Starting a new business involves more than ideas and code – there are legal must-dos to protect you and your company. Skipping legal steps can lead to big headaches later.
Here are the essentials:
Choose and register your business entity. Decide on LLC , S-Corp, or sole proprietorship (see previous article). Register it officially (usually with your state).
NerdWallet emphasizes this as the first step:
it “affects your personal liability, what you pay in taxes, and your fundraising ability”. While sole props are simple, they offer no liability protection. As you grow, a corporation or LLC is usually safer.
Obtain licenses and permits. Depending on your location and industry, you may need local, state or federal permits (e. g.
business license, sales tax permit, health permits, etc.). Research your specific requirements and apply early to ensure compliance. Your city’s business licensing office can often guide you.
Set up taxes and bookkeeping. Apply for an Employer Identification Number (EIN) – required for an LLC/corp and needed for opening a business bank account.
Keep meticulous financial records:
you must track income/expenses and pay estimated taxes quarterly. Use accounting software (like QuickBooks) and consider hiring an accountant. Proper bookkeeping now will save legal trouble and fines later.
Write founder and stakeholder agreements. If you have co-founders, create formal agreements: operating agreements (for LLC) or bylaws/articles and shareholder/stock agreements. Define - each person’s ownership, roles, and voting rights.
Also set up vesting schedules for equity so founders earn shares over time. This protects everyone if someone leaves early. Protect your intellectual property (IP).
File for trademarks on your brand name/logo and consider patents or copyrights if you have unique technology. IP protection is crucial, as NerdWallet notes it’s the “bread and butter of many businesses” and attractive to investors. Even a provisional patent can buy you time.
Understand employment laws. If hiring, determine each worker’s classification correctly (employee vs. contractor) to avoid penalties.
Purchase workers’ compensation insurance if required (most states mandate this for employees). Draft offer letters, NDAs, and job policies. As your team grows, consider creating an employee handbook covering conduct, confidentiality, and key procedures.
Follow regulations (privacy, securities, etc.). If you collect user data, create a privacy policy compliant with laws (e. g.
GDPR, CCPA). Also, if raising capital, be aware of securities laws (only sell stock to accredited investors unless you file proper notices). Email marketing must comply with anti-spam laws (CAN-SPAM).
Consult an attorney. None of the above replaces legal advice. In fact, NerdWallet bluntly advises: “hire competent legal counsel” early on.
An experienced startup or business lawyer can handle complex matters (contracts, intellectual property, employment) and avoid costly mistakes.
Bottom line:
Treat legal setup as foundational. Crossing t’s and dotting i’s now prevents lawsuits, penalties, and confusion later.
As one summary puts it:
“If you’re meticulous about getting your startup legal checklist in order, you’ll save yourself from some serious headaches down the line.”. Make a checklist from the points above and work through it before launch (or step-by-step as you grow). It’s an investment in protecting your vision.
How to Find the Perfect Co-Founder for Your Startup A co-founder can make or break a startup. The ideal partner brings complementary skills, shared passion, and unwavering trust.
Start by asking yourself:
Do you need a co-founder? If your venture requires expertise you lack (like tech or marketing) or you want to split the workload and risk, a co-founder can help shoulder the journey.
Qualities to look for:
According to startup experts, your co-founder should have: - Shared vision and values. You must agree on the company’s goals and culture. Conflict arises if one founder dreams big (IPO) and the other wants a quick exit.
Ensure alignment on mission and work ethic. - Resilience under stress. Startups have ups and downs.
Carta advises finding someone who “can handle intense stress” and collaborate through challenges. Observe how they react to setbacks or tight deadlines. - Complementary skills.
Seek someone whose talents balance yours. If you’re a technical person, a co- founder strong in sales or marketing can fill gaps. As Carta explains, this lets each focus on what they do best, improving work quality.
Trustworthiness and character. You’ll spend countless hours together, so personal compatibility matters. You should enjoy working with them and trust them completely.
Don’t skip background checks:
talk to mutual contacts and mentors to confirm their reliability.
Where to find co-founders:
Look both inside and outside your current circle: - Existing network. Consider colleagues, classmates, or industry contacts you’ve enjoyed collaborating with. Referrals from friends or mentors often yield the best matches.
- Events and communities. Attend hackathons, startup meetups, and tech conferences. These are prime places to meet motivated entrepreneurs.
Online platforms like LinkedIn, founder forums, or local startup groups can also connect you with like-minded people. - Co-founder platforms. Websites like CoFoundersLab, FounderDating, or even Y Combinator’s network offer matching services for entrepreneurs.
They aggregate profiles of people seeking partnerships. Use them judiciously – a personal connection (from an event or introduction) is often stronger.
Vetting candidates:
Treat this like dating or hiring: - Trial collaboration. Before committing, work on a small project together. Carta suggests, “building something like an app for a few weeks” to test compatibility.
This reveals work styles:
do you solve problems together or end up in conflict? - Discuss hard questions. Have deep conversations about visions, exit strategies, and roles.
Ask how they reacted to past failures or stress.
Conduct informal reference checks:
colleagues or past co-workers can tell you about their work ethic and attitude. Finally, once you find a great partner, agree on roles, titles, and an equity split. Open communication and legal clarity (founder agreements with vesting) solidify the partnership.
As the experts warn, if two founders both “insist on being CEO” it’s a red flag. Aim for complementary roles (for example, one as CEO and the other as CTO, if skills align ).
In short:
Finding the perfect co-founder takes time and care. Prioritize trust, shared commitment, and skill synergy. Use your network and co-founder communities to meet candidates.
Then, test and verify thoroughly before leaping in. The right co-founder relationship can “make your entrepreneurial journey more fun” and massively increase your startup’s chances of success. Each of these articles equips you with practical, research-backed guidance for building your startup from the ground up.
Start acting on the advice today – review your idea, write your plan, register your business, and begin forming the team that will make it all happen. Good luck on your entrepreneurial journey! Companies That Succeeded With Bootstrapping www.
investopedia. com/articles/investing/082814/companies-succeeded-bootstrapping. asp How To Start a Business With No Money in 2025 (5 Proven Ideas) - Shopify www.
shopify. com/blog/start-business-without-money 5 Proven Methods to Validate Your Business Idea Pre-Launch www. investopedia.
com/validate-business-idea-pre-launch- How to Write a One-Page Business Plan [2024 Guide] - LivePlan www. liveplan. com/blog/planning/one-page-business-plan?
srsltid=AfmBOooDLoXixzThpEUZb1BoKis8igHNS4WNt1s0p3w4Z9fGgIz8Hr Free One Page Business Plan - Word, PDF | HubSpot www. hubspot. com/resources/templates/one-page-business-plan Choose a business structure | U.
S. Small Business Administration www. sba.
gov/business-guide/launch-your-business/choose-business-structure LLC vs.
S Corp:
Key Differences Explained for Business Owners www. investopedia. com/articles/personal-finance/011216/s-corp-vs-llc-which-should-i-choose.
asp 16 Important Legal Requirements for Starting a Small Business - NerdWallet www. nerdwallet. com/business/legal/learn/startup-checklist Essential Tools Every Entrepreneur Needs to Succeed in www.
entrepreneur. com/growing-a-business/essential-tools-every-entrepreneur-needs-to-succeed-in-2024/ The 36 best tools for startups & small businesses (2025 guide) waveup. com/blog/best-tools-for-startups-and-small-businesses/ How to Build a Strong Brand With a Limited Budget www.
entrepreneur. com/starting-a-business/how-to-build-a-strong-brand-with-a-limited-budget/ Branding for Startups – How to Do It on a Budget - The Branding Journal www. thebrandingjournal.
com/2025/07/branding-for-startups-how-to-do-it-on-a-budget/ How to Find a Co-Founder: A Guide for Startups carta. com/learn/startups/founding-team/co-founder/