I just found the National Venture Capital Association's page of legal documents. This is a fantastic resource for the ambitious and cheap entrepreneur. In the ultra-light startup mode, there is no money for lawyers. However, that doesn't mean that the legal framework can be eschewed. Entrepreneurs should be concerned about the following issues:
- Intellectual Property - Make sure that everybody who works on the project signs any IP claims over to the company. If somebody has some particularly valuable piece of IP that they don't want to just give up, they can license the IP for free to the company. That way, they retain ownership but the terms of it's usage are clear.
- Incorporation - Everybody says LLC is great, but Adeo Ressi of TheFunded.com is pretty clear that a C-Corp is the correct option. Investors don't want to deal with an LLC because then they would have annual (quarterly?) tax obligations as partial owners. The C-Corp protects them from that - they only have to worry about dividends and capital gains when they sell. It's good to start an LLC just to handle things like buying your computers and stuff until you're ready for a C-Corp. Incorporate.com does a great job.