such as LegalZoom.
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This article discusses the various options LLC members have for federal income taxation (and states which follow the federal scheme) -- disregarded/partnership taxation, C corp taxation, and S corp taxation.
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This article discusses the trend towards increasing employee privacy, noting recent court decisions striking down company policies requiring medical documentation to support employees' use of their sick time as violative of the Americans with...
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Some crowdfunding proponents are concerned, or even angry, with the regulations on crowdfunding imposed by the CROWDFUND Act recently signed into law by President Obama. This article explores two additional hurdles that crowdfunding may face before...
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This article lays out the various provisions of the CROWDFUND Act portion of the JOBS Act which recently passed both houses of Congress and is awaiting signature by the President. Issues and shortcomings with the Act are also identified.
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Bank business loans are hard to come by, and you're reluctant to give away equity to investors, so now you're considering using credit cards to fund your business' operations. This article discusses some of the benefits of using credit cards to fund...
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This past week's legal news issue has been the revelation that companies have been asking prospective hires for access to their Facebook, Twitter, and other social media or email profiles, ostensibly in an attempt to discover if prospects have gang...
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The Boston metro area is considered by many to be the #2 entrepreneur and startup scene, behind Silicon Valley, but other cities such as New York, Seattle, and Chicago are gaining fast. This article discusses some legal, and livability, improvements...
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This article briefly describes the different organizational forms and the formation process of a non-profit organization.
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The Senate is currently debating reforms to the securities laws intended to make access to capital easier for startups and small businesses, particularly the Jump-starting Our Business Start-ups Act (JOBS Act) and the popularly-known "crowdfunding"...
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Some state and local governments are beginning to debate whether employers -- including small businesses -- should be required to provide their employees with paid sick leave. This article provides a few suggestions for small businesses to give their...
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In this final part of the securities series, other securities registration exemptions -- Section 4(2), Section 4(6), Rule 701, and Regulation A -- are discussed.
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In Part 2 of this series on securities and federal registration exemptions, the exemption rules pursuant and related to the SEC's Regulation D -- the ever-popular Rule 506, as well as Rules 504 and 505 -- are briefly explained.
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In this "Slaying the Securities Dragon" series, my aim is to provide entrepreneurs with some knowledge of how their businesses can raise capital through sale of equity while still complying with the securities laws. Here in Part 1, I begin with an...
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A startup that keeps poor financial records, or co-mingling the personal funds of owners and the funds of the business, risks problems with the government as well as the likelihood of difficulties in raising capital from banks or VCs. This article...
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In the early weeks and months of a startup, there are certain legal documents that entrepreneurs should have prepared. This article identifies some of the importantly early documents startups should obtain and the reasons why they are important for...
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Socially-minded ventures have been getting a lot of press lately with the introduction of the business form known as the benefit corporations in several new states this year. However, in other states entrepreneurs with a social mission have another...
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Although some startups hire some workers as independent contractors in order to avoid the administrative and monetary expenses of having employees, classifying workers as independent contractors when in reality they operate as employees can have...
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Often the budgets of startups constrain their options for obtaining labor for skilled tasks (such as building a website) or hour-intensive menial tasks (such as compiling potential sales leads from a search engine). Crowdsourcing, whether it is of...
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This article briefly reviews the opinion in Auriga Capital Corp. v. Gatz Properties LLC, passed down this week by the Delaware Chancery Court, which involves LLC manager/majority stakeholder fiduciary duties, and discusses the case's implications for...
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Entrepreneur Sean Blanchfield recently blogged about an idea for a new form of business for starts coined the "startup cooperative" -- essentially, an organization that gives entrepreneurial teams the flexibility to learn if and how well they work...
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Companies of all sizes and ages that must take the risk of disclosing proprietary information to employees and third parties in order to enable them to do their jobs often protect themselves through the use of nondisclosure and noncompete agreements....
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Traditional financing for startups that come from banks and venture capitalists may become less available in 2012. For entrepreneurs who still need to finance their ventures this year, this article gives a brief overview of several non-traditional...
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Trade secrets are an overlooked yet critical part of the intellectual property of many startups and small businesses. This article gives a brief overview discussing what a trade secret is, what a business must do to protect its trade secrets, how...